CVS Loyalty Chief Says Program Overhaul Driven by Consumer Desire to Keep It Simple

Loyalty programs have become a ubiquitous part of the retail landscape, offering consumers enticing rewards and incentives for sticking with their favorite brands. However, as retailers expand their offerings, the proliferation of multiple loyalty programs can complicate the consumer experience and pose challenges for both customers and retailers.

CVS Pharmacy, the retail division of CVS Health, acknowledged this challenge and responded by streamlining its ExtraCare loyalty program. The recent move involved consolidating the program into a single membership with two tiers, simplifying the experience for CVS Pharmacy customers.

“We heard from some of our members that they found value in our loyalty programs, but that the multiple programs could be hard to manage. So, we’ve been on a journey to combine what was at one point four different programs into a single program with two tiers,” said Zach Dennett, vice president of loyalty, omnichannel and Hispanic formats at CVS Health in an interview with PYMNTS.

Earlier this month, CVS Pharmacy announced the simplified loyalty program, going from four separate programs to a single program with two straightforward tiers. ExtraCare members can also now save money by accessing sale prices both in-store and online, benefit from accelerated earnings at the pharmacy, and receive exclusive deals through email and text messages.

“We have also made it easier for ExtraCare members to understand the benefits of joining ExtraCare Plus, including free rapid delivery and $10 to spend each month,” said Dennett.

More Reasons to Simplify

As online shopping grows and stores offer more choices, customers grapple with multiple confusing loyalty programs from the same retailer. This complexity can lead to reduced engagement, as consumers may lose interest or become frustrated.

Ironically, loyalty programs designed to foster brand loyalty may undermine it, pushing customers towards competitors with simpler programs.

Managing numerous programs can also strain resources for retailers, leading to increased costs and potential errors. That said, consolidating loyalty programs could offer a cost-effective solution.

Additionally, retailers may struggle to understand customer behavior with multiple programs, hindering personalized marketing efforts and risking a lag behind competitors offering a more seamless loyalty experience.

In an era focused on customer experience, a convoluted loyalty structure may deter potential customers.

And while this all sounds logical, for those who want the data to back up all the reasons why to simplify, retailers have a strong motivation to streamline their loyalty programs based on insights from PYMNTS Intelligence. According to their research, 65% of card users prefer shopping with brands or merchants that provide loyalty or rewards programs. Additionally, the study titled “Leveraging Item-Level Receipt Data: How Card-Linked Offers Drive Customer Loyalty,” conducted by PYMNTS Intelligence, revealed that over 40% of customers participated in a card-linked offer program in the previous year.

According to Dennett, CVS Pharmacy currently holds 74 million ExtraCare members — 74 million reasons to simplify its loyalty offering.

“That’s a pretty large percentage of the total households in America,” said Dennett.

Need for Greater Value

“As inflation continues across the country, we observe customers focusing on their health and wellness while also trying to save money and save time,” said Dennett.

In light of this trend, CVS has experienced growth in customer engagement with its digital offerings, including buying online pickup in-store (BOPIS) and CVS at-home delivery, ensuring items are delivered within a few hours.

And in the pursuit of time savings, Dennett highlighted benefits for ExtraCare members who opt for personalized “Deals For You.” These members can enjoy more savings compared to non-opted-in members, and utilizing the CVS Pharmacy app can enhance the potential for greater savings. However, Dennet notes that regardless of the chosen method, customers can derive value from these options.

As a result of CVS’s initiatives, Dennett said increased usage of ExtraCare and ExtraCare Plus has been observed, leading to enhanced deals and personalized offers — and contributing to the program’s overall growth.

What’s to Come in 2024

“Stay tuned,” said Dennett. “We are listening carefully to the feedback from customers after these latest changes. We hear very positive feedback about the simplification, about the free same-day delivery, and about the accelerated earnings at the pharmacy. But, as a health and wellness destination, we’re constantly looking for ways to make it easier for members to take care of their health. Expect us to continue to innovate our loyalty programs as we strive to improve health outcomes, reduce costs, and increase access to care.”