Walgreen’s loyalty program debut intensifies drugstore loyalty battle

Walgreen’s launched its new Balance Rewards loyalty program in more than 7,900 stores nationwide on September 16, instantly giving the nation’s No.1 drugstore chain the most widely available rewards program in the industry. In an introductory press release, SVP and Chief Customer Experience Officer Graham Atkinson hailed it as “one of the largest and most important programs in company history.”

In all of the chain’s Walgreens and Duane Reade stores this week, current members and non-members alike are being stopped at registers and sign-up tables and asked to enlist in Balance Rewards. Walgreen’s marketers have attached a wellness theme to the program, attempting to distinguish it from established CVS and Rite Aid programs by offering 500 points for prescription and immunization purchases in states excluding Arkansas, New Jersey, and New York.

“This is a very big but necessary step for Walgreen’s. CVS has an 11-year head-start, not just in numbers of members, but in knowing who their customers are and harnessing intelligence from it,” says Kelly Hlavinka, managing partner of Colloquy, a loyalty marketing consultancy and research firm. “I predict that Walgreen’s will be evolving their program into the area of wellness to leapfrog the competitors and own that space.”

The company has some serious leaping to do, considering that Rite Aid’s program is called Wellness+, has more than 52 million members, and has no intention of surrendering the healthy high ground. “Since the beginning, Wellness+ has differentiated itself from other loyalty programs because it uniquely combines health and wellness rewards with shopping discounts,” said Rite Aid spokesperson Eric Harkreader in response to the Walgreen’s news. “Wellness+ has and continues to be an important part of Rite Aid’s game plan.”

No. 2 chain CVS, meanwhile, reports more than 70 million active cardholders of its ExtraCare program. Going into the launch this week, Balance Rewards counted a little over a million members signed in via online registrations that began September 6.

Still, it’s clear that Walgreen’s intent is to ultimately claim the wellness positioning among drug chains. Balance Rewards members can earn 10 points for every mile they travel in the Walk With Walgreens program and Atkinson stated that it was part of the company’s strategic vision “to become America’s first choice for health and daily living.”

On the same day that Walgreen’s launched Balance Rewards in stores, CVS announced a “Double Quarterly ExtraBucks Rewards” promotion, awarding 4% back on purchases of eligible products from September 16 through December 15. Asked whether the timing of the offer represented a competitive response to the Walgreen’s launch, CVS spokesperson Erin Pensa responded via email that “Double Rewards” had been planned “to help ExtraCare members earn bigger rewards during a time of the year when many are especially concerned about saving money and sticking to a budget.”

ExtraCare returns 2% of dollars spent on purchases of all non-prescription products to members in the form of quarterly rewards. It also awards $1 for every two scripts filled. ExtraCare is the first program to employ customer segmentation: Members can sign up for Beauty Club, which awards additional points on purchases of cosmetics and beauty accessories.

CVS demonstrated the importance that ExtraCare plays in its marketing plan when it introduced a revamped website this summer focused on delivering special offers to cardholders and helping them manage their savings and rewards.

At Rite Aid, tiered rewards are earned by accumulating points: $1 on front-of-the-store purchases earns one Wellness+ point and a prescription earns 25. Rite Aid is the lone drugstore chain to present a tiered program that delivers bigger savings to members who buy more throughout a calendar year. Loyal shoppers who reach $250 in purchases become Bronze members and get 10% off all Rite Aid store brands for the remainder of the year. Silver members ($500 in spending) get 10% off all products, plus free gifts like magazine subscriptions and gym memberships. Gold members, who spend at least $1,000, get 20% off products store-wide.

UPDATE, September 18: Walgreen’s representatives were unavailable for comment at post time due to launch activities. However, Walgreen’s Divisional VP of Loyalty and Consumer Insights Adam Holyk was able to speak with Direct Marketing News today. “Customer loyalty is healthy at Walgreens” features the Q&A with Holyk.

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