Healthcare is one of those things that people take for granted — until they don’t. If anything has been learned from the ongoing pandemic and its effect on people, loyalty and commerce, it’s that healthcare is alternately a service, a product, a commodity, and a necessity, depending on need, greed, and sundry other factors.
On the consumer side, it can be a medically necessary purchase or discretionary, with ample ambiguity in between, e.g. probiotics, weight-loss products, sleep aids, analgesics etc. In managing the myriad of concerns that compose healthcare for consumers, what is the touchpoint that comes to mind first? Is it the consumer's primary care physician, insurance company, favorite pharmacy, or a local hospital? Because of the daily transaction nature that is fundamental to pharmacy, we vote for the pharmacy as the primary touchpoint for people seeking to manage all things related to their health and well-being.
Now, during the pandemic, healthcare has become elevated beyond “essential.” But impulse purchases and discretionary spending are taking big hits due to self-quarantines and social distancing. Healthcare loyalty programs can provide a legitimate yet stealthy way to stimulate customers in this difficult time, and we've found both major pharmacy chains and healthcare providers prescribing diligent offers to connect with their customers and build customer loyalty. For retailers, healthcare marketing can tie it all together and when done right, should neatly bridge the need vs. want gap.
US Companies pave a path for healthcare rewards
In the US, CVS, Walgreens, and Rite Aid each have fully functional customer loyalty programs. CVS is listed first because they pioneered customer loyalty in this category. The ExtraCare program offers members to earn 2% back in ExtraBucks Rewards on general purchases with accelerated bonuses and special deals through data driven offers and its ExtraCare Beauty Club. Members can access deals by loading to their ExtraCare card, scanning their card at store kiosks, or waiting until they checkout, with scanned items determining additional discounts. Members need to spend a minimum of $50 in qualifying purchases or otherwise reach a minimum of $1.00 in ExtraBucks® Rewards by the end of an earning period to earn rewards. Earnings are not carried over and members must collect their quarterly ExtraBucks Rewards during the 45-day period following the earnings period. Long chided for longest purchase receipt in known civilization, it is quizzical that a program meant to promote healthy living and productive choices would communicate with its members through paper, lots of paper.
Walgreens launched Balance Rewards following CVS in the market and takes a more digital approach to program communications while offering the equivalent of just 1% back on daily purchases. Members earn 10 points per $1 spent on almost everything in store and online. They can unlock additional savings with paperless coupons, special promotions and members only offers. Ultimately, accumulating 1000 points earns a $1 reward. Additional rewards can be earned when the Beauty Enthusiast program is added to membership. Every qualifying purchase adds up to the $50 spend requirement. Balance Rewards has created a partnership with AARP and, when members link a Balance Rewards account and AARP membership, earn 50 points per dollar spent on Walgreens brand health and wellness products, receive valuable coupons via email each month and earn 1.5x points for participating in "healthy choices" programs. The clearest contrast between ExtraCare and Balance Rewards seems to be Walgreens focus on promoting healthy lifestyles and rewarding members for participation and activity. There are several versions of a 4 week health challenge available and progress can be tracked by self-reporting or connecting a health and fitness device to your account. The gamified approach to living a healthier lifestyle is something to build on.
Rite Aid had a loyalty program in place years ago and became a partner in Plenti, the coalition program emanating from the halls of American Express. After Plenti ceased operation, Rite Aid relaunched with wellness+ Rewards℠, where members can earn one (1) Point for every dollar spent on eligible purchases. Customers identify for credit using their wellness+ card by entering a phone number at the register. Accumulated points earned qualify members for tiers which offer discounts on purchases. Tier qualification is determined based on the number of points accrued by the customers in a given 6-month period (periods are defined as January 1 - June 30, and July 1 - December 31 of each calendar year), with Silver Tier (250 - 499 points) unlocking 10% discount and Gold Tier (500 points and higher) delivering 20%. Points are reset to zero on January 1 and July 1 of each calendar year.
Making customer loyalty efforts more complex for Rite Aid is their acquisition by Walgreens Boots Alliance in 2015. For now, the brands continue to operate separately, but it would not be a surprise to see some merging of the two programs in the future.
Canada finds success with healthcare loyalty
Canada is estimated by many industry observers to have the most well developed and mature customer loyalty market in the world. Shoppers Drug Mart operated a highly sophisticated and effective loyalty program which made great use of collected data to deliver personalized offers to its members. In 2013, Loblaws acquired Shoppers for an announced $12.4 billion and its loyalty program is now merged with the PC Optimum program, the successful program operated by Loblaws.
Using the exigencies of healthcare to build loyalty is a win-win proposition and earlier this year Rexall Pharmacies (owned by McKesson since late 2016) launched Be Well, a principally app driven loyalty program designed to bring customer’s health and wellness management into one place.
Rexall is a leading drugstore operator with a history of innovation and growth, dedicated to caring for Canadians’ health “one person at a time”. Today, Rexall operates over 400 pharmacies across Canada. The Be Well program was launched to serve the needs of its broad customer base and the timing was not deterred by world events, including the pandemic. In addition to managing a sensitive economic period, Rexall shifted its business model for loyalty. Previously, Rexall participated in the Air Miles coalition rewards program and ended that association at the end of April and launched the Be Well program on May 1st.
The change in loyalty business model can be complex for any brand and we asked loyalty expert, Mike Hughes, CEO Exchange Solutions, for insights on this process:
“Both coalition and proprietary loyalty programs are used by retailers to execute their growth vision, especially in Canada. For Rexall Pharmacies, a switch to the proprietary Be Well program enabled Rexall to implement their strategic vision of making health care easier and more rewarding by combining health and wellness with loyalty. Whether in health and wellness, apparel, grocery, convenience or any other category, enterprise retailers need to assess the needs of both the business and their customer’s needs when designing and implementing a loyalty and customer engagement program. Rexall Pharmacies did just that, which led to a successful program launch in the midst of a pandemic in May.”
The program offers a bevy of simple tools, advice, and personalized ways to collect and earn points, add manage and refill prescriptions and take advantage of personalized offers. In addition to pushing prompts for prescription refills and other relevant medical alerts, integration with Apple’s Wallet in IOS enables contactless payments, and Family Sharing, which allows purchases by up to six family members to aggregate, enables points to be earned within the family or group — a handy feature. The app also delivers sales and other promotional offers and provides a health-assessment tool for self-diagnosis.
Be Well’s loyalty program is straightforward and easily understandable; earn 10 points for every $1 spent (25,000 points = $10 redeemable cash value). Digital offers delivered via email or the mobile app are personalized using customer history and spending. These offers can accelerate the path to redemption for members, for example, Be Well recently offered 20,000 points for any spend of $50 or more on “just about anything in the store”. That equates to one big shop in the store getting the member very close to a redemption level in just one visit. The prescription-refill tool is sticky and makes it easier for customers to ensure they don’t run out, with timely notifications. There are also senior and student discounts and a tie-in with CARP, the Canadian equivalent of AARP.
Consumers are seeking more from their pharmacy retailer as they find value in accessing all health information in one place and being able to manage prescriptions as well as products that help them stay health and well. The structure and components of the pharmacy loyalty programs in market today reflect these desires.
We believe the future development of these loyalty programs will provide even more ways for consumers to act on a proactive approach to healthcare, including wellness assessments and making plans for becoming healthier.
