Walgreens Loyalty Program Leaving Many Customers Unrewarded, According to New Poll

Survey’s Results Raise Doubts about Balance Rewards’ Impact on Sales;
Gives Insight into Recapture of Express Scripts Customers.

A new nationwide poll of more than 2,000 Walgreens (NYSE, NASDAQ: WAG) shoppers raises concerns about the effectiveness of the company’s Balance Rewards loyalty program in changing consumer behavior.  Despite Balance Rewards’ impressive membership growth since its September 2012 launch, the poll points to problems with the program’s design that may be limiting customer engagement and participation.

Key findings include:

  • No clear impact on changes in spending.  Among regular Walgreens shoppers, Balance Rewards members are no more likely than non-members to say they have increased their spending at Walgreens.
  • Not meeting members’ demands for savings.  Only 16 percent of members believe they have saved a significant amount of money with the program, and three-quarters of members say that the program’s deals do not fit with items they usually buy.
  • Points redemption and accumulation difficult. Twenty-one percent of members report having redeemed Balance Rewards points.  More than two-thirds (69 percent) of members say it is not easy to earn rewards.
  • Balance Rewards points don’t pay off.  Based on customer-reported estimates of membership spending and points accumulation, the average Balance Rewards member is earning less than one cent for every dollar spent at Walgreens after six months of participation in the program—less than half of what CVS ExtraCare reports its members receive.

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Walgreens Loyalty Program Leaving Many Customers Unrewarded, According to New Poll

Survey’s Results Raise Doubts about Balance Rewards’ Impact on Sales;
Gives Insight into Recapture of Express Scripts Customers.

A new nationwide poll of more than 2,000 Walgreens (NYSE, NASDAQ: WAG) shoppers raises concerns about the effectiveness of the company’s Balance Rewards loyalty program in changing consumer behavior.  Despite Balance Rewards’ impressive membership growth since its September 2012 launch, the poll points to problems with the program’s design that may be limiting customer engagement and participation.

Key findings include:

  • No clear impact on changes in spending.  Among regular Walgreens shoppers, Balance Rewards members are no more likely than non-members to say they have increased their spending at Walgreens.
  • Not meeting members’ demands for savings.  Only 16 percent of members believe they have saved a significant amount of money with the program, and three-quarters of members say that the program’s deals do not fit with items they usually buy.
  • Points redemption and accumulation difficult. Twenty-one percent of members report having redeemed Balance Rewards points.  More than two-thirds (69 percent) of members say it is not easy to earn rewards.
  • Balance Rewards points don’t pay off.  Based on customer-reported estimates of membership spending and points accumulation, the average Balance Rewards member is earning less than one cent for every dollar spent at Walgreens after six months of participation in the program—less than half of what CVS ExtraCare reports its members receive.

The poll also found that only 41 percent of customers who moved a prescription from Walgreens in 2012 due to insurance coverage issues say they have moved the prescription back to Walgreens. One analyst estimates that its dispute with pharmacy benefits manager Express Scripts cost Walgreens roughly 77 million prescriptions in 2012.

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