London Drugs enters loyalty rewards game
Clint Mahlman sighs when asked why London Drugs waited so long to create its first loyalty rewards program.
"It's the No.-1 question we're being asked," said Mahlman, executive vice-president and chief operating officer of the Western-Canadian pharmacy retail chain. "But I don't think the term 'loyalty rewards' is applicable to what we're doing. This is something unique and interactive in the retail space from a fun and eclectic retailer."
Launched Oct. 5, the free "LDExtras" program offers enrolled customers experiences and rewards that are tailor-made to their purchases both online and in-store.
Rewards range from customized offers on products and services to entry in a monthly $2,500 shopping spree for every ten "visits" to LDExtras.
A visit is earned for every $10 or more spent on most products (apart notably from prescription drugs) in any of London Drugs' 79 stores in 35 markets across Canada's four western-most provinces, or on www.londondrugs.com.
Customers can enroll in the free program by simply providing their phone number at the check-out counter or an email address when shopping online.
They can then track and follow their "visits" through iOS or Android mobile apps, in-store kiosks, or online at www.ldextras.com.
READ: Don’t underestimate the power of loyalty programs
According to Mahlman, the program ramps up and expands offers and experiences in accordance with people's purchases of most of the wide range of products London Drugs carries, from digital cameras, cosmetics and computers to pharmacy and healthcare.
"If we have, say, a Nikon buyer, we might create offers around tripods or flashes," he said. "But if they buy a $10,000 lens, we might offer them a one-on-one session with an expert photographer to help them get the most out of the product.
"This program is all about tapping into customers' desire to develop a deeper and more exciting relationship with retailers," added the Mahlman. "It morphs into how best to use and maximize their purchases."
He said London Drugs' approach, which was successfully tested over the past year on Vancouver Island, is a stark contrast to the vast majority of loyalty rewards programs, which revolve around points and redemption for free items.
READ: Appetite for loyalty programs up, but brands must remain competitive (study)
"They all look the same," said Mahlman. "We wanted something that reflected our mantra, which is to be the easiest possible retailer to deal with, and to make shopping as fun and less stressful as possible."
The program notably builds on and marries London Drugs long e-commerce experience with new digital marketing and consumer trends, especially the use of smart phones.
Mahlman said it also avoids the pitfalls that undermine most loyalty rewards programs, such as growing consumer reluctance to provide personal information for generic offers, fatigue with the points redemption concept, and anger and frustration over point devaluations.
"That's not something we wanted to live with," said Mahlman. "Sometimes it's better to sit on the sidelines and take a good look at a landscape before venturing onto it."
For loyalty points expert Patrick Sojka, the new LDExtras program follows the growing trend to personal experiences.
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"A lot of big names have been doing, like Marriot and Starwood," said Sojka.
He said the one-of-a-kind experience approach is a trendy technique of gamification, which is the science of using rewards to engage and motivate players.
For Queen's University marketing professor Ken Wong, who chairs London Drug's advisory panel, the new LDExtras meets the company's goal of finding a program that generates "true loyalty" as opposed to being a price-driven sales promotion under the guise of a loyalty building program.
"By true loyalty I mean it has the capacity to not only generate retention but also customer acquisition, lift (share of wallet), cost savings for (London Drugs) and customers and referral sales, and be consistent with (London Drugs') value proposition," Wong wrote in an email.