Wednesday, December 05, 2012 2:03 pm
4 questions to ask about drugstore loyalty cards
By TOM MURPHYAP Business Writer
All the national drugstore chains now offer a free customer loyalty program loaded with incentives to use their cards. Walgreen Co., the nation's largest drugstore chain, became the latest when it unveiled its Balance Rewards program in September.
Experts say frequent shoppers should consider enrolling but also should be aware that they're sacrificing some privacy. Here are four questions to consider before a store clerk asks you to sign up during your next visit.
1. Why would I want another card cluttering my key ring?
For starters, there's a chance to save money or build up points toward a future purchase.
Walgreen's Balance Rewards program gives customer several ways to add points through both stores and online purchases. Shoppers receive a $5 award when they accrue 5,000 points. The reward climbs to $50 for 40,000 points.
Rite Aid gives customers a 10-percent discount on store-brand products once they've built up 250 points through that company's Wellness Plus program. That climbs to a 20-percent discount for non-prescription purchases at 1,000 points.
CVS offers through its ExtraCare program 2 percent back on non-prescription purchases and a dollar reward for every two prescriptions purchased.
These programs resemble airline frequent flyer benefits, said Lisa Gill, prescription drugs editor for Consumer Reports.
"If you're looking to save money, this is absolutely one thing to consider," she said.
2. What else do these programs provide?
These loyalty programs offer layers of benefits, with some straying beyond the drugstore's walls to keep you interested. Balance Reward members can earn 10 points for every mile walked thought a "Walk with Walgreens" program.
Rite Aid will cover a two-week trial membership and half the sign-up fee for a Curves membership for Wellness Plus members who accumulate 500 points. Curves is a fitness center chain for women. The drugstore chain also offers screenings or a health magazine subscription for customers who reach that level.
Some companies also offer around-the-clock access to a pharmacist online or through toll-free numbers, and they may provide discounts on treatments for specific conditions like diabetes.
3. What are the drawbacks?
These cards have some limitations. Customers cannot earn points when paying for prescriptions in some states or if they have coverage through government-funded programs like Medicare or Medicaid. Pharmacists are generally experts in their company's programs, so customers should ask whether they can use loyalty cards when they pay for a prescription.
Some products, such as cigarettes, also are excluded from these programs.
These cards aim to encourage customers to visit more frequently, and those visits can add up. Drugstores are generally more expensive places to shop compared to grocery stores or big retailers like Target, said Jeff Jonas, an analyst who covers the industry for Gabelli & Co.
They can be competitive on items such as baby formula or diapers and convenient if you just need a couple things. But the corner drugstore might not be the best option for the bulk of your weekly groceries.
Customers who sign up for these loyalty cards sacrifice some privacy. The cards give companies a record of your buying habits and shopping patterns. If you have a sensitive purchase for which you'd rather not receive a follow-up marketing e-mail, then don't use your loyalty card.
"Just remember, these are voluntary, you don't have to do these, you can still shop at stores without being part of the loyalty program," Gill of Consumer Reports said.
CVS, Walgreen and Rite Aid all say that they do not sell the data they collect from their loyalty program members.
4. What do the companies get out of all of this?
The cards give companies loads of information to help them drive business to their stores, stock shelves and tailor marketing.
Jonas, an ExtraCare member, receives weekly emails from CVS offering weekend deals. That's a slower time for drugstores because most customers visit during the week to fill a prescription after seeing their doctor.
ExtraCare data help CVS executives figure out where to place items in its stores and what items to offer, said Rob Price, the company's chief marketing officer. For instance, if the company sees that its regular customers are buying several bottles of a shampoo at one size, it might start offering a bigger bottle.
CVS has years of data from its loyalty program. It can tell not only what customers are buying, but which ones like sales that feature a percentage off the price and which want deals that advertise the dollar-value discount, Price said.
These loyalty cards also help companies figure out what deals you may like. If you buy a particular nutritional supplement at a store, it may e-mail you a discount offer or promote a sale on a different supplement.
"It's really an awful lot cheaper for them to basically advertise by sending you an email rather than running a commercial or printing up a circular or putting something in the newspaper," Jonas said.