7. Grow loyaltyLoyalty cards, which allow customers to accumulate points when they spend and buy more goods when they’ve saved enough, also bring benefits. Nectar, the scheme anchored by Sainsbury’s, has developed the concept by adding external partners to the scheme. It’s estimated that half of the UK’s households collect Nectar points. In August 2009 Nectar’s marketing director, John Sheekey, reported that the company had added 500,000 new members in the previous six months – and that there were 21 Nectar “swipes” every second on average. New loyalty schemes can work just as well. In May 2009, HMV introduced the purehmv card, which gives members 100 points for each £1 spent in store to redeem against collectors’ items. A DVD poster for the film Mean Streets, signed by director Martin Scorsese, for instance, is available for 25,000 points. “It is proving successful in building loyalty and driving traffic and spending among shoppers,” Button says.
8. DiversifyDiversifying into new market segments or regions is a sensible hedging tool to boost business resilience. Engineering, technology and consultancy services supplier Ricardo started to diversify into related industries before the recession hit, but chief executive Dave Shemmans says that it has proved crucial in the past 18 months. “We focus on adjacent sectors in which we can genuinely add value rather than simply generate volume,” he explains. “In renewable power we are helping wind energy customers with turbine gearbox design, where warranty issues are a cause for concern as the industry moves to large capacity offshore units. In defence vehicles, too, we have been developing solutions in both the US and Europe, drawing on our hybrid and electric vehicle systems expertise.” It works in a retail environment, too. “Diversification has become very important in recent years,” says Jason Toy, head of operations at HMV. It has been as much about the shift online as the recession, he adds – “but in such a trading environment you have to work even harder to stay where you are. We have become far more multi-channel, offering consumers access to music, film and games through our stores and digital platform.” HMV is also moving into new market segments. “We have invested in associated entertainment-related sectors such as live music venues and cinema,” Toy says. HMV now owns and operates venues such as the hmv Hammersmith Apollo and is trialling a three-screen cinema in Wimbledon.
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