Here’s how to retain consumers gained during COVID

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One of the most positive stories to come out of the pandemic is the pivotal role that retail pharmacies played in the vaccination effort and how it helped the country gain

Steven Robins

control over the spread of COVID 19. While chain drug had already contributed to the response effort before the vaccinations with COVID-19 testing, drug chains ultimately became the most convenient locations for people all over the country to get their shots. Through the first half of 2021, leading chains that have released data, including CVS, Walgreens, Rite Aid, and Kroger, administered more than 50 million vaccine doses.

In most cases, chains added scheduling capabilities to their apps and websites and, as a result, added millions of names to their CRM platforms and loyalty programs. Further, as consumers got vaccinated in-store, they were quite literally a captive audience with little to do other than browse the merchandise for a few minutes while they felt the relief of getting a vaccine. This resulted in a material enough contribution to chains’ financial performance that several of the market leaders commented on the economic tailwinds the vaccinations provided in their latest earnings releases.

From a strategic perspective, my partners and I at the New England Consulting Group know the increased user base could serve as a catalyst for all of the chains, while several of them are investing in the expansion of health and wellness services to better position themselves as primary care, health management sites.

But maintaining the momentum and retaining most of these consumers will not be easy. We already see some segments and categories quickly returning to pre-pandemic levels as consumers transition back into old habits. Further, across our practice areas at the NECG, we are working with clients who have realized that many of their new consumers require different narratives and a new context for their brands to maintain the top-of-mind saliency they have gained.

While a fully developed retention strategy requires significant planning, we offer the following three short-term actions to strengthen the retention frameworks you have in place:

  • Refresh your segmentation immediately — In a world where most retailers are well on the road to “digital transformation” (a phrase used only slightly less frequently than “you’re on mute”), you probably already have a customer segmentation. It likely combines demographics, buying rates, anchor needs and psychographics presented as series of user groups. Unfortunately, most segmentations are biased towards the past, since quantifying the segments relies on existing data, even when looking at emerging segments. This approach can work where there are not significant trend changes or changes to your chain’s penetration. In this case, however, you have groups of new or infrequent users who considered your store to fill a specific need. Some of these may be consistent with existing segments, but many will have different journeys that need to be accommodated if you hope to retain them and increase the share of requirements you fulfill.

A report from CHPA and IRI published in June, “The Evolution of Self-Care,” points out that the rapid acceleration of self-care trends around health and wellness drove unprecedented growth across CPG retail. Health and wellness achieved full-year 2020 growth of 16.6% and exceeded total store growth by nearly one-third. According to the same publication, these consumers are highly motivated. They are looking to manage multiple health and wellness goals (the average is 6.6) across various retail categories carried in the Drug channel.

  • Add Emotional Intelligence to your Artificial Intelligence — One of the many complications in retaining buyers attracted during the pandemic is that their purchase behaviors are likely atypical of their ongoing needs after the crisis. This inconsistency can disrupt the loyalty program, AI algorithms that drive the messaging and promotional work flows to increase buyer engagement. Unfortunately, unlike shoppers with a long and well-characterized pre-COVID history, these essential newer buyers may be getting messaging and offers that are of little interest, or worse, unwanted.

Just as with segmentation, it is important to balance your understanding of these consumers’ buying patterns with rich, qualitative insights. The good news is that, along with related categories like telemedicine and video meetings, virtual marketing research tools have improved during the pandemic. It is now fast and easy to spend time with consumers virtually in multiple geographies across consumer segments. Integrating human emotional intelligence with artificial intelligence has never been more important to getting ahead of consumers’ behavior shifts and their expectations of retail post-pandemic. If you have not done this already, you are late. As people return to offices and restaurants, their traffic patterns will change, potentially reversing some penetration gains at chain drug stores.

  • Remove any remaining barriers to a frictionless omnichannel experience — Just as chain drug stores benefitted from essential status during the pandemic, they also benefitted from the surging demand for home delivery and the supply shortages struggles experienced early on by the pure-play e-commerce sites consumers began to look to for alternatives. As a result, numerous consumers are shopping both in-store and through the e-commerce options of loyalty apps and websites. Further, bolstered by prescription ordering, chain drug consumers have become more adept at pre-ordering and pickup and delivery, and in-store shopping.

However, to maintain this virtuous circle, chains need to make sure that customer service delivers on expectations across and between the channels. A study published by the research firm HIVER found that 81% of the 1,000 shoppers surveyed expected customer service to be more empathetic, more responsive, or both, post-pandemic. A large part of succeeding was defined as a timely resolution resolved in the preferred communication format of that customer. We would add, in the channel they want it resolved in.

By way of example, my wife ordered several items through a leading drug chain’s app, and when the box arrived, it was damaged, and one of the skin care items had leaked over some of the others. So instead of returning the items via mail, my wife went to the local store to return them. When she got home, she proceeded to tell me that the store not only took the products back but that the clerk walked the aisles and brought her new replacement products. Frictionless, and a great example of what it will take to retain consumers in the post-pandemic retail world.

I hope to hear many more stories like that in the days to come.

Steven Robins is managing partner/principal at the New England Consulting Group.


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