There are many ways to keep customers loyal. Some shoppers are driven by low prices, while others are looking for an emotional connection to their store. Still others require constant incentives to cement their loyalty. The bottom line is that consumers are all different, and they respond differently to offers and promotions.

Dan Dmochowski

Post-pandemic, consumer loyalty shifts are stronger than ever before. The last 18 months have only strengthened these predispositions. That means if drug store retailers want to maintain their strong market position, they need to anticipate consumer needs and provide the options their customers are looking for.

Not unlike other channels of trade, loyalty programs in the retail drug channel are designed to retain customers and cater to an audience of profitable shoppers. They are used to differentiating retail offerings that are otherwise quite similar — all drug stores encourage shoppers to fill their prescriptions and buy health, wellness and other product categories consistently at their stores.

Historically, retailers have tried just about every possible incentive to create repeat customers and capture more wallet share across their markets. Since Coca-Cola issued the first coupon in the 1880s, retailers have developed programs to increase shopper loyalty and differentiate themselves from the competition. As technology developed, paper coupons became digital, offers became personalized, and loyalty marketing programs, now ubiquitous, proliferated but evolved in very similar ways.

For example, over the past 20 years, the primary tool used for shopper loyalty was discounts via a retailer-branded card, key tag or other identifier at the checkout. These discounts could be redeemed at the store and, in some cases, at local gas stations. They were very straightforward: “Shop here most often and we’ll reward you with cents off products and fuel.”

However, changing consumer behaviors — even before COVID — soon made fuel discounts less impactful. Discounts on purchases were table stakes and non-differentiated. They were not really creating much value for the retailer, and it didn’t take long for shoppers to grow restless and demand more value from loyalty programs. Simply put, shoppers were looking for flexibility and choice. One size does not fit all, not in today’s market. Shoppers started looking for other types of rewards to meet their social and economic interests and needs.

Different factors began playing a role in this new demand for choice, like the increasing diversity of American consumers, as well as a generational change. For example, the arrival of Millennials (who began turning 40 this year) as a core segment was a paradigm shift for loyalty programs. Similarly, baby boomers, a segment commonly motivated primarily by money, were also incorporating non-financial factors into their customer journeys, adding a new pressure for drug store retailers.

Then rewards programs hit a new, unforeseen turning point — one spurred by COVID. Consumers were driving far less, and gas was less important. Shoppers’ use of digital increased and, as the pandemic receded, consumers became captivated by new experiences. To a great degree, people were also more interested in community both during and post-pandemic, so rewards that provided donations to charities, helped local schools and assisted with paying down student loans all became top of mind.

Clearly, the pandemic — and consumers’ abrupt change in shopping behavior — prompted drug retailers to reexamine what tactics were effectively driving the loyalty of their most profitable customers. As a result, retailers began shifting away from basic price reductions and discounts and toward rewards that shoppers will find most compelling.

For example, innovative companies including Walgreens, CVS, Giant Foods, Price Chopper and several other retailers recently moved beyond basic discounts on products and fuel, and started featuring new ways of rewarding shoppers for their loyalty. Some retailers have even changed the names of their programs. In some cases, the renaming of the rewards program can be telling: Giant Gas Extra Rewards recently changed to Giant Choice Rewards, for instance.

Rewards program adjustments are happening both on the earning and redemption sides of the loyalty equation, and retailers are changing how customers earn points and what they can be redeemed for. For example, myWalgreens members can now earn bonus Walgreens Cash rewards for reaching health goals; get daily personalized recommendations for health/wellness, and donate their Walgreens Cash to eligible charities. CVS’ ExtraCare Rewards program is adding new benefits, such as rewarding ExtraBucks members with $3 during their birth month. An updated app experience also enables members to view, track and send all earnings and personalized deals to their ExtraCare cards.

Price Chopper/Market 32, which operates supermarkets and pharmacies in the Northeast, recently deployed a diversified loyalty platform that adds a mobile-based personalized customer experience to a range of physical, digital and experiential rewards. Its expanded AdvantEdge rewards program now enables customers to use their earned rewards to support local schools, pay down student loans, donate to charities, purchase specialty kitchen products, and even enter periodic shopping sprees and vacation sweepstakes.

Successfully adapting to new consumer shopping dynamics requires loyalty marketers to determine what kinds of rewards customers are going to be receptive to and use those incentives to grow wallet share. Technology now provides near-real time analytics capabilities so retailers can quickly assess the efficacy of rewards. This insight allows them to amplify incentives that deliver the best value to profitable customers and adjust those that aren’t hitting predetermined goals.

For a rewards program to be successful in the coming years, executives at retail drug stores need to know what incentives their shoppers are going to positively react to, and understand that not all customers are going to want the same things at the same time. Using data science and a digital platform that offers a multitude of rewards options is the best way to encourage customer participation and loyalty.

Dan Dmochowski is president of North America for tcc global, an international marketing company specializing in creating loyalty platforms and campaigns. He can be reached at [email protected].