business news in context, analysis with attitude

Lots of reaction to yesterday’s piece taking note of a column by David Lazarus in the Los Angeles Times about an admittedly unscientific survey he ran, in which he asked CVS customers how they felt about the retailer’s loyalty rewards program. Overwhelmingly, Lazarus writes, customers said that they did not want to have to bring in their receipts in order to redeem the “Extra Bucks” that CVS promises them, that is said to give them up to two percent back on their purchases. Instead, customers told Lazarus, they would just like the rewards automatically stored on their CVS cards.

And I commented:

I’ve been banging this drum for a long time, and I’m completely in agreement with Lazarus. It has always seemed to me that the CVS loyalty program - like a lot of so called loyalty programs - is more hat than cattle.

Lazarus has one passage in his column that I think makes the point extremely well:

“Now the company apparently sees greater financial merit in promising a reward but deliberately making it difficult for many people to receive it. In the most recent quarter, CVS Caremark pocketed $816 million in profit. Chief Exec Larry Merlo attributed that in part to ‘solid expense control.’

“Maybe CVS should remember that loyalty programs work both ways. If a company can't (or won't) live up to its part of the bargain, it may find that customers are all too willing to take their loyalty elsewhere.”

Boy, does he have that right.

MNB user Michelle DuFresne responded:

I TOTALLY dislike the “bring back your receipt” method for your reward.  The last thing I need in my wallet is more crumpled receipt paper.  It’s bad enough as it is with the ridiculous number of loyalty cards, key fobs and every other method of tracking my spend that we maintain in order to save a buck or two.  You’ve hit the nail on the head…..the financial cost of actually giving the loyalty rewards is too great!

MNB user Linda Hellman wrote:

I’ve stopped even looking at the CVS Sunday ads because they feature these fantastic bargains that I’m going to get if I show my card, but when I get to the store, the items are already out-of-stock (or maybe had never arrived). This has happened over and over, even when I hit the store first thing Sunday morning. I’ve complained to the store managers, suggesting they pass the complaint on up the chain of command to the district managers; the store managers response is typically I should come back on Tuesday after they’ve unloaded the truck. I don’t want to come back on Tuesday, I’m in the store on Sunday with a list and money in hand and nothing to purchase.

I’ve also complained via the CVS homepage feedback. To date, I’ve not had one contact back from the company. I drive past a Walgreens and a Super Target to get to CVS, and there’s a Super Walmart just down the street, none of which have consistent outages for sale items. These latter companies will continue to get my business, even if they don’t sponsor a so-called ‘loyalty’ program.

Another MNB user wrote:

Amen! The CVS program that requires you to bring in receipts for discounts totally turns me off. CVS used to be the first place I would go for drug store items, etc.. However, I view this as a cheap way to try to drive value to customers, and hoping that most do not redeem their coupons/receipts and it irritates me! I drive by their stores on the way to others. I think Rite-Aid also falls into this same trap.

Either offer value that makes it easy for me to take advantage of (stored on my card), or drop the program because the program is having the opposite effect on me!

Another MNB user wrote:

We shop at CVS and Dick’s Sporting Goods and a few other businesses with Customer Loyalty Programs. As an example of a better program in my opinion, with Dick’s you do your regular (not with two high school now college athletes)shopping and you get your quarterly points to redeem and additional cash off coupons plus additional point accumulator coupons mailed to you. Almost like some sort of a gift package. You get reminded of their store and and has bonus opportunities when you shop and is a bit more exciting program when you go back. Now they do expire in a couple of months and expire if they buried on the counter but has a better feel than to save part of one of your receipts and take it in when you shop there next.

We will continue to shop at both places religiously, plus the other businesses that have Customer Loyalty Programs, but there are clearly degrees of how customer friendly and exciting they are to their customers. That should be important to the company if they want to have a CLP.

From another MNB user:

I am a user of Extra Bucks and get the weekly emails from CVS.  Was delighted this week – when the email popped up to save $5 off of $25 when shopping there this week, was able to click a button to add the coupon to my card instead of having to waste a piece of paper and print it out.  One plans to shop there but then the week goes by – so more often than not have printed the coupons and not used them – to be able to click to add to the card was a great initiative on their part!  They also had a sidebar where you could click your opinion if the new feature was of value to you or not.

If that option exists, CVS is doing a lousy job of broadcasting it.

Finally, I got the following email about one reference I made in my commentary:

Ok, I tried looking up what your old timey saying meant: More Hat than Cattle and a definition of this slang phrase is nowhere to be found. A blog related it to President Reagan though. Please disclose the meaning. Too many cowboys (hats) and not enough stock (cattle) to watch over?

Okay, here’s what I suggest. Click here to listen to Randy Newman’s song, “Big Hat, No Cattle.” It’s a great song...and he, of course, is one of America’s great singer/songwriters.

(But in case you can’t access YouTube because you are at work and your employer has blocks on where you can go, “big hat, no cattle” essentially translates to “all sizzle, no steak.” Or “all talk, no action.”)
KC's View: