COVID-19 has shaken the globe to its core. Every last segment of the business world has been affected by the epidemic, and customer retention tools, such as loyalty programs, play a vital role in helping companies re-emerge after the crisis. On the other hand, pharmacies and drugstores proved to be quite resilient during the crisis, so the challenge they face is twofold: find a way to innovate, and keep their rapidly growing customer base loyal. Pharmacy loyalty programs will be essential for pharmacy chains and drugstores intending to retain both old and new customers, as well as for encouraging customers to fill their basket with a wide variety of products, not just medicine.
What Are Pharmacy and Drugstore Loyalty Programs?
Drugstore and pharmacy loyalty programs are customer retention (and sometimes acquisition) tools that cater to an audience with high purchase frequency. In a highly crowded market that gives customers plenty of options to fill their prescriptions and purchase health-related products — the latter including online webshops as well — drugstore and pharmacy loyalty programs aim to give buyers a reason to be faithful to a particular brand.
Loyalty and brand advocacy are particularly important in this vertical, considering that the second-largest customer segment — that consists of roughly 35% of the total customer base — are retirees and recovering patients, who not only tend to make their significantly high-value purchases at the same store, but also contribute the most to over-the-counter medicine sales. Therefore, retaining this segment using a loyalty program should be the utmost priority for all pharmacies.
Pharmacy loyalty programs are also unique in the sense that they need to balance two distinct customer groups: the ones who are price-sensitive, and those who seek convenience. This means that on the one hand, the reward system should provide some form of incentive to convince buyers that spending money at the store either helps them save money through discounts, or, grants them additional value through free merchandise.
“COVID-19 is creating a ‘new normal’ – a change in consumer behaviour because people are getting used to engaging more with phone, digital and online channels. While COVID-19 has been the disruptor, shopping behaviour was already heading more in this direction. COVID-19 has accelerated and amplified this change –altering the way consumers engage with pharmacy. It’s important to know that things won’t just ‘go back to normal’ but integrating old and new experiences as people have become used to engaging with retail and healthcare differently.
In uncertain times and with disruption at our doorstep, consumer loyalty in pharmacy is more important than ever. It’s about a laser-focus on the customer, developing lasting relationships and cultivating long-term loyalty. This is key to surviving through change and beyond. We need to know how to connect with each and every customer and offer real value. Part of this is understanding how to champion the pharmacy’s loyalty program – presenting customers with the opportunity to access personalised information, offers and rewards.”
Channel Strategy Manager at Sigma Healthcare
On the other hand, drugstore loyalty programs need to reinforce convenience in a number of ways. For instance, managing the point collection and reward redemption should be quick, seamless,and still possible even if the customer forgot their card at home. Moreover, the reward program is recommended to engage customers even if they aren’t in the buying cycle in order to make members feel appreciated.
Drugstores are also the home of a more casual audience, who are interested in a wide range of goods, such as baby care products and healthcare items. Loyalty is just as important here in addition to the ability to promote OTC (over-the-counter) and HBA (health-and-beauty-aid) items.
Fundamentally I believe that loyalty programs are an absolutely critical tool for brands to maintain and build relationships with their members and customers. During Covid-19, brands’ primary role should be to help members and society, and to maintain and build appropriate brand engagement.
After Covid-19, loyalty programs should be a core part of a brand’s “rebuild and rethink” strategy –brands should be using this time to retain and engage existing members and customers, to identify and build relationships with new customers, and to discover new roles for your loyalty strategy as part of your marketing mix. Every single loyalty program will need a rethink – Who is your target membership now? What are you trying to achieve now for your brand and business? What should your new and evolved proposition be? I’m excited to see how loyalty programs evolve and what new innovations will emerge as a result.
MD & Head of Strategy, Mando-Connect
The Biggest Customer Retention Challenges for Pharmacies and Drugstores
Increasing customer lifetime value is undoubtedly an important KPI for any pharmacy chain or drugstore, but it is important to understand that there are many more industry-specific challenges a next-gen loyalty program should be able to solve.
- Even though pharmacies are resistant to economic downturns, it’s generally difficult to stand out from the competition. This is why a loyalty program is necessary to elevate the brand image by generating positive word-of-mouth and supporting the brand’s marketing communication.
- A pharmacy loyalty program should also have features geared toward incentivizing members to expand their basket with OTC and HBA items through double point campaigns and other targeted events.
