Walgreens has had a busy year.
First, it began innovating through its store formats, matching product and merchandising often unexpected from a drug store chain to local demographics and store locations. That strategy has led to 160 different planograms ranging from a location in Chicago’s tough South Side where a nurse practitioner can administer HIV tests, to another in Brooklyn that has a bar backed by a wall stacked with beer growlers, a testament to Brooklyn’s entrepreneurial craft beer makers. The idea is to provide products and services of real interest to the local community to encourage loyalty.
Building on that local strategy, Walgreens over a year ago began testing a few different concepts to encourage those local customers to be more loyal. The concepts were tested and tweaked in three markets before Balance Rewards rolled in September.
“Balance Rewards is connected with the overall transformation of Walgreens from a traditional drug store to a health, wellness and living destination,” Adam Holyk, group vice president, insights and analytics at Walgreens, said. “It’s about getting the customer experience right and the right assortment in the box, but also to build a complete loyalty program and to learn through that customer knowledge.”
The program
Under the free program, members earn points on a wide variety of items both in stores and online that when added up can be redeemed for future purchases. For example, 5,000 points earns a $5 reward.
But where Walgreens really makes an impact is through the number of promotions and specials it runs around the program to encourage sign ups—and frequent participation, which can be lackluster in many loyalty programs.
One promotion in September offered an addition 5,000 Balance Rewards points to any member who spent more than $30 in the store. Reward members who are also AARP members get an even better benefit, 5,000 points when they spend $25 in a single purchase plus five special point offers.
Reward members also get exclusive sale prices promoted through the Weekly Ad circular and in-store offer locators. Auto refills on prescriptions earn 500 points on a regular basis, as do immunizations. Reward members who also join Walk with Walgreens will earn 10 points for every mile they complete.
Customers can join Balance Rewards through a variety of ways. They can sign up online or in stores at specially marked kiosks or at checkout. Customers can also download a free mobile app and join from their smartphones or tablets or call an 855 number to set up membership.
New membership sparks a steady communications plan for each individual beginning with a welcome to educate them about the program to complimenting direct mail pieces with product offers and relevant communications.
Getting the messge out
Marketing the program is fully integrated and ongoing. However, the launch was supported with more than 2 billion impressions from Walgreens.com, through social and email, in its 8,000 stores, TV and radio ads, mobile, circulars, online banner ads, digital signage and a strong presence on social media, including a video on YouTube.
“We’re not viewing it as the launch of a loyalty program, it really represents our focus on our customers,” Holyk said. “The loyalty program and message will be integrated ongoing through all of our vehicles and will be connected in messages.”
By the end of September, 12 million members had joined and by the end of October, that number had jumped to 28 million.
“We already have one of the largest programs in the country,” with the percent of sales on loyalty cards tracking ahead of schedule, he said.
The capability to capture that customer and transactional data through Balance Rewards provides a foundation for Walgreens to track and analyze individual customer data and to activate those insights and define customer focused strategies.
“Most of the information is really focused around how do we continue to move our store format forward,” Holyk said. “Based on purchase behavior, how can we make sure we have that relevant assortment. There is a big focus around trying to make sure we get the right products into the right stores and have the value message tied to that.”
Eight of the top 10 U.S. retailers have loyalty programs, some for more than a decade like Kroger, and others with just a year under their belt like Lowe’s. The number of U.S. loyalty program memberships has skyrocketed over the last decade from 97 million in 2000 to 2.09 billion in 2010.
Walgreens debuts Balance Rewards long after many competitors have established loyalty programs, but Holyk sees that as a benefit.
“We thought there was a great opportunity for our late mover advantage and that would really come through in how we designed the program, how we’re able to leverage technology, the data and insights, and really put together a best in class program,” he said.
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