Loyalty Truth

It’s easy to sit back and criticize every loyalty program in the market. There are enough examples of weak value propositions, poor use of data, and uninteresting or unattainable rewards around to elevate Loyalty Marketing critics on par with economists and meteorologists – say what you want and you can’t be wrong!

Corporate marketing departments can fall into the trap of relentlessly cataloging the programs which miss the mark. The outcome is that marketers turn a “learning exercise” into lowered confidence that they can play the game to their advantage. Whoever first said that “great is the enemy of good” had it spot on. Waiting for perfection may result in no action at all while your competitors pass you by.

To its credit, CVS Pharmacy took a bold step when it launched ExtraCare. While it is far from perfect, it represents the tiebreaker that drives consumers to choose CVS over its competitors.

The ExtraCare program delivers promotions, discounts and money-off coupons delivered on purchase receipts at point-of-sale (POS).CVS assembles a broad range of information on each receipt including:

• Text that explains the value proposition (“You earn 2% back on almost everything)
• Company URL – www.cvs.com
• ExtraCare card balances with YTD savings and seasonal spending totals
• Special frequency offers for Hallmark and Hershey products with progress towards goal

CVS has undoubtedly made a tremendous investment in the software driving the POS systems and the database that stands behind the system. In doing so, the company has taken the first and most courageous step towards building customer loyalty. Observing how the program evolves will be truly fascinating, with the ultimate measure of success being how CVS uses the data collected from its members.

Taking a tour through my latest receipt reveals that there is room for improvement in ExtraCare.

• A corporate web address is ok, but why not list the ExtraCare URL?
• The top message that caught my eye was “ExtraCare card balances as of 08/07”. My purchase was made on 08/22/08, which leaves me confused. Is “08/07” a date or am I missing something?
• Year to date savings are listed as $167.97. Does this relate to the 2% earn on all purchases? This is doubtful as I have not spent $8,398.50 in CVS this year! Maybe the number is a mythical “savings” number similar to the way grocers offer a “members price”
• Summer 2008 Spending is shown to be $105.15. This number means little to me as they don’t define “summer” by date range. I would probably relate better to Calendar year 2008 spending, but then again, maybe CVS doesn’t want to rub that number in!
• The frequency counters show me that I still need 8 Hallmark cards to earn a free one (apparently I have not bought my first one!) and 9 more Hershey bars to earn a freebie. These promotions may be sponsored hence their ubiquity, but would it not make more sense to customize these offers to match up with my historical purchase patterns?
• The two coupons that were included were for products that I have never purchased and only one was in a category that I had ever purchased in. More relevancy is needed

I have been tracking the CVS program over the past two years and have had some fun with their receipts. The world record receipt length topped just over 36”, a whole yard of promotional fun to review. Higher relevancy in their offers will bring more efficiency to this method of delivery.

Forgive me for wandering off into the land of the critic, but my notes are meant to be constructive. Remember that I give CVS highest praise for launching the program and continuing to support their investment in customer loyalty.

If you’ll pardon an Olympic metaphor, the athletes we have been watching over the past two weeks have been training for at least 4 years just for the opportunity to qualify for a medal round or race. Not every one of the qualifiers wins a medal, but it is indisputable that if they had not trained, they would have no shot at all.

CVS is in training and has a shot at the Loyalty Marketing Gold Medal in the pharmacy category. As far as I can see, their competitors have yet to enter the training facility. The longer they wait, the tougher it will be to catch up.

Bill Hanifin