Vladimir Makeew CEO of Surf

    Increasing Customer Lifetime Value: Digital Loyalty Program for Your Pharmacy App

    Today, one of the vital goals for drugstores and pharmacy companies is to engage regular customers. As it is widely known that acquisition is more expensive than retention, increasing the value of existing customers is the right track leading to stable growth.

    Following this way, the healthcare and pharmacy service providers can face some specific challenges to stand out among competitors while creating a pharmacy app. As the industry specifically implies that patients use multiple medications from different suppliers and are not likely to download several different apps to track each one. These are exactly drugstore and pharmacy loyalty programs that work for high purchase frequency.

    One of the proven tools to increase customer lifetime value (LTV) is a digital loyalty program.  Experience in retail, beauty industry, travel and tourism has shown that a properly tuned loyalty program works extremely efficiently for long-term business goals

    • adds value to your offers,
    • improves customer engagement,
    • increases brand awareness,
    • contributes to extending the reach of the services.

    We, the Surf team, have been in the mobile and web development market since 2011, and healthcare-related apps development belongs to one of our special fields. In this article we suggest discussing what lessons pharma loyalty programs can learn from the experience of other industries, what metrics they have an impact on, and what peculiar features you should be aware of. Read to the end to learn some practical tips from our team.

    Loyalty program in mobile pharmacy app to boost LTV, and more

    Along with the highly crowded market, another specific feature to be taken into consideration for the industry are their unique customers.

    On the one hand, there are practically no random customers in pharmacies, everyone comes with a specific request. The audience can be divided into patients with chronic diseases who regularly buy a specific set of medicines and one-time buyers whose every request can be radically different.

    On the other hand, there are two other groups: people who place primary importance on price and customers who prefer convenience.

    In either case, the loyalty program can cover the customer’s interests and boost customer engagement with

    •  discounts, free products, special offers, and other perks, and
    •  personalized effortless customer experience. 

    At the same time the loyalty program can help healthcare service provide learn more about their customers:

    • collect purchase information in the format of customer accounts;
    • segment the audience by any category: gender, age, amount of purchases, frequency of purchases, time since the last purchase, assortment, trigger actions;
    • test different reward rules for different audience segments to find out the most effective ones;
    • personalize offers and communication with customers.

    New digital customer experience to improve customer loyalty

    Speaking about customer experience, we, as mobile and web app developers, mean, first of all, user experience online and are glad to share some points that will add to the efficiency of your loyalty program.

    • The loyalty program is recommended to have several entry points so that the apps and the website work in conjunction. Today, users have already formed a habit of doing whatever and whenever they want. Therefore, it’s better not to restrict them with a single possible option that can be unavailable at some moment, or may contradict their online habits. But make sure, you use the same terminology for multiple entry points, not to confuse the users about their purpose and functionality. 
    • The next point is to offer several authorization methods: via email, Google account, or SMS. In case the user has forgotten the login or password, it is important to give the opportunity to restore them in a convenient way.
    • A convenient personal account can be another advantage of your loyalty program. Add the bonus account balance, purchase history, and special offers and make them easy-to-check. Provide your users with the possibility to change contact details and delivery address.
    • Make sure that accrual of points, bonuses, cashback is transparent. The rules of the loyalty program should be written in simple and understandable language and easily accessible.
    • The integrated option for using one card by several family members can be additional motivation to use loyalty programs and increase purchases with one account.
    • Be careful with fraud control. Filters can be added to the system to identify fraudsters among employees or customers.
    • Make various communication options available for your customers so that they can get information and solve any issues promptly and in the most convenient way for them: a built-in chat, integration with email, SMS, WhatsApp or Telegram messengers, push notifications.
    • The last but not the least: do not stop in searching for new ways to make your loyalty program stand out.
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    Walgreens, with 9,000-plus stores in the USA,  is an excellent large-scale example of developing the loyalty program for ‘the one and only you’ meaning outstanding personalized customer experience. In 2020, the company has upgraded and replaced the previous program (that had been used for eight years) with a new one offering more extended possibilities: using percentages instead of points, which is simpler, the fullest experience accessible in the mobile app, including a 24/7 pharmacy chat, access to find and book medical care and vaccination appointments, access to locally-specific environmental and health info, and more.

    Increased customer lifetime value and other key metrics

    As any retail company selling goods or services, pharmacies and drugstores of any scale aim at increasing conversion rate and improving the basic sales metrics such as LTV, churn rate, engagement rate, NPS (Net promoter score), and customer return. 

    Competent implementation and development of the loyalty program will result in increased conversion and boosting customer engagement. 

