Magazine article Drug Topics

Frequent-Shopper Cards Can Develop Loyal Patrons

Magazine article Drug Topics

Frequent-Shopper Cards Can Develop Loyal Patrons

Article excerpt

Drugstore chains must get on board the movement to use ffi quent-shopper cards. These cards are part of a marketing strategy called "customer relationship marketing." That was the recommendation from Peter Doherty, principal consultant, Management Horizons, a Columbus, Ohio-based consulting division of Price Waterhouse.

Speaking recently at Management Horizon's annual Strategic Outlook Conference, held in New York City, Doherty described customer relationship marketing as a process that begins with the use of scannable frequent-shopper cards to gather data on shoppers. Armed with the knowledge of how shoppers shop helps chains create marketing programs that develop a core group of loyal, high-volume customers.

Drugstore chains generally lag behind supermarkets in developing the use of shopper cards as a marketing strategy. But major chains such as CVS, Woonsocket, R.I., and Shoppers Drug Mart, Toronto, Canada, are catching up.

CVS has entered the world of customer relationship marketing "by leveraging its pharmacy database and then sending direct mail to its pharmacy patients to get them to come shop the other parts of the store," Doherty said.

He pointed out that small chains and even independents that invest in pointof-sale technology can enter the world of customer relationship marketing with relative ease, given their local focus and flexibility.

Frequent-shopper cards are a chain's proprietary plastic cards that consumers pass through a scanner each time they make purchases at one of the chain's stores, Doherty said. The cards typically help participants gain discounts on various purchases. Consumers' use of frequent-shopper cards has increased dramatically in recent years, he pointed out. While 12% of consumers used the cards in 1993, 31% used them in 1996.

For chains that wish to use frequentshopper cards to full advantage, Doherty outlined 12 steps of development: First, chains must have a point-of-sale (POS) scanning system in place to allow for the development of a database on consumers' purchases.

Second, chain executives must develop marketing objectives for the use of frequent-shopper cards and integrate those objectives within their (ong-term strategy. …

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