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Walgreens Enters the Loyalty Game

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Walgreens Enters the Loyalty Game
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The long awaited and much rumoured loyalty program from Walgreens is about to launch. Interestingly at this point, it is everyone else that is talking about Balance Rewards, not Walgreens. A quick scan this morning of the Walgreens website landing page and their Newsroom page don’t give away even a hint of the forthcoming program.

The magic of the internet is that bloggers seem to have the jump on the traditional news channels. One site has been following the movement towards launch for over a year and seems to have a grip on a significant level of detail for the program. I won’t go into great examination of the value proposition, as a WSJ article published this week can provide you most of the important information.

There are some signficant thoughts to sha, and the competitive activity between CVS, Rite Aid, and Walgreens following the launch will be fascinating to observe.

  1. Most people know that CVS has been in market longest with its ExtraCare program, with Rite Aid’s Wellness+ making news more recently. Each program has a distinctly different structure with CVS ExtraCare the most unique. While Walgreens is centering Balance Rewards on a traditional points earning model, Wellness+ uses points to achieve tiers which trigger discounts. 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.
  2. CVS has made good use of multiple communications channels to engage customers with discount and reward offers. Email, mobile web, and in-store kiosks are each integral to their communications strategy. If all of these can possibly be ignored, there is still the “longest receipt in retail” that pumps out of the POS machine that alerts 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 decides to follow the social path
  3. 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 (or is it apathy?) and the chain has its eye on the ball to achieve its most important objective. If so, they have a leg up on success.
  4. It seems that Register Rewards, a popular discount program sponsored by Walgreens for some time, will stay in place during the early phase of launch for 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?

Walgreens is entering the loyalty game so late that you might say that its a race that even Usain Bolt couldn’t win. On the other hand, there is clear imperative for Walgreens to introduce a meaningful customer strategy and move beyond couponing if they are to keep pace with the competition. 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 under-utilization of data might be the only window that Walgreens has to catch up.

For each pharmacy chain, marketing innovation should be brewing over as competition heats up. For the  consumer, it’s becoming more rewarding to go to the pharmacy no matter where they shop.

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