Clive Humby, head of Dunn Humby, the consultancy behind Tesco's loyalty scheme, has questioned whether joint loyalty schemes such as Nectar, recently launched by a UK consortium which includes BP and Sainsbury's, can really deliver: "How much information do Nectar members really share? Who decides on what the cardholder gets? Who is in control - Loyalty Management, who is the organiser, or the retailers in the scheme?"

Keith Mills, chairman and owner of Loyalty Management, and the orginal inventor of the pioneering Airmiles scheme, suggests that retailers running solo schemes are the ones who should watch out: "The Tesco scheme is very impressive but our members will share the costs, unlike Tesco, which spends £150 million a year on its card."  He agrees that Tesco still makes money on that, but adds: "We expect member companies to get between 50% and 250% return on their investment in profits before tax over a year." 

He also suggests that it is the customer overlap which really delivers the goods: "We can immediately guide many thousands of BP customers who don't shop at Sainsbury's, but live near a store, into Sainsbury's, and vice versa.  Our scheme is all about changing customer behaviour.  The worst thing you can do is spend several hundred pounds a year on giving discounts to customers who would always be loyal anyway. Tesco does quite a lot of that!"  He also suggests that Tesco's way of handing out rewards every quarter is not particularly sophisticated: "You just create spikes. We want to change how people shop."

The aim, as he sees it, is to turn what retailers term secondary and tertiary customers into primary customers. "We want the woman who buys cans and bread at Sainsbury's to buy everything here."  He adds: "The problem with a solo scheme like Tesco's is that it only ever gives detailed information on primary customers."  Mills sees four revenue drivers - increasing retention, lifting customer spend, shifting frequency of purchase and turning buyers into more profitable customers: "We want to change the behaviour of consumers, whilst recognising that each and every one is unique. There is no point in having the same strategy for a single woman who is already a loyal customer as for a large family who are tertiary buyers."  Mills' private company is behind similar joint loyalty schemes in Canada, the Netherlands, Spain and the Middle East.