How Loyalty Programs Fuel Retail Media's Future
Loyalty programs are the lifeblood of retail media networks (RMNs), providing valuable shopper data that enables deep personalization and customization.
At CVS Media Exchange (CMX), the RMN of CVS Pharmacy — the largest retail pharmacy chain and home to ExtraCare, a longstanding leader in customer loyalty programs — we wanted to delve deeper into what drives engagement in them. Partnering with the Path to Purchase Institute, we surveyed 1,000-plus shoppers across various industries to uncover the factors that strengthen first-party data derived from loyalty programs, which can fuel RMNs. Our goal was to understand the factors that attract and retain consumers in a loyalty program and utilize those insights to improve solutions for our partners.
Here are five key insights from the study, along with their implications for RMNs:
Insight #1: Essential purchases drive loyalty program participation. Seventy percent of shoppers buy groceries, drugstore products and online-exclusive items monthly, and these categories have the highest loyalty participation.
RMN takeaway: Frequent purchases provide a wealth of granular data. By understanding how shoppers react to pricing, promotions, out-of-stocks and new products, RMNs can tailor campaigns to resonate with consumers, improving their shopping experience with relevant deals and rewards. This data also allows RMNs to understand shoppers’ baskets and predict future needs, driving category and brand discovery with hyper-relevant communications.
Insight #2: Rising prices on everyday items make rewards crucial. Access to discounts, promotions and coupons a consumer can use today are the top drivers of loyalty program participation.
RMN takeaway: Retail media campaigns deliver cost-saving choices and timely messaging to price-conscious consumers. Leveraging first-party data, advertisers can personalize offers in real-time, using solutions like dynamic creative optimization or in-app deals.
Insight #3: Convenience and accessibility matter. Seventy-five percent of shoppers prefer in-store shopping for everyday items, often buying across categories. However, for two-thirds of shoppers who recognize the ease of online shopping, flexibility in reward redemption is critical.
RMN takeaway: Leveraging loyalty data, RMNs act as omnichannel publishers, targeting shoppers across their entire journey and identifying conversion points for future campaigns. This is achieved through closed-loop reporting, providing advertisers precise measurement — where did they purchase — and attribution of purchases to campaigns.
Insight #4: Grocery and drug categories have longstanding loyalty program members. Nearly half of shoppers in these categories express interest in personalized promotional offers.
RMN takeaway: Personalization and simplicity drive rewarding experiences at scale. Using internal data, RMNs can tailor offerings to individual preferences, fostering long-term customer loyalty. CVS, with its 25-plus-year ExtraCare program, recognizes this value, but also understands the need to evolve and attract new shoppers with our updated loyalty program launched earlier this year.
Insight #5: Generational differences impact loyalty preferences. Gen Z values personalized recommendations, instant gratification and exclusive access, while older generations prioritize consistent savings over time.
RMN takeaway: Loyalty programs must evolve and offer rewards that appeal to all demographics. RMNs should analyze data, including generational differences in partnership with their internal loyalty marketing peers, to understand how these factors impact program enrollment and engagement. This is crucial for maintaining the strength and accuracy of an RMN’s data fidelity and overall solutions.
Parting thought: Data quality is the foundation of an RMN’s power. Questioning the source and strength of data used by RMN partners is crucial. Loyalty programs with engaged participants who shop across multiple categories provide invaluable insights into consumer behavior, serving as a guiding light for understanding consumer preferences and driving effective marketing strategies. This can inform personalized content strategy from simple direct mail pieces to sophisticated programmatic digital campaigns.
By understanding and acting on these insights, RMNs can strengthen their loyalty programs, enhance consumer value, and improve their ability to serve advertising partners effectively.
About the Author
Pamela Young is head of sales at CVS Media Exchange. Prior to joining CVS, she served on the founding sales team of Firework, a video commerce solution.