- It’s worth highlighting that loyalty programs are potent marketing tools to make customers feel valued and to give back to the community. Furthermore, a reward system is a great asset to encourage customers to develop healthier habits and to educate them about certain illnesses or treatments.
- Many pharmacy brands already have some form of loyalty solution, but it’s often localized or unique to a certain store. Unifying the loyalty experience and allowing participants to collect and redeem rewards at any store is yet another feat a 21st-century pharmacy loyalty program needs to be able to achieve.
Best Loyalty Program Features for Pharmacies and Drugstores
With the goals clearly defined, let’s take a look at what kinds of features pharmacy loyalty programs have to offer.
A balanced ruleset for the program
While planning a loyalty program, it’s vital to think ahead and consider the point-to-cash ratio. If you’re too strict, and members have to work (or spend) too much for their rewards, then they’ll be discouraged from participating. Likewise, being overly generous would mean you’re using discounts or gifts on customers who would stick by you for less. Still, the rule of thumb is to start a bit more strict and loosen the redemption rate a little further down the road, because the other way around would lead to a negative experience.
Digital loyalty cards
Unlike physical loyalty cards — something which people tend to forget at home — digital membership cards are available through the user’s smartphone. Other than being always at the customer’s side, digital cards allow you to connect the online and offline customer profiles to get a holistic view of their shopping habits. For an even more wholesome experience, consider implementing a Mobile Wallet solution that also holds their loyalty coupons.
A comprehensive membership page
The online membership page is the main hub for the program. It is where participants can review the rules, access their reward history, and redeem points for online coupons. The page should be accessible and easy to navigate. If you’re focusing on omnichannel and offer a digital loyalty card, this section should also showcase a QR code or ID that staff can scan with a POS device in order to identify the person while in the store.
The Most Fitting Loyalty Program Types for Pharmacies and Drugstores
Earn & Burn loyalty programs
The most straightforward option, earn & burn programs are all about collecting points with purchases and other actions, which can be cashed in for various rewards. For pharmacies and drugstores, points can be offered for making a purchase, filling a prescription, getting vaccinated in the store, or linking their prescription to their profile. Also,consider introducing a point expiration date, so people don’t sit on their points
Tiered loyalty programs
In the case of tiers, members accumulate their points to rise in the ranks and metaphorically ‘climb the ladder’. Higher tiers are associated with more alluring benefits, which in turn incentivizes customers to keep returning. Tiers give members a sense of progression, coupled with the fact that once a person reaches a higher tier, they’re less likely to switch to another pharmacy because it would mean giving up their hard-earned benefits.
Unlike tiers and earn & burn, perks programs don’t use points at all. Instead, all members are entitled to all the available benefits after finishing the enrollment. By doing so, perks programs focus more on community building, boosting enrollment, and fostering a sense of gratitude among members. This type of program is also the easiest to run.
A Fulfilling Reward System
A diverse reward catalog
The loyalty program would only work if the benefits are attractive enough to entice customers to strive for them. Luckily, pharmacies and drugstores have plenty of options to choose from: standard discounts, members-only coupons, free delivery on online orders, and even free product samples to introduce customers to OTC and HBA products.
With an offer management module, a wide range of reward campaigns can be added to the pharmacy loyalty program. This feature gives you the ability to set up an offer that grants bonus points for a selected group of product categories or to double the reward for 90-day prescriptions. In short, offer management is the key to pushing product discovery and to promoting a healthy lifestyle.
Loyalty Communities, like “Baby Clubs”
Loyalty communities are similar to tiers, with the exception that members need to fulfill certain requirements in order to enter. In exchange, membership won’t expire that easily. Think about them as insider groups that can be dedicated to a certain audience, such as 65+ customers or parents of young children. Those who fulfill the criteria can apply to the group, and once they’re in, they receive access to benefits such as discounts, educational content, members-only sales, etc.
Incentivizing non-transactional behavior
Encouraging a healthy lifestyle
If promoting a healthy lifestyle is high on your agenda, there are ways a pharmacy loyalty program can achieve it. For example, you can ask members to exercise more by tracking their progress through Fitbit. Once they connect their device to the program, bonus points can be awarded once a member hits certain milestones.
Engaging customers outside of the buying cycle
Rewarding useful customer actions that aren’t tied directly to transactions go a long way as they subtly change customer behavior, driving other important KPIs. Offering badges and challenges for weekly logins would subtly push members to log into their profile frequently to check the relevant offers. The same can be done for newsletter subscriptions to ensure participants won’t miss the latest news.
