US: Walgreens CX combines with loyalty to build relationships

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By: RickFerguson |

Posted on July 28, 2017

In the US, pharmacy retailer Walgreens is well known for its five-year-old Balance Rewards program. With 150 million registered members and 85 million active members, the program delivers a wealth of data to the retailer to drive its relationship marketing efforts. A new Forbes piece details the retailer's efforts at leveraging technology to improve and personalize the in-store customer experience - but it's the at the intersection of CX and loyalty marketing that Walgreens really shines in its ability to drive customer relationships.
By Rick Ferguson

The Forbes piece
, from contributor Shep Hyken, focuses largely on how Walgreens leverages traditional CX channels such as its mobile app to drive in-store customer engagement.

"70 percent of Walgreens customers engage through mobile. Half of digital sales come from mobile and more than 50 percent of app users are using the app while in the store. The payoff is huge. Customers who engage the app in-store and online are 3½ times more valuable. And, when you add mobile to the mix (in-store + online + mobile), they become six times more valuable."

Hyken focuses his profile on the ways in which Walgreens seeks to deliver a consistent and frictionless customer experience across both digital and physical channels. What's most interesting, however, are the women driving this strategy: Walgreens' Vice President Loyalty and Personalized Marketing Mindy Heintskill and Global Director of Brand Strategy and Loyalty Marketing Deepika Pandey. That Walgreens has placed both CX and loyalty marketing under the auspices of these executives tells you the importance they place on the intersection of CX and loyalty.

Hyken highlights such frictionless CX features as Walgreens' "Refill by Scan" app that allows customers to refill prescriptions by smartphone camera in 17 seconds. The retailer has also been an early adopter of mobile payments, integrating both Android Pay and Apple Pay into its loyalty program; users of either platform can now earn and redeem Balance Rewards via their payment apps. By linking loyalty with mobile payments, Walgreens ensures that its loyalty program and the mobile experience it provides are overtly connected in the minds of its most valuable customers.

It is in Walgreens’ use of loyalty program member data, as well as their sound customer strategy, that really drives home the link between CX and loyalty. A DM News profile highlights the ways that Walgreens' leverages data both for personalization and to reward and recognize high-value customer segments. 

"Some of Walgreens' reward members are more valuable than others. By using customer data analysis solution emnos, Walgreens can identify these high-value customers and then leverage personalization to communicate with them in a relevant way, ultimately driving loyalty. Indeed, Walgreens targets members at each stage of their customer journey, such as through its acquisition, win-back, and loyalty and retention campaigns."

"'[Personalization is] really the future of Balanced Rewards,' Mindy Heintskill, VP of loyalty and personalized marketing at Walgreens, said during a panel discussion moderated by emnos' managing director Ron Orgiefsky at Retail's Big Show in New York."

“Lisa Zhao, Walgreens' director of supplier direct marketing, shared the stage with Heintskill and acknowledged that the level of personalization can vary per communication. One way Walgreens personalizes its communications is by purchase data. For instance, Zhao said customers might receive direct mail offers for products they've already bought or are likely to buy based on purchases in similar categories... Walgreens can target members based on points earned, time spent in program, nearest store location, and more."

And a Total Retail profile from earlier this year reveals how Walgreens deploys classic test-and-control experiments to determine which loyalty offers are truly driving incremental behavior.

“In order to identify the optimal mix of messaging for its Balance Rewards members, including timing, channel (email, direct mail, programmatic, coupons at the point of sale), creative, offer type, etc., Walgreens uses holdout tests to see which messages perform best. A portion of loyalty program members are designated as a control group, while other members get the test campaign. A successful test for Walgreens is one in which the test segment generates incremental sales growth or incremental engagement. ‘We have a continuous culture of improvement,’ [Lisa Zhao, senior manager, supplier direct marketing] said. ‘Scale and improve through a test-and-learn approach — channels, offer types, creative, format/vehicles, etc. Identify what works, what doesn’t. This influences future campaigns.’”

This scientific approach to loyalty marketing is loyalty best practice at work – and a terrific example for other retailers to follow. Walgreens has also begun to leverage the power of their customer loyalty network by fostering sub-communities of members: Last October, the retailer launched Beauty Enthusiast, a beauty club within its Balance Rewards loyalty program that offers members additional rewards on beauty and personal care items, as well as exclusive promotions and coupons, as special beauty offers, new product information and expert tips throughout the year.

That Walgreen's has grown its Balance Reward program to 85 million active members demonstrates that the retailer understands the key to leveraging CX to build loyal relationships: Not solely by providing a seamless digital experience to every Walgreens' customer, but linking that investment in CX to a sound loyalty marketing strategy that rewards and recognizes the retailers' best customers. This linkage ensures that your CX investment will work as hard as it can to drive profitable, long-term customer relationships. It's the future of loyalty, and Walgreens is demonstrating that future today.

Rick Ferguson is Editor in Chief of the Wise Marketer Group.