The CVS ExtraCare Card is one the best examples of a rewards & loyalty program that really works. They capitalize on human psychology in a way that is self-perpetuating.
Why are they so great? Here are 3 reasons and the psychological factors behind them.
1) The ExtraCare Savings & Rewards program capitalizes on the place of habit in people’s shopping experiences.
“People are creatures of habit. They like doing things through repetition.” This insight from Linked In points out why this is smart business. And anytime it benefits both the merchant and the customer, for our purposes we can consider this smart business.
The first important thing to factor in is that “rewards programs are taking the everyday shopping habits and attaching rewards to them which further solidifies this habit.” This benefits CVS of course for greater and more repeat spending, and increased loyalty.
Additionally, this same spending, when done at the same locale, CVS, benefits the customer as they accrue the loyalty bonuses on CVS’ already low prices.
2) The CVS card hits the sweet spot for size of benefit.
Their rewards benefit is large enough to actually be meaningful to the consumer. They remain small enough to not be damaging financially to the company, but customers still notice them. It’s important to note that the rewards don’t have to be extravagant. Studies have shown that “only a relatively small financial incentive was required to change consumer behavior.” With just a little nudge a customer can feel doubly benefited by choosing a retailer that offers a rewards & loyalty program.
3) CVS anticipates and provides a solution to some of the frailties of human nature.
People forget things all the time. With the CVS card, everything about your account is electronically accessible via your telephone number or an app. As Sarah Schmalbruch shares on Business Insider “one of the worst feelings while shopping is getting to the checkout only to realize that you’re buying something you have a coupon for — and that coupon is sitting on your kitchen table.”
Getting access to your account, or to coupons electronically saved to your account, is as easy as providing your phone number, and the points will all be saved to your account, and any in-store discounts apply as well.
4) Though I only promised 3 points, I add a 4th in the spirit of CVS’ ExtraCare principles. First of all, because it’s extra. Secondly, because at the time of purchase at CVS, you will usually receive a sizable receipt with a number of coupons on the bottom, usually associated with the items you just, or regularly, purchase. This extra step right at the time of your transaction helps solidify the feeling of getting more for your money, right at the most important time.
Overall, these 3 primary principles, and the extra one, provide a model for a business of any size looking to benefit from a rewards & loyalty program.