    How does the loyalty program work for increasing LTV?

    Users’ behavior becomes more predictable:

    — they access the site or application more often;

    — they make more orders;

    — orders cover more product categories;

    — user churn is lower.

    Profit-making capacity is higher:

    — higher average purchase size;

    — high-margin goods are purchased more often.

    Lower operational costs:

    — fewer abandoned carts and returns;

    — fewer refused deliveries.

    Churn rate is the percentage of the number of lost customers to the total number of customers and it helps you track how many users you have lost while the loyalty program is active. Accordingly, the lower the churn rate, the more successful the loyalty program is. LTV and churn rate grow in inverse proportion to each other: the higher the churn, the lower the LTV, and vice versa

    Engagement rate is the ratio of the number of loyalty program participants to the total number of customers. This indicator shows to what extent the loyalty program is interesting to customers. If there are a lot of participants in the program, but almost no one uses it, you have obviously missed some points.

    For example, it is important to monitor the percentage of points used, and namely, the ratio of used points to accrued ones. The program will not be efficient and will not increase engagement when it is easy to install, but the motivation and benefits of using it remain unclear for the customer.

    Net Promoter Score shows whether your customers are ready to recommend your product to friends or family. The efficient loyalty program will result in growing NPS.

    CVS Health Corporation (CVS), ranked fourth on the Fortune 500 list in 2021, has one of the largest loyalty programs in the USA, with 74 million members. The company uses a mobile app as a driver to deliver their customers the personalized experience. COVID-19 has boosted usage of mobile devices, and the CVS Pharmacy App has witnessed double-digit increases in downloads, and double increase in coupons sent to users’ ExtraCare cards from the app. The number of the loyalty members has grown by 16% since 2019.

    CVS Pharmacy app

    Tips to improve customer loyalty while creating a pharmacy app

    Do not ignore cross-industry experience

    As mentioned above, the retail, beauty industry, travel and tourism have already accrued rich experience in creating and extending loyalty programs, and this can be useful for the pharmaceutical industry to learn some lessons in order not to reinvent the wheel.

    Having been on the market since 2011, we, at Surf, have developed various solutions for different market segments, including large-scale loyalty programs.

    For a large retailer, we implemented a loyalty program with a grading system changing dynamically, enhanced with game elements and interactive format. The last contributed a lot to improving engagement: we offered customers to use an interactive virtual scratch zone to open their gifts.

    As a result, the launch of the loyalty program led to a 3 times increase in app usage. Currently, the app boasts MAU (monthly active users) of about 9 million.

    Focus on your customer

    Any digital product we create, including loyalty programs, shall be first of all focused on the end users. Before you spend your time and money for any new development project, ask yourself whether you are well-aware of  the user’s needs, desires, mood, their path in your app and eventual a-ha moments or barriers they can encounter.

    For example, one of the challenges in creating a pharmacy app  may be long and complex product names and numerous options for product forms (pill, tablet, or capsule, drink or syrup, etc). That’s why special attention should be paid to the search function: it should work like a dream being able to prompt the users, even in case of misspelling.

    For our clients we, at Surf, offer a customer journey mapping (in a form of collaborative moderated brainstorm) that helps find out  what features are of real importance and priority at the initial stage of development, what problem areas exist, and what direction the product is going to move in the future.

    CJM, app features table, ideas backlog – this is what our clients receive after CJM workshop.

    Keep in step with technology

    Today, technology offers so many possibilities that no wonder, sometimes it’s not easy to choose the right tech stack or the most suitable approach that would be effective exactly for your project, and not in the short-term only but for a longer perspective.

    We have always been pioneers in adopting the newest solutions, and our real catch is Flutter, a cross-platform solution by Google that allows using one code base for both iOS and Android, and since Flutter 3.0 release for four other main platforms: Windows, Mac, Linux, and web. Flutter has been gaining more popularity lately, and now is the most popular cross-platform mobile framework used by global developers.

    We have implemented 10+ large-scale Flutter projects for various industries, and it has proven to deliver easy coding and code maintenance, high performance, safety, and scalability, along with native look and feel for each platform. The next important advantage: reduced time and cost of development (as you do not have to hire programmers for each platform) and faster time to market.

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    Summing things up

    This is no secret any more that loyal customers are an effective driving force for any business, and pharmacies and drug stores are no exception. Use any opportunity to reward your customers for engaging with your brand. Be there where your customers are, using multiple channels. Make use of all available data to offer every customer a unique experience.

    The Surf team will be glad to offer you support from the technology point of view to make your business, and to make people’s lives healthier. This is what we strive to achieve with our products: making life better.