As news about the launch of a new loyalty program from Walgreens, Balance Rewards, trickled into the press, we shared a few observations about the program in this post. We speculated about the impact of Balance Rewards on the competitive retail pharmacy industry in the US, and piqued our curiosity about Walgreens plans for this new loyalty initiative.
To our delight, we were able to exchange a few questions with Adam Holyk, Divisional Vice-President, Loyalty and Insights at Walgreen Co. in Chicago, and are pleased to share the interview here. Adam is an expert in customer-centric retailing and prior to joining Walgreens, held senior level roles at both American Express and dunnhumby, providing consulting services to leading retailers such as Target and Macy’s. Adam also led analytics and loyalty groups at both Shoppers Drug Mart and Loblaws in Toronto, so his customer strategy experience runs deep.
Loyalty Truth: With CVS and Rite Aid having rewards programs in market for some time, to what extent did you use these competitive programs as models for “what to do” or “what not to do”?
Adam Holyk: We’re always looking for ways to better serve our customers and expand on our legacy of innovation. Balance Rewards offers customers easy enrollment, exclusive savings, instant points, and rewards, as well as ways to get, stay and live well at Walgreens.
An advantage for entering the loyalty space when we did was our ability to use technology to make our program easy to join and use. We recently implemented state-of-the-art point-of-sale store technology chain-wide in preparation for the loyalty program introduction, and we will have a big focus on everything being simple, instant, electronic and multi-channel.
There is also an important connection between Balance Rewards and Walgreens commitment to health and wellness. Customers may earn points on prescriptions, immunizations and for participating in Walk with Walgreens.
Loyalty Truth: To what extent did you build on the rewards program at Duane Reade stores, a chain acquired by Walgreens? What technology challenges were presented implementing Balance Rewards in both chains?
Adam Holyk: Walgreens designed Balance Rewards entirely for the consumer. We utilized the latest technologies in loyalty programs to make it easier for customers to save, earn and redeem points. Additionally, we have implemented next generation point-of-sale systems in all Walgreens and Duane Reade.
When we looked at other programs in this space, including Duane Reade, we noticed a heavy leaning towards short-term discounts and coupons. Balance Rewards offers savings, but it is really a rewards program that allows us to treat our best customers even better.
Loyalty Truth: CVS is notorious for its long paper receipts offering product-related coupons and ExtraCare Bucks to its members. How will Walgreens present product-related offers to Balance Rewards members while being just a bit more “green”?
Adam Holyk: We wanted to offer customers ease and simplicity with Balance Rewards. As a result, the program is instant, electronic and multi-channel. Customers may join in-store, at check-out, online or via the Walgreens mobile app. There are no paper enrollments. The earning of points will happen online and in-store, and the redemption of the points will also be online and in-store and will happen instantly.
Balance Rewards point offers change weekly and customers may view the Walgreens Weekly Ad to learn what items feature points for the coming week. Point offers are also visible in store aisles and on Walgreens.com.
Loyalty Truth: Previous to the launch of Balance Rewards, market consensus concluded CVS was the most innovative pharmacy industry player with its data-driven marketing efforts. That said, many have observed that product-related offers on store purchase receipts for CVS ExtraCare members do not correspond with products of interest based on purchase history. What is Walgreen’s approach to connecting customers with the products they buy?
Adam Holyk: We’re always looking for ways to better serve our customers and expand on our legacy of innovation. The program also strengthens Walgreens ability to better understand our customers, meet their changing needs and treat our best customers even better. We’re hopeful that the program better enables our customers to interact with us on their terms and with their preferred channels–online, via mobile, at the register or even at photo kiosks. Ultimately, we want to learn enough about our customers so we’re building engagement.
Loyalty Truth: To be fair, we just read a report documenting a 7.8% decline in September sales at Walgreens. To what extent do you expect the Balance Rewards program to change this trend?
Adam Holyk: We believe we are positioned for growth as we benefit from the launch of Balance Rewards, our reentry into the Express Scripts pharmacy provider network, and our execution of the Alliance Boots strategic partnership.
We also believe that Balance Rewards can be the largest consumer loyalty program in the country, and the customer response so far has helped to further cement this belief.
Loyalty Truth: How is Walgreens planning to interact with Apple Passbook?
Adam Holyk: This September, Walgreens rolled out new features for its mobile app, which included a virtual card and other components to Balance Rewards. The Balance Rewards loyalty card in the Walgreens app has been integrated with Passbook. Apple has ranked the Walgreens app number 10 in its “best-seller” app ranking and number one for “lifestyle.” Walgreens will continue to find innovative ways to help its customers stay happy and healthy.
Loyalty Truth: Thanks Adam!