More adoption of technology could drive retail pharmacy customer loyalty, report finds

Empathica study recommends greater use of loyalty programs

TORONTO — More than half of U.S. consumers would not recommend a particular pharmacy to family and friends, according to a new report by a Canadian customer experience management firm.

According to the report, by Empathica, scheduled for release later this week, the 60% of consumers who would not recommend a pharmacy indicate that most consumers do not have a loyal relationship with any one chain or mass retail pharmacy despite what the firm called a "promising future" for the industry, with more than three-fifths of surveyed consumers saying they would not cut pharmacy spending regardless of the economy.

The report attributed the lack of customer engagement to a slow adoption of technology by pharmacies. Empathica said online prescription drug sales are expected to grow at a faster rate than in-store sales, but 40% of pharmacies don't have an online presence, and among those that do, half of customers are unaware of web offerings, while less than 20% have received information or offers promoting them.

"Three-in-four customers still place and fill their prescription orders in-store," Empathica CEO Gary Edwards said. "This highlights both the lack of online pharmacy services and a low level of awareness among customers about existing services. There is no doubt that consumers are performing an increasing number of activities online — pharmacies need to get there and take advantage of digital rewards and online marketing to attract and retain customers."

Baby boomers were more likely to take advantage of online prescription services, accounting for 36% of those who manage prescriptions online, compared with 20% who are Millennials. Of the 25% of consumers who fill and manage prescriptions online, most use mobile health applications and said their pharmacies should use similar apps, but 75% of all customers reported not knowing whether such apps were available.

Empathica also found loyalty programs represented an area of improvement as core pharmacy services become commoditized. The report found that only 40% of customers were "highly committed" subscribers to loyalty programs at their primary pharmacy, with an even lower rate of 32% in mass-retail settings; 30% of consumers indicated they were always aware of coupons at pharmacies and mass retailers.

"Our research shows that customers that always use loyalty programs are almost twice as likely to advocate their primary pharmacy to friends and family when compared to non-loyalty program subscribers," Edwards said, citing respective figures of 64% and 36%. "Pharmacies that do not offer loyalty programs or targeted promotions miss an opportunity to turn customers into loyal customers and advocates."

Edwards suggested that mass retailers with pharmacies should offer "compelling" promotions and use marketing tactics like in-store coupons to take advantage of their price advantage.

"For bargain-hunting customers, promotions really help drive behavioral loyalty," Edwards said. "For chain pharmacies that cannot compete on price alone, loyalty programs give customers an incentive for returning and set them apart from other pharmacy chains that, according to our research, are often not leveraging these programs and promotions with consumers. These programs provide a powerful reason for price-conscious consumers to keep coming back."


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