Mindy Heintskill, Senior Director, Loyalty & Vendor Collaboration, Walgreens participated in an intriguing Q&A with Loyalty360 in advance of a session she will help deliver at the 8th annual Loyalty Expo, presented by Loyalty360 – The Loyalty Marketers’ Association. The event will be held April 27-29, 2015, at the Loews Royal Pacific Resort at Universal Orlando in Orlando, Florida.

Heintskill, along with Lisa Zhao, Sr. Manager of Loyalty and Vendor Collaboration, Walgreens, and David Hess, Head of Analytics, emnos, will present a session titled, “Driving Customer Engagement and Sales Growth through Personalized Marketing.”

Q: Why did Walgreens first decide to make a break away from the traditional marketing techniques of customer acquisition to begin focusing on customer retention?

There are two reasons for making the choice to focus on retention of high value customers.

First, using a leaky bucket analogy, it didn’t make sense to try to “fill the bucket” if we didn’t do a good job of reducing or eliminating the leak of high value customers. Only after a robust retention program is in place does it make sense to “fill the bucket”.

The second reason for focusing on retention of high value customers has to do with basic economics. The value that an existing high value customer brings to the business is much greater than that of the average new customer. As such, it makes more sense to focus on investing in the retention of high value customers.

Q: Has Walgreens been able to successfully quantify the benefits of its efforts to retain customers, personalize engagements, and build loyalty?

Measurement and continuous improvement is at the core of our personalized marketing program. Our measurement approach spans from granular (e.g., tactics within campaigns) to global (e.g., long-term impact on retention). Taking this approach allows us to not only understand the benefits of the program, but also to identify areas for improvement.

Q: Why do so many brands seem reluctant to focus more on customer retention and remain fixated on the traditional aspects of customer acquisition?

Some people believe that retention-based programs focused on rewarding high value customers give money away to customers who would have purchased anyway. Contrary to this point of view we’ve realized incremental sales in each of the Balance Rewards “thank you” campaigns when compared to a control group. Significantly, the majority of the incremental sales are generated from existing brand buyers. In addition to the short term benefits, the program has provided the long term benefit of improved retention/loyalty.

Q: Loyalty programs can generate a massive amount of data. How does Walgreens target relevant information to provide meaningfully personalized customer experiences? 

Walgreens works with emnos to derive actionable insights from the massive volume of data that is captured from our Balance Rewards loyalty program and apply them across different operational levers. Within the context of Balance Rewards “thank you” and solo campaigns, emnos provides the analytics to personalize a large pool of vendor funded offers by determining the relevance of each offer to a customer, and only allocating those offers to a customer that have the highest relevance.

Q: How can smaller retailers that are unable the leverage the same resources as large organizations still hope to find similar success with their customer engagement programs?

A collaboration between a retailer and its vendors, similar to Walgreens’, provides the opportunity to build a scalable sustainable customer engagement program. Building a program based on shared customer insights brings focus to marketing investments that benefits not only the retailer and their vendors, but also customers through relevant offers/experiences.

Q: Why is Walgreens excited to share its success with the audience at Loyalty Expo?

In an environment where many retailers are questioning the value of their loyalty programs, we believe it is important to provide examples of successful application of customer insights in driving greater customer loyalty.

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