How British Gas and Nectar exceeded first-year targets and expectations.
By Jan-Pieter Lips, Managing Director, Nectar UK
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British Gas (part of Centrica) is the UK’s largest energy and gas provider, operating in a competitive sector which typically suffers from low trust and high churn amongst consumers. In 2010, the company undertook a nationwide listening exercise, which revealed that their customers wanted to be rewarded for their loyalty. In January 2011, British Gas joined the Nectar loyalty coalition with the aim of engaging with and rewarding both current and prospective customers. Launched with a successful multi-million pound integrated campaign, the partnership between British Gas and Nectar exceeded first-year targets and expectations.
The energy sector has been suffering a crisis of trust amongst the British public. As Britain’s leading energy supplier, British Gas already employed a proactive customercentric approach to its business that included energy saving tips, technology initiatives to help customers live greener lives in smarter homes, charity and community work, and even sponsorship of the British Gas GBR Swimming Team. Still, British Gas wanted to build on this approach to engage more effectively with its current and prospective customers and build long-lasting loyal relationships with them.
Joining the Nectar loyalty coalition, the UK’s largest loyalty programme, presented British Gas with the opportunity to differentiate itself in a highly competitive and commoditised market, and to benefit both from the trust that the programme engenders in its collectors and its broad consumer appeal. A partnership with Nectar would enable British Gas to deliver immediate, recognisable and relevant rewards to its customers.
British Gas and Nectar identified the following potential benefits of the partnership:
- Nectar points are a “hook” that helps increase customer retention. Nectar would perform data analysis to identify key points of customer churn, which would allow British Gas to send targeted offers designed to drive retention and renewal.
Reduce cost to serve
- From experience across different sectors, the Nectar team knew that Nectar points would be an effective incentive to encourage customers to perform more cost efficient behaviours, including submitting their own meter readings and signing up to pay their bills by direct debit.
- Enrol 2.35 million British Gas customers into the Nectar loyalty programme within 12 months.
- Deliver a positive benefit in churn reduction and Net Promoter Score among customers signed up with the programme.
- Acquire 175,000 Nectar collectors as new British Gas customers.
British Gas and Nectar worked together to design a customer loyalty solution designed to demonstrate the value of Nectar programme participation and drive retention, renewal and loyalty amongst British Gas current and prospective customers.
Specific elements of the partnership design included:
- Programme value proposition: British Gas and Nectar designed a programme value proposition that rewards British Gas customers for performing key desirable behaviours with immediate, recognisable and relevant rewards. British Gas customers who enrol in the Nectar programme receive Nectar points every quarter, just for being a customer. Earning opportunities include points for gas and electricity accounts, points for home services products, and also points for performing specific behaviours that reduce their cost-toserve, including direct-debit bill pay or signing up for paperless billing. Customer collectors also receive bonus points at the end of each year they participate in the programme.
- Colleague engagement: Early in the partnership development stage, British Gas and Nectar decided to embed the Nectar programme across as much of the British Gas business as possible with the goal of making the programme integral to all aspects of the customer experience. To facilitate a successful launch, British Gas undertook a 15-site road show to educate 28,000 employees about the launch and deliver training designed to ensure full commitment across the business.
- Launch marketing: British Gas launched its partnership with Nectar on 31st January 2011. The company offered a 100-point “welcome bonus” to encourage enrolment, and promoted the launch via a multi-channel media campaign leveraging both mass and direct channels such as television, radio and direct mail through both Nectar and British Gas channels. The television campaign in particular was the highest-scoring advertising campaign undertaken by British Gas in three years.
The results of the new partnership between British Gas and Nectar speak for themselves.
- Engagement: British Gas reached its year-end Nectar enrolment target of 2.35 million customers within 8 weeks of launch. By 31st December 2011, just 11 months after the launch, the company enrolled 3.96 million customers in the programme. Enrolled customers are also over-represented in multiple valuable product segments known to result in higher brand engagement and retention than single-product segments. Furthermore, within the first year over 700,000 existing British Gas customers joined the Nectar programme.
- Reduced cost to serve: Over half of enrolled customers perform behaviours that reduce cost to serve, such as signing up for paperless billing.
- Marketing ROI: The Nectar offer improved direct mail response rates by 160%.
“Loyalty is complex, and Nectar is an established programme and the market leader, so why would we try to build something in competition with that? Instead we joined forces, and it has been a brilliant decision.” - Chris Jansen, Managing Director, British Gas