Becoming the medical hub
Winner of Best Use of CRM (Customer Relationship Marketing), Best New Loyalty Programme of the Year, and Loyalty Programme of the Year: Central and Eastern Europe plus Turkey.
Why we won: A programme that changes the loyalty proposition by ‘doing the right thing’ for pharmacy patients, at the same time providing the missing loyalty link of tracking of the individual.
Since its launch in 2015, the data driven Dr. Max loyalty programme has acted as a hub for customers’ medical histories and has enabled its pharmacists to look at patient OTC (over the counter) and RX (prescription) histories to customise treatment options and suggest best medicine. Dr. Max CEO Daniel Horák explains the programme’s success.
How many members does the programme have and how active are they?
Daniel Horák: Since April 2015, 2.3 million customers have registered in our Dr. Max “Benefit card“ loyalty programme, which is 23% of Czech population. At the moment, an average of around 5,000 new members are registering per week. The amount of active customers is 75%. We define these as people who purchased at least once in last 3 months.
How unique is the scheme in the Czech Republic?
This loyalty model is unique for the pharmacy market. We have observed some minor examples of copying parts of the scheme from competitors, such as providing income-related discounts on products. Outside of the pharmacy market, loyalty schemes are usually at food retailers, such as Tesco Club Card or Billa Bonus Club. However, these schemes are about the number of points customers collect on their card and this is a model that we do not use.
What were your main objectives when the scheme started in 2015?
The programme was created in a period of major legislative changes in Czech healthcare, when the contribution fee of CZK30 (Eur1.10) that customers had to pay for a prescription was cancelled. However, Dr. Max never charged this fee to customers that were members of the original loyalty programme.
Firstly, it was necessary to keep these original customers, and that is why we created the new loyalty scheme with the new offer of services and benefits. The second objective was to significantly improve the quality of the contacts in our customer database. This was an important step that made our new programme able to work commercially and also made it possible to implement an up-sell and cross-sell CRM campaign. At the moment, we are able to get the necessary marketing consents from the registrations, and in particular we are getting a high percentage of contact details. The programme database now contains 98% of postal addresses, 85% of phone numbers and almost 50% of email addresses.
The programme recruited over 2 million members in its first nine months, 20% of the Czech population. What are the reasons for it being so immediately popular?
What was really helpful for marketing communication was the huge media support that we had (TV spots, in-store communication and our leaflet) and we also put a lot of emphasis on the clear explanation of programme benefits. From a tactical point of view, it was very useful for a quick acquisition to offer personal help for the registration itself. There were hostesses in every one of our pharmacies who helped customers to fill out the new registration. We signed up the first million members six weeks after starting registrations, and the second million by the end of the year.
What are Dr. Max customers looking for in a loyalty scheme?
Programme members like to take advantage of low product prices plus services such as counselling, the customer portal, mobile apps and education campaigns. Instead of receiving deferred benefits, they can get the discounts and benefits immediately each time they purchase.
Which benefits have proved most popular?
The most popular benefit is definitely the discount from the supplement to Rx (prescription) medication that is defined by Czech legislation. The discount that we offer is up to 50%. Another very popular one is Dr. Max prices – permanent special offers of OTC (over the counter) products for our cardholders. Our customers also like targeted vouchers that are sent out twice a year to selected members on the basis of their previous purchase behaviour.
How important is the ethical part of the scheme and “doing the right thing”?
We see the ethical part of the programme as its connection with health-related services related. That´s why, apart from sales campaigns, we also provide educational campaigns and develop digital activities to give information on previous purchases and to encourage the correct use of drugs. Members also appreciate the mobile app that provides alerts on the regular use of drugs.
How have you used customer data to improve their treatment, safety and health?
Our pharmacies can check programme members’ purchase history to see if there is a problem with them taking this medicine with another product that they use. Doctors are not able to see these purchase histories that our pharmacies have available.
