Walgreens Seeks Lifetime Loyalty through Balance Rewards Program

Mindy Heintskill, Senior Director, Loyalty & Vendor Collaboration, Walgreens said during Thursday’s Loyalty360 webinar, “When Strategy Meets Technology, Consumers Benefit with Walgreens’ Balance Rewards® Loyalty Program,” that the ultimate goal of the program is succinct and clear.

“We’re really looking for the lifetime loyalty of our customers,” she told webinar attendees.

The highly successful Balance Rewards loyalty program, which launched in September 2012, now boasts an eye-opening 103 million members−of which more than 80 million are active participants.

Kathryn Zajak, Vice President, General Manager of Client Services, Epsilon said customers expect certain things from a loyalty program.

“Today, having a real-time experience and allowing your customers to engage in your loyalty program in real time is an expectation,” she said. “Walgreens recognized this trend and structured its successful loyalty program accordingly.”

Heintskill explained that the company has shifted from a transactional focus a relational one, stressing the overall experience, targeting multiple touch points, while maintaining a holistic view of the customer.

“Engagement is key,” Heintskill said, “and real-time is an expectation. It all starts with a vision. Our vision supported the need for a loyalty program at Walgreens.”

Heintskill listed the reasons for a loyalty program:

We can treat and celebrate our best customers better

We can drive significant engagement with all customers

We can learn more about our customers to better anticipate their needs

We can support the Operational Excellence agenda in each of
our stores

Heintskill explained why the Balance Rewards program targets Walgreens’ best customers.

“Points allowed us to take a currency and apply it to people who shopped at our stores regularly,” she explained. “We can be very targeted and the program allows for 1-to-1 marketing. We give them relevant offers and valuable information. It’s more about customer-centric retailing. The more relevant we are to our customers, the more they’ll come back.”

Why is a loyalty program important?

Top 20% of customers generates 80% of your sales

Opportunity to retain customers

Inform business decisions

Pricing

Assortment

Product development

Store format; Layout; Location

Know more about our customers to increase personalized service quickly and with extraordinary care

Balance®Rewards delivers value to Walgreens’ best customers across several areas:

Rewarding best customers for making Walgreens their health and daily living destination

Daily living rewards

Pharmacy rewards 500 points for every prescription filled

Balance Rewards for healthy choices

Collaboration is critical to a successful loyalty program, she said.

“The pilot programs were helpful, for sure because they enabled us to build partnerships with IT and store operators,” Heintskill said. “IT knew line by line and row by row what was needed. We had a great connection with our store operators.”

The Balance Rewards loyalty program impacts all of Walgreens’ 240,000-plus team members. It’s the first program of its kind for Walgreens. Team members and customers can earn and redeem points on purchase in store, at the pharmacy, and online.

“We keep it simple,” Heintskill explained. “All enrollments have been paperless so memberships are processed immediately. We wanted to make sure we were multichannel.”

Kelly Smolinski, IT Senior Director of Customer Systems, Walgreens said the Balance Rewards program eclipsed the 100 million-member mark after 17 months.

“We have integration across 9,000 locations and delivery in real time 24/7,” she said. “The success of our program and numbers enrolled was considerably higher than we initially forecast. It was a great problem to have, just not one we had foreseen.”

Smolinski said it was critical that a correct and proper infrastructure was firmly entrenched before the program launched.

“We established a robust governance structure to help ensure collaboration across key stakeholder groups,” she said. “It was very important we had this infrastructure set up. Having a brand new POS system was absolutely critical to do paperless enrollments.”

Each stakeholder group impacted by the program was represented on committees, Smolinski explained. Roles and responsibilities were defined within each committee, which ultimately defined escalation and the approval
process.

The infrastructure setup helped to drive overall ownership, alignment and stakeholder engagement and increased two-way communication. The infrastructure includes an Executive Committee, a Steering Committee, an Operating Committee, and a Loyalty Project Team.

Walgreens’ attention to this area was a critical piece to finalizing the customer value proposition of Balance Rewards and successfully meeting a very aggressive launch timeline in 2012.

“We were gathering information during the pilot programs,” Smolinski said.

Walgreens had about 1.5 million members in three pilot programs that weren’t fully integrated in the system.

Technology underpins the Walgreens infrastructure through strategy, analytics, campaign management, reporting, data, and channels. In 2011, Walgreens embarked on a journey to assess the viability of a loyalty platform that would allow it to leverage data and technology to better engage consumers while reminding them on a personal level to take care of their health.

Smolinski listed the challenges to the loyalty program:

Stay true to the vision and strategy

Prioritization of opportunities

Investment

“We have engagement,” she said. “Eighty million members are engaged and we’re getting insights into what they’re doing. We actually encountered many challenges along the way, but with our collaborative cadence we set up and our executive buy-in, we’ve been able to be successful.”

Smolinski offered the following key points of advice regarding loyalty programs:

Remember, it’s a marathon, not a sprint

Get executive buy-in

Integrate teams

Communication is key

“We knew and continue to know it’s a marathon, the never-ending marathon of ideas to keep re-invigorating the program,” she said. “You can never over-communicate. Communicate, communicate, and then communicate some more.”

Heintskill said to use customer insights to inform every decision made in the store.

“We enabled the organization to really look at customer data to make better decisions,” she said. “A loyalty program makes data much cleaner and better.”

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