By Larry Leung

Loblaw Companies Limited (“Loblaw”) purchased Shoppers Drug Mart in a deal worth $CDN 12.4-billion back in July 2015. Both companies had strong loyalty programs under the PC Plus (8 million members) and Shoppers Optimum (11 million members) branding. Loblaw decided to merge these two popular programs into a one called PC Optimum on February 1, 2018. Once all the members fully enroll into this new program, it is expected that membership total would exceed 11 million.

In anticipation, Loblaw increased the loyalty liability (the estimated liability from the outstanding points available for redemption under the new program) by CDN $189 million to CDN $413 million as at December 31, 2017.

Account Merge Challenges

From the start, it was widely reported that both existing program members encountered many challenges with the merger process. Instead of using the PC Plus or Shoppers Optimum platform as the foundation, members from both programs were invited to supply new information and sync up all their loyalty points data separately into the new PC Optimum platform. All the new account creation and data transfer overwhelmed the systems and resulted in system outages. There are other reported cases where customers noted their loyalty point data was inaccurately merged and had to frustratingly contact the helplines to resolve their issues.

Two Months In

While the majority of account merger related issues are largely behind the new loyalty program, there is a new set of challenges on how promotions are communicated and managed. Previously, PC Plus and Shoppers Optimum operated under two different principles when it comes to earning points:

PC Plus - Points can be earned from purchasing targeted items at Loblaw and its affiliates and through the use of PC Financial MasterCard.

Shoppers Optimum - All purchased transactions (except for selective items such as bus tickets, lottery tickets, prescriptions and gift cards) will earn base points. Additional bonuses could be collected by purchasing specially marked products or promoted products found in the mobile application.

With PC Optimum, both methods of earning points are employed. While there is a Frequently Asked Question section available in the PC Optimum’s website, many members of the new program are very confused as to when and how they can earn and redeem points. For example, while you can still earn base points at Shoppers Drug Mart, you cannot do so at any Loblaw branded supermarkets.

On a weekly basis, members are asked to check their inbox for an email from the program with the new promotions. As the add all button does not always work, members would have to spend time to individually add product or points promotions online or in the mobile application. They also have to check regularly for other random daily promotions. It can be a tedious process over a longer period of time. Additionally, affiliates like Joe Fresh are not included in any weekly promotions thus reducing potential online or foot traffic to the store.

The program makes it difficult for the members to track and use all the promotions added to their accounts. They do not receive timely notifications to remind them which promotional items are about to expire or ones that have been redeemed.

In a recent informal Twitter survey conducted by Retail Insider at the end of March 2018, a majority of the responders (61%) polled found that it was too time consuming to individually add promotional items onto their profile, while 32% wanted a money spent method of earning points and 7% did not mind loading only the items they wanted.

Lack of Redemption Opportunities

PC Plus had a straight forward policy for points redemption. Each 10,000 points can be redeemed for CDN $10 off with a minimum redemption of 20,000 points. Shoppers Optimum used a tier scale which reward members saving their points for mega redemption events (e.g. 95,000 points for CDN $200).

The new program uses the older PC Plus method but eliminated the 20,000 points minimum requirement. While it seems like the straight forward method is easier to manage, this type of redemption only equals to a 0.1% return per point instead of up to 0.21% under the Shoppers Optimum method. While Loblaw allows members to earn points with PC Travel, they are not able to redeem points for their vacation.

Five Quick Improvements to Maximize Potential of PC Optimum Program

Retail Insider came up with five quick improvements for the program to improve customers satisfaction and loyalty:

1. Create a video to show how members can earn and redeem points. Instead of reading the complicated frequently asked questions, the PC Optimum team can create a video on the ways and how easily any member can earn and redeem points. This would reduce time required for customer service agents at the store, on the phone and online to respond to questions.

2. Allow members to earn points everywhere without having to use the PC Financial Mastercard. As of right now, there is less to no incentive for a former Shoppers Optimum member to make all their purchases in Loblaw and its brand of supermarkets because they can double dip on earning points at Shoppers Drug Mart (including groceries and household goods).

3. Improve delivery of promotions - Not everyone will find the weekly email or want to check the mobile application regularly for promotions. Any promotional items added to the member’s profile should be tracked and communication (email or notification) should be sent reminding members of start or expiry dates. The latter is important so that members can plan their purchases accordingly.

4. Introduce a "select all” button inside the mobile application and on the desktop version of PC Optimum’s website. Point collectors have a “fear of missing out” mentality. They would always want an option to add all available promotions to their profile to maximize earning opportunities.

5. Introduce promotions for other affiliated brands. This could introduce and drive traffic to stores customers may not know about. The PC Optimum mobile application and website should also highlight these brands to maximize awareness.

While a loyalty program can drive customers into the stores, they can also drive them away if it has not implemented a perceived ease of use and a good value proposition built-in. Loblaw’s new PC Optimum program started its journey two months ago with great fan fare and also challenges. There is room for improvement to make the program more competitive and challenge the leaders LoyaltyOne’s Air Miles or AMIMA’s Aeroplan programs in the lifestyle space.

Larry Leung is a research and strategy director based in Toronto. He focuses on technology, experience creation, marketing and loyalty in the aviation and retail industries. Larry contributes blog posts for aviation consulting company Experience The Skies (www.experiencetheskies.com) and writes for Urban Toronto. Follow him on Twitter at @larrykleung. You can also email him at: lleung@experiencetheskies.com.

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