We also prepare special educational campaigns focused on different health topics, such as diabetes, breastfeeding support or allergies. We also use our customer data for geo-based activities, where we inform our customers about the opening of new pharmacies near where they live.
How different is the OTC part of the programme from the Rx part?
The support of the Rx part is very limited due to legislation issues. It features a discount of up to 50% from a supplement to Rx medication. The OTC part of the programme includes cross-sell and up-sell campaigns targeted at customers based on their previous purchase behaviour. Both parts, Rx and OTC, are connected by accompanying services that shape the programme into one unit. Members can use the customer portal which features complete information on their purchase history, they get priority treatment in the complaints process, educational information and special offers on a regular basis. The customer portal services are available also in the mobile app that contains the special warning function on the use of medicine.
What have been the specific benefits for Dr. Max from operating the scheme?
The programme generates highly valuable data that is extremely helpful in many areas of our business. This data is utilised when we make strategic decisions or while negotiating with suppliers, and it makes it easier to promote the right activities. The quality contacts make it possible for us to conduct successful ROI-positive CRM campaigns.
With around 85% of Dr. Max sales linked to a loyalty account, how do you plan to use all the customer data that is being gathered?
We would like to use the data for effective CRM in all its forms. Of course, there are cross-sell and up-sell campaigns, and campaigns based on specific events or customers’ activity. We also use the data for setting the business and promotional plans with suppliers.
How important have the personalised coupons been to the success of the scheme?
We reach out to our customers twice a year with discount coupons offers based on the purchase segment they belong to. Apart from the coupons, the mailing also contains the details on individual product categories for our customers. Compared to control group customers, those in the campaign achieve higher shopping cart values and increased frequency of Rx and OTC purchases.
You have stated that some of your previous loyalty initiatives failed to deliver expected results. What were the problems with these, and how has the new scheme improved on this?
The previous loyalty scheme fulfilled its purpose at the time when there was different legislation and the patients were required to pay the CZK30 prescription fee. They received this back from us by being members of the programme. When legislation changed and this fee was cancelled, it was necessary to change the loyalty scheme as well. In the previous model, we also used an account where people saved up “spots” and 1% of their expenditure was returned to them to go off their next purchase. We found out that this system wasn’t very attractive to our customers and they were not really motivated to save the spots. Another difficulty the previous programme had was the lack of quality contact information on customers.
How important are the programme website and mobile application?
Our website, mobile app and e-shop make it possible for us to realise a multi-channel approach. We provide customers with a complete overview that monitors previous transactions on a personalised website and at the same we inform them about news and ongoing campaigns. It is easy to make a purchase on our e-shop directly from our website or to print a paper discount coupon that can be used in our pharmacies. Our app makes it possible to transfer information and campaigns onto mobile devices and it can be also used directly in our pharmacies. The app is currently being used by 14,000 customers.
What are your plans to develop the programme in future?
We would like to continue to improve services related to health. We have started to move from the acquisition phase to retention activities and also to projects that will strengthen customer loyalty. As for the campaigns, we would like to focus on automated campaigns that are based on the current lifestyle of the customer or on their activity. We plan to build an integrated contact and advice centre, where there will be a system to identify a caller and make the whole customer experience even better. Although, the majority of our target group are older people, we want to continue to improve our offering in the online world and to come up with innovative digital solutions for customer care.
What advice would you give to other loyalty programme providers based on your experience with the scheme?
A well-functioning loyalty programme cannot be developed as a short-term marketing project, and simply has to be part of a company´s philosophy. Customers no longer appreciate schemes with deferred benefits, and prefer immediate advantages from their membership. It is good to combine sales campaigns with the non-sales ones. Connect the benefits and services with the main scope of your business, in our case it is the connection with health. And probably the most important thing, take good care of your contact database, keep it updated and try to improve it constantly so that you are able to successfully monetise it when cooperating with potential partners of the programme. Last but not least, have your control mechanisms set in a quality way, so that they can help you to measure the ROI of your sub-activities and the programme as a whole.