BrainTrust Query: Walgreens Enters the Loyalty Game
Through a special arrangement, presented here for discussion is a summary of a current article from the Hanifin Loyalty blog.
The long awaited and much rumored loyalty program from Walgreens reportedly will launch on September 16.
Called Balanced Rewards, the loyalty card will utilize a point-based system similar to the program used by Duane Reade, which Walgreens acquired in 2010. According to reports, shoppers will earn points for buying front-end items, filling prescriptions, getting shots and even participating in a walking program. At 5,000 points, a $5.00 card can be redeemed. At 40,000, members earn a $50 card.
"This program is all about collecting points, saving up for a treat," said Graham Atkinson, chief customer experience officer, told Reuters. Mr. Atkinson led United Airlines' Mileage Plus program before joining Walgreens in January 2011.
Competitive activity between CVS, Rite Aid, and Walgreens following the launch will be fascinating to observe. Here, a few observations:
- While Walgreens is centering Balance Rewards on a traditional points earning model, Rite Aid's Wellness+ uses points to achieve tiers which trigger discounts. In market the longest with its ExtraCare program going national in national in 2001, CVS tracks purchases but does not explicitly award points, preferring to surprise members on a regular basis with ExtraBucks, dollars good on purchases made in the store.
- CVS uses multiple communications channels — E-mail, mobile and in-store kiosks, etc. — to engage customers with discount and reward offers as well as the "longest receipt in retail" alerting members to product offers, account status, and ExtraBucks offers. Walgreens has been trialing offers with Foursquare, but there is no hint of "social" being part of the Balance Rewards program. Let's see if Walgreens follows the social path
- Walgreens hints that pharmacy loyalty might be the core behavior that it seeks to encourage among its customers. It seems that switching cost between pharmacies is high and the chain has its eye on the ball to achieve its most important objective. If so, they have a leg up on success.
- It seems that Register Rewards, a popular discount program for some time, will stay in place during the early phase of launch of its loyalty program. For savvy consumers, this means that some double dipping may take place. Even though it appears Walgreens is moving away from Register Rewards, should they promote it to drive attention and foot traffic to its stores in these early days?
Moving beyond couponing to introduce a meaningful customer strategy will help Walgreens keep pace with competitors. CVS has been collecting purchase data for several years and, from reading my receipts, still has a long way to go to connect the dots between what I want to buy and the deals I am offered. This underutilization of data might be the only window that Walgreens has to catch up.