The pharmacy customer as frequent flyer
The predictability of the chain store shopping experience has long been both a strength and weakness. The quality and experience may be predictably good, but can a shopper have a warm relationship with a store that treats everyone the same?
Walgreens gets that. So it is transforming its relationship with its customers by getting to know their needs more closely.
Walgreens’ new Balance Rewards shopper loyalty program, which launched Sept. 16, is all about transforming the shopper relationship to the place they shop, noted Graham Atkinson, Walgreens chief customer experience officer and architect of the program. “The dynamics of the last five or 10 years have really brought [loyalty] into a whole new focus,” Atkinson said. “If you put all that together, that collectively says that retailing and health care — like most other segments of the consumer market — are being increasingly driven by one’s core ability to understand the customer better, know what they want and be able to serve up those needs, products [and] services how they want them, when they want them and in the way they want them.”
Atkinson came to Walgreens in January 2011 with plenty of loyalty experience under his belt. Prior to Walgreens, he was president of United Airlines’ Mileage Plus program. Because of that experience, Atkinson has a different take on customer loyalty, both in terms of how it is defined and how it’s engendered, versus the typical retail- centric view. “The way we thought about [the Mileage Plus] program was in terms of being able to identify, segment and design programs around different customers depending upon their value. … It’s a long way away from a [typical supermarket] card that you swipe and you just get the lowest price,” Atkinson said. “Customers have varying levels of value to a business, and it’s absolutely essential that you understand the value of each customer to the business now. We found in the airline model that the customer who values the benefits and services that you get from being an elite member of United … is very different from the customer who’s just collecting points.” The road warrior just wants a hassle-free experience, he said.
The pharmacy customer has many similarities to that frequent flyer, Atkinson said. “Our ability to know that customer and influence that customer and ultimately give them a better experience, a differentiated experience … is just a huge opportunity,” he said. “How we actually segment our customers into much more meaningful universes and groups so that we can actually understand what’s really important to them is going to be as much of a game changer as the actual store experience that we’re designing and developing.”
The loyalty program is being launched with a focus on three customer-friendly tenets: It’s easy to sign up; it’s easy to accrue points; and it’s easy to redeem those points. And Walgreens’ Balance Rewards can be accessed and used through any mobile device, maintaining the seamless, multichannel shopping proposition that Walgreens is bringing to market.
How is Walgreens’ program different? For one thing, the points accrued through Balance Rewards almost never expire and can be combined with points earned by others in the same household. For every 5,000 points collected, Balance Rewards will award $5 good for almost any purchase at Walgreens or any of the chain’s online properties. And awards accelerate as points accumulate; for instance, 40,000 points net a $50 award.
Another way Balance Rewards differs from existing programs is that it will be used to help drive healthier behavior among program members. For instance, Balance Rewards will be tied into Walgreens’ Walk with Walgreens program, so users who log a certain number of steps are awarded points. “This program we want very much to focus as a health-and-wellness program rather than just a retail program on the front end,” Atkinson said.
The data that will come out of the program also will help transform how Walgreens goes to market. “We will learn a lot more about our best customers and what they shop and how they shop the entire store,” Atkinson said. “And that will enable us to send them direct offers if they want to, or otherwise at least amend, update and adjust the store selection to make sure that we’re actually providing the health and daily living services that they really want.”
In fact, Atkinson suggested that the consumer insights derived from the loyalty program would affect how Walgreens goes to market across several departments. “We’re just going to be better informed about our business on every dimension,” he said, including who’s buying, what’s selling, where stores should go and optimal labor commitments. “It runs right across the whole business,” Atkinson said. And better understanding that customer equation will ultimately lead “to better product development, store assortment selection, store location and many things besides.”
The loyalty data component that will be shared with vendor partners will better define the difference between “price takers” from “value seekers,” Atkinson added. “The other thing that has really excited [the vendor community] is the knowledge that we’re going to be able to give them, from all the promotions that we can test with them and the data and the customer knowledge, [insight] around what works and what doesn’t work.”
There is a cost associated with points, Atkinson said, and to realize a return on that investment, the Balance Rewards program is designed in such a way that it changes behavior. “The program that simply issues points or discounts for every dollar you pay doesn’t influence buying choice. Balance Rewards encourages people to either cross-shop or persuades them to actually select a particular product from a range of products. That’s where this program is different, and therein is the value for vendor partners.”