As for educating your customers, the best tactic is to set up the content you wish to spread among customers, and then grant a set amount of points each time someone watches the video or reads the article. One example of this content could be to give advice to newfound parents about dieting and babycare products.
Also to prevent cheating, create a quiz at the end to ensure participants properly understood the content.
Social media contests
The effect of loyalty programs extends to social media as well. Other than giving points for linking their Facebook, Twitter and Instagram accounts, members can earn rewards for participating in social media contests, such as a hashtag contest or an Instagram contest. These features undoubtedly lead to positive word-of-mouth and can even help discover brand advocates.
7 Inspiring Pharmacy and Drugstore Loyalty Programs
1. ExtraCare Rewards Program – CVS Pharmacy
ExtraCare is an American retail and health company owned by CVS Health, one of the largest pharmacy chains in the United States. The company’s loyalty program has a strong focus on the mobile app, which doubles as a digital loyalty card.
- $5 worth of rewards for filling 10 prescriptions
- Once a customer signs up, they receive a welcome discount they can use on other CVS purchases
- Extrabucks is a type of currency that can be used towards other CVS purchases
- The system tracks purchasing habits and sends personalized and relevant coupons to members
- The app alerts customers when there are markdowns on products they regularly purchase
2. Wellness + Rewards – Rite Aid
A prominent drugstore chain in the US, Rite Aid has over 2,400 stores around the country. As for the loyalty program, it has become a cornerstone for the company, with 55% of transactions at Rite Aid now involving a Wellness+ card.
- Customers earn 1 point for every 1 dollar spent on eligible purchases they make
- 25 points for every prescription filled
- There are three tiers in total: the bronze rank provides weekly price ads, the silver tier grants 10% off all in-store purchases, while gold rank makes members eligible for 20% off on all store purchases
3. Balance Rewards – Walgreens
Walgreens operates as the second largest pharmacy chain in the US behind CVS Health. The program, Balance Rewards, is accessible on the app, and additionally members can use their phone number to access their card while in the store.
- Members earn 10 Balance Rewards points for every 1 dollar they spend on almost all products and services
- Every 30-day prescription filled is worth 100 points
- Every 1000 points grants $1 off the next purchase
- Not using the program makes a member inactive and they lose all their points
4. Boots – Advantage Card
Health and beauty retailer and pharmacy chain Boots is the leading pharmacy chain in the UK. The company has an earn & burn style program, with a heavy emphasis on mobile apps and personalized offers.
- Customers earn 4 points for each £1 they spend. Points can be used directly to pay for products
- Students who purchase using a student ID automatically receive a 10% discount
- Two insider groups, parents and customers aged 60+, receive additional benefits
- The membership account is constantly refreshed with targeted offers, e.g. members of the Parents Club receive exclusive deals
5. Watsons Membership
Watsons is a health care and beauty care chain store in Asia with 7,600 stores and 1,500 pharmacies in 13 countries. One huge advantage is that the loyalty program is not country specific,, meaning that the same membership card can be used in any of the participant countries.
- The system uses both physical and eCards
- Spending 29 HKD equals 1 point
- Watsons runs multiple offer campaigns that provide double points for a limited time, or grant free products on certain purchases, but these are restricted to your home locations
- Members also earn 5-10 more points during their birthday month
6. Flexi Rewards – MedPlus Mart
MedPlus Mart is an Indian pharmacy retailer, available in multiple countries and over 1500 locations. What makes Flexi Rewards noteworthy among the pharmacy loyalty programs is that after a purchase, members can choose between a flat discount or the loyalty points, which can be accumulated for a free product.
- Points can only be spent on free gifts, or members can go for a 10% direct cash discount at the checkout
- Ordering online grants 15% discount
- The points remain valid for 2 years
7. Rossmann App – Rossmann
Rossmann is Germany’s second-largest drugstore chain in Europe. The company offers a perks program for its members, meaning that everyone receives access to the discounts, and there’s no point collection.
- The members-only coupons are only accessible through the mobile app
- There’s an insider group for parents who have young children
- There are regular competitions customers can enter in hopes of winning a grand prize
The Time to Start Planning Is Now
If you wish to retain your customers as a pharmacy chain or drugstore, then you need to act quickly. For more information on running a successful loyalty program, check out our ebook. We also love sharing our knowledge, so feel free to book a demo and we’ll show how our loyalty platform can work for your business.