Giving Away Margin for No Good Reason

As I check out at a local mass retail store, the cashier hands me my receipt – along with a piece of thermal paper offering me $1 off the dog food that I just bought. I stuff the thermal paper into my purse, along with the other crunched and rolled up receipts, that are in the ‘depths’ of my purse; where only the brave dare to go. It will never be found again, and never be used.

I have been going to a local large grocery chain store for over 19 years and have been a Loyalty member since they instituted it 6 years ago. Unfortunately, they gave a discount savings at the checkout. I never knew what I was going to save until I paid.

Since both of these are examples of giving margin away – for absolutely no good reason, I was not surprised when the grocery store cancelled their ‘rewards’ program. .

What is wrong with these two programs? There is no definitive reason for the customer to return to the store –and- the retailers might as well throw the dollars they are spending, right into the trash.

The above mentioned grocery store chain is the closest to my home, however, I ceased going there because, after 19 years, they didn’t have a clue who I was! The ‘rewards’ information card had all of my personal info on it, but, they didn’t use it wisely. Instead, they mass marketed me with an on-slaught of discount coupons for baby items. Why? Because I was female. I didn’t matter that my son is grown. This is not only an example of misdirected marketing, but they have lost a customer due to their lack of attention!

Finally, although this is not a loyalty program, some retailers fell prey to the most recent ‘salesy’ idea – that ‘gift cards’ will bring them an increase in margin. Well, it’s just not true. This last holiday was an example of that. Every store I went into – had turnstiles filled with these gift cards. Even the local corner convenience store was stacked with them. They were everywhere. The same electronics companies, restaurants, etc.. No reason for me to buy them at my pharmacy, I was flooded with them at every turn.

For those that think ‘loyalty’ programs are new – we must think back to days gone by of the stamp books. My mother saved those stamps and we eventually got an entire set of small encyclopedias. Since these were pre-internet days, we used them voraciously for our homework and school projects, saving us trips to the library.

The next level of loyalty came along with the punch cards and offers to ‘Buy 12 and get the 13th Free’. The idea was a flop, as the retailers are giving away something that the customer was going to buy anyway. Half the time people lost their punch cards. Another example of ‘giving away margin for no good reason’.

So what, you may ask, is the best philosophy for a loyalty program that not only works – but increases your margins? How can your marketing dollars be spent in the best way?

Here are the proven concepts of a successful loyalty program:

1} ROI; Return on Investment:
A loyalty program must not only pay for itself, but bring a margin increase to your pharmacy.

2} MIA; Missing In Action:
You will lose 25% of your customers each year. That’s 1/4th of your income. Since it costs 5 times as much to bring in a new customer, a high priority is keeping those customers you have. You must have an easy, at-a-glance, 5 minute process to find, analyze and send out an offer to bring these customers and patients back. The mass marketing chains have been using this at an incredible success rate!

3} Automatic Reward Processing:
This is a no-brainer. A good loyalty program should include the function of automatically sending out a personalized e-mail or high quality postcard to the customer with their reward amount on it. This will bring the customer back to the store. Stats indicate that the psychological value of this card will then create an environment where they will spend 2-3 times more than they would on an average visit. You are recognizing and rewarding your best customers….which is the key concept of a good marketing program.

4} Completely Automated Process
POS companies will often tell you that they have a loyalty program. Well, they have a field in their file that can ‘house’ a loyalty number, that is true. But, you, the retailer, must do all of the rest of the work. For those that have tried this themselves – they usually give up. This entails: exporting the data, sorting the data, personally analyzing the data, spitting out a list, printing the postcards, printing the labels, adding stamps, adding the labels, mailing them out.

A successful loyalty program should include a completely automated process, at a discount rate. It should also include the ability to spend only 5-10 minutes per month, selecting any additional marketing campaigns you choose.

5} Cross-Sell/Up-Sell:
If you have a POS system, your sku level data is worth it’s weight in gold. A good loyalty program should also offer the ability to access, analyze generate promotions based on the shopping history of your customers. These are opportunities that should cost very little – but, offer your customers additional buying power. Which customers purchased vitamins but not supplements? What customers bought gift items but not greeting cards?

6} Correct Marketing By Knowing Your Customer:
A ‘smart’ loyalty program should offer you the ability of knowing your customers and marketing the products that they will be interested in. In less than a minute, you should be able to locate by gender, age and purchasing history; then offer a buying opportunity that is customized for them.

7} Saving a Good Customer When Things Go Wrong:
It happens in every retail environment. A customer has an unfortunate experience. You should have the ability of looking up that customer in your loyalty program, designing a specific card to express your concern and offering them the concept that you pride yourself in customer service- with an incentive to come back. 1 postcard mail out ability in less than 5 minutes – with a message that you want to send.

8} No POS? No Problem:
Just because you don’t have a point-of-sale, doesn’t mean you should be penalized by not offering a loyalty program. Your patients go to you because they trust you. You offer the best customer service around, and everyone knows them. Offering a loyalty program with nice rewards, will keep them coming back to you. You should still have the ability of find the MIA’s, generating special marketing promotions and offering just about everything else that the mass marketing chains offer. You want them to have YOUR personalized tag on their keychain!

9} Loyalty should not take up your time:
A successful loyalty program should not take up your time, your staff’s time nor should it require more than a few minutes per month to generate your marketing ideas. Your time is money.

10} Don’t Try To Do It Yourself:
There are many do-it-yourselfers out there. They may have friends or family that know a bit of programming, or they may try to hire a programmer to design a loyalty program for them. Anyone that tries it – usually finds that it takes 1-2 years, a lot more than the initial cost and they are still spending a lot of time and money on implementation. You will have lost your momentum and usually a lot of customers by that point.

11} You Get What You Pay For:
Don’t try to go cheap. This is simple and easy. Whether you have 1 pharmacy or 20 - Your customers will see it and you will get what you pay for. Your loyalty program should reflect the professionalism of your pharmacy. Anything else will cause you to lose customers, end of story.

Bottom Line:
Multiply your annual pharmacy income by 25%.
That is what you are losing each year.

You should have a ‘smart’ loyalty program that will not only pay for itself, but bring a large percentage of those customers back; as well as entice new customers to your pharmacy and increase margins: What is that worth to you?

Today’s patients may appreciate the Customer Service at the Independent Pharmacy, but tomorrow’s customers will be quickly swayed to the service supplied on the internet. It’s easy to get involved in the day to day problems ~ but the savvy Independent Pharmacy has a long term vision that embraces what the future customer will be looking for.

RxLoyalty Genius is a ‘smart’ program – fashioned after the high end style ~ at low end pricing. Offering your patients incredible rewards~ giving you the ability for customer retention! Completely automated, you can offer your patients and customers a professional loyalty program that will bring them back to your pharmacy.

RxWebGenius is designed with a serious investment of time and careful thought ~ to represent your professional Pharmacy. Increase your high margin OTC sales by having an RxWebGenius site with online order fulfillment for your pharmacy.

Call today for a free online demonstration of RxLoyaltyGenius and RxWebGenius!

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Karen Sulprizio,

Client Associate
PharmacistsOnLine
A Living Naturally Co.
ksulprizio@PharmacistsOnLine.com
1-866-312-8324
Pharmacy Demo Site: www.RxGenius.com
Loyalty Genius Demo Site: www.RxLoyaltyGenius.com
Home Site: www.PharmacistsOnLine.com