Pharmacy Daily | Loyalty, Lifetime Value and Profitability

THE ongoing challenge in a pharmacy/ retail business is understanding what motivates and influences your customers and is far more complicated than merely offering your customers discounts; it is about driving profitable customer relationships. In a tight retail market, the value of holding onto your current customers makes far more sense than spending your entire budget attempting to lure new customers (it is 7-10 times more expensive to attract a new customer rather than retain one). Gaining greater awareness of who your customers are and what drives customer loyalty is essential in today’s retail environment. All customers are not created equal in what they give to your business. Recent research into independent pharmacy loyalty has shown that members who are engaged and participate in a loyalty program visit twice as often and spend four times as much as those that don’t, and an average loyal member shops 11.8 times a year and contributes to 65.7% of total loyalty sales v a non engaged customer who transacts just 1.1 times per year on average. Loyalty programs are sometimes perceived as giving away margin, but they are actually a means of providing an offering that strategically places your store at the forefront of customers’ minds and wallets. A good loyalty program results in increased profitability, increased competitive advantage and increased market intelligence about your customers and their spending habits – enabling you to market to them accordingly. This week’s contributor is Shannon Kerr, Marketing Mgr from Instigo Retail Solutions.

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The above article was sent to subscribers in Pharmacy Daily's issue from 27 Jun 11
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