Prescriptions for Loyalty

Walgreens finally caught up to its drugstore channel rivals – and most of the retail world – in September by introducing its first loyalty card program. Based on the marketing onslaught it unleashed for the program's launch, the retailer was eager to make up for lost time.Called Balance Rewards, the free program lets U.S. residents aged 13 and older earn points on eligible purchases in-store and online. The points are converted into "Redemption Dollars" that can be used for discounts on future purchases.The marketing surge began before the program's official mid-month launch with a sweepstakes awarding 1 million points (worth roughly $1,000), a variety of social media activity, in-store signage and teaser ads in weekly circulars.The retailer used its full P-O-P sign package to promote the launch, employing everything from window posters, A-boards and standees at entrances to floor clings, wall posters, ceiling signs, shelf talkers, side panels, rack signs and counter clings everywhere else. By early October, some signs were already presenting offers from specific national brands.The official promotional introduction came in a wrap around the Sept. 16 circular, which showcased a total of 90,000 points worth of offers across its 16 pages. Subsequent circulars dangled point totals ranging from 40,000 to 70,000.National brand partners were at the ready. Promotions communicated through co-equity FSIs in Sunday newspapers immediately transitioned to Balance Rewards offers on Sept. 16. Customized P-O-P displays, too, quickly began promoting program offers."Walgreens designed Balance Rewards entirely for the consumer," Adam Holyk, divisional vice president of loyalty and consumer insights, said in a media release formally announcing the rollout. "We have utilized the latest technologies in loyalty programs to make it easier for customers to save, earn and redeem points."Balance Rewards also strengthens our ability to better understand our customers, meet their changing needs and treat our best customers even better," Holyk continued. "Customers will see more customized stores with improved product mixes and rewards on popular products." The retailer is working with Dallas-based Alliance Data's Epsilon to manage the program and analyze its use.The program attracted 12 million sign-ups in less than two weeks, Walgreens executives boasted during a Sept. 28 analysts' call. Speaking at the Shopper Marketing Expo on Oct. 18, Holyk did not update that number but did state that "the pace of enrollment has not slowed." The retailer has boldly predicted that Balance Rewards will become the largest retailer loyalty program in the U.S. within one year.Making that prediction come true will require Walgreens to generate more than 70 million signups by next September to surpass the total that CVS/pharmacy claims to have amassed with its ExtraCare program.Walgreens' main rival didn't waste any time firing a counter shot. The same day that Balance Rewards launched, CVS introduced a "Double Quarterly ExtraBucks Rewards" promotion that let ExtraCare cardholders earn 4% back on all qualifying purchases through Dec. 15 instead of the standard 2%. (See “CVS Looks to…” in Related Articles.) The rewards are redeemable beginning Jan. 1, 2013.CVS mirrored Walgreens' strategy by teasing the program for several weeks before its launch. The official announcement came via Facebook on Sept. 6 and was followed by multiple updates and a YouTube video that enlisted Super-Couponing founder Jill Cataldo to explain the program.Circular features began with small interior ads on Sept. 9. In subsequent weeks, an exterior wrap invited consumers to "sign up today" at Coupon Center kiosks or CVS.com. A 30-second national TV spot and online display ads soon followed.In stores, an extensive P-O-P effort included a series of floor clings placed as stepping stones to lead ExtraCare cardholders to the Coupon Centers to sign up for the enhanced deals."With 15 years of leadership and innovation under our belt, we have learned what works when it comes to delivering personalized value to our customers," chief marketing officer Rob Price said in a media release. "Our ExtraCare members love earning and cashing in ExtraBucks Rewards. They think of it as 'free CVS money.'"CVS has continuously modified the ExtraCare platform since its launch through such additions as the Coupon Center, offshoots like the ExtraCare Beauty Club and ExtraCare Advantage for Diabetes programs, and digital upgrades including a "Send to Card" option for coupons.Participation in drugstore loyalty programs increased from 41% to 45% between 2010 and 2011, according to a recent "Pulse of Shopping Life" report from WSL Strategic Retail, New York. A significant portion of that growth likely came from Rite Aid's rollout of a Wellness+ Rewards program in May 2010. That program has attracted 52 million members in a little more than two years of operation.

Prescriptions for Loyalty

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