What price loyalty?
News dropped into my inbox this week that delivery company DHL Express is to offer SMEs the chance to pick up Nectar points when they use its service. For every pound spent the cardholder will receive two points
.
They are not the first company to offer this to customers. The Nectar Business loyalty scheme has been running since 2005 and suppliers of office products, commercial insurance, catering and vehicle rental are also involved.
“Small businesses have lots of outgoings – from stationery and business insurance to transport and by collecting points with Nectar Business they can earn rewards on their everyday business expenditure to spend on themselves or their business,” said head of Nectar Business Louise Isaacs.
If you are a small business, I’m sure this sounds great. Why not place your company business with these vendors to get a little bonus to help out with the weekly shop or filling up the car – especially in these tough financial times?
But I wonder if this will create a conflict of interest for those less scrupulous business owners, who might be tempted to select the provider that offers a personal incentive rather than one that offers better value to the organisation.
It brings to mind similar clashes I have heard where business travellers have rejected flights with the organisation’s preferred (and cheaper) carrier, because they wanted to earn personal frequent flyer miles with a different provider.
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Loyalty should be earnt by delivering excellent, consistent service and competitive prices. Professional buyers will still recognise this depite an attempt buy suppliers to cloud the issue.
Loyalty points are like rebates and should be avoided. Lower unit costs win every time.
If a business owner wants to do this then fair play to them, it is after all their own money they are playing with. Professional buyers doing this to the detriment of the organisation they work for would surely be violating the CIPS ethical code.
I doubt these incentives will sway many buyers, if any. I agree with David F that competitive pricing and an excellent service always prevails. I have seen some pretty strange incentives, including a free jar of sweets on orders over £300.00, chocolates and even cakes. One would have to be silly to let these offers sway important decisions on who gets the business! These incentives only cost a couple of pounds in the shops.
Not a good move in light of the imminent Bribery Act.
Like any loyalty points scheme, only the supplier wins. If the supplier wants to get the business, why dont they give a volume business discount at the end of period…..seems fair and square!!!