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Case Studies

LMUK Builds UK's Largest Loyalty Program on IT Partnership with Infosys

Summary
Loyalty Management UK (LMUK) launched the Nectar loyalty card in September 2002, introducing the UK's first coalition customer loyalty program. Unlike other loyalty card schemes, Nectar allows collectors to accrue points and redeem rewards at multiple retailers or 'sponsors' and 'reward partners', rather than just one. This unique scheme has so far attracted more than half of all UK households, making it the largest loyalty program in the UK.

To keep consumers interested, LMUK has grown its sponsor list from the four in 2002 to 13 today, including well-known brand names from every part of our daily lives. As planned, Nectar has successfully created cross-selling between these sponsors with 75% of collectors now using at least two sponsors. 62% of collectors also say they are actively spending more with the sponsors because of Nectar.

LMUK had to build a highly complex IT system to underpin Nectar. It had to handle large volumes of secured transactions from the start, integrate with the IT systems of multiple sponsors and be available within tight promotional deadlines. To execute this, LMUK partnered with Infosys, the leading India-based IT services company. Infosys has utilized its full range of consulting, technology expertise, IT development and maintenance capabilities to deliver what it promised on time and on budget. It remains LMUK's long-term strategic IT partner for the ongoing development of Nectar.

"The Infosys partnership has been critical to the launch and the ongoing development of Nectar," said Simon Hawkes, COO at LMUK. "In Infosys, we found a unique partner for our unique loyalty program."

Part I: Launching Nectar - the IT challenge
LMUK faced multiple challenges when setting up the IT infrastructure that underpins Nectar. It had to start from scratch and build a complete 'greenfield' IT platform, that is both highly scalable and complex, but against an immovable deadline and a tight IT budget. As LMUK launched the scheme in partnership with four big brand sponsors - Sainsbury, BP, Barclaycard and Debenhams - it needed to ensure it met the high-profile launch date. Unlike other start-up ventures, LMUK also expected a huge customer base from day one and so needed a highly scalable and reliable IT infrastructure. LMUK recognized that a robust IT system was a critical success factor for Nectar and wanted to capture the very best in IT and loyalty sector expertise the world could offer. It looked for a long-term strategic IT partner, with UK market and global experience, to take care of the technology needs of the venture, so that LMUK could concentrate on marketing one of the UK's largest ever product launches.

The Infosys' solution
LMUK partnered with Infosys, the India-based global IT services company to build and then maintain and develop its entire IT infrastructure. Infosys was chosen based on its proven ability to build sophisticated IT systems against strict time, budget and quality parameters. This level of reliability was critical to LMUK.

"We chose Infosys and offshore sourcing as it could deliver the high quality IT development we were depending on quickly and cost-effectively," said Hawkes. "Infosys had also built the application behind loyalty schemes in the US and so could contribute significant expertise in selecting the technology for Nectar."

Infosys has provided its complete range of IT services since engaging with LMUK in mid 2001, from initial business consultancy and sector expertise, to advice on software and data centre vendors, design of the technology platform, systems integration, infrastructure planning, IT development and ongoing maintenance. It continues to be involved in the complete lifecycle of most IT projects at Nectar.

The project - a technical challenge
LMUK and Infosys together conducted a rigorous analysis of LMUK's business and IT requirements. Infosys' technology R&D labs, SETLabs, assessed the package applications on the market and decided with LMUK that only a custom-built application would give the scalability and robustness required to support the expected demand. Infosys built and rigorously tested the core IT application for LMUK using J2EE architecture. The application supports Nectar's website, call centre and internal users as well as a marketing database which gathers data on Nectar collectors for analysis. The application was technically very challenging to build as it needed to interface with the point of sale systems of multiple sponsors, enabling collectors' points balance and reward redemption transactions to be updated in real-time.

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