The firm is using Enterprise Miner software from SAS to complement its existing business intelligence systems to provide deeper analysis of data.
"We have been using Business Objects and other tools for business intelligence but the deeper statistical correlation analysis we are looking to do is only possible with data mining," said Duncan Stirling, client services director at Loyalty Management.
"The software will allow us to improve the speed and flexibility of our segmentation process," he added.
The SAS software, which will link in to Loyalty Management's Oracle 8i databases, will also help the company to provide greater insights into campaign selections, marketing opportunities and performance measurements, Stirling said.
"From a sponsor point of view, this is a strategic tool to support both the work we do as a hub of information, and to support the marketing and customer relationship management programmes," he said.
For Loyalty Management, which has a large number of business partners, being able to segment data quickly is a key benefit, said Andy Kellett, senior research analyst at Butler Group.
"It will be able to focus more deeply on which customers are earning points with particular retailers, so they can target offers in a more focused way, avoiding spam-type issues," he said.
Loyalty Management hopes to complete the implementation of the SAS software within the next two months. The main IT challenge will be ensuring that the underlying data is structured in a way that will allow the best analysis, Stirling said.
Loyalty Management UK has completely overhauled the Nectar website, allowing cardholders to redeem loyalty points online and check what offers their points can give them. The new website, which soft-launched earlier this month, was developed in-house with partners Infosys for IT infrastructure, Evolution for a real-time redemption engine and Conchango for front-end design.
To prevent a repeat of problems with availability as experienced at the original website launch, the site has been "stress tested to the point of trying to break it", said chief operating officer Simon Hawkes.