News: CVS When a reward isn't really a reward. Rob Price, CVS' chief marketing officer, said this isn't how the company wants it rewards working

June 22, 2010 by DAVID LAZARUS
Rewards programs can be a good thing. They build loyalty and provide a tangible benefit to being a steady customer.
That is, if the reward is actually a reward, and not some corporate ploy that goes out of its way to prevent customers from enjoying the perk they've been promised. I'm thinking of the cash-back program at CVS Caremark, one of the country's leading drugstore chains. At first glance, CVS' Extra Bucks system seems pretty appealing.
Flash your CVS ExtraCare card at the cash register and you'll earn 2% back on things you buy. You'll also earn one Extra Buck for every two prescriptions you fill.
So far, so good. The problem is with how the rewards are given out.
Rather than keeping track of your Extra Bucks in the company's computer system and applying Extra Buck credits to each new purchase, CVS includes your Extra Bucks on an unusually lengthy receipt every three months.
In other words, customers are expected to schlep the yard-long receipt around with them and to apply the Extra Bucks themselves.
Moreover, you can't spend a few Extra Bucks here and a few there. If you have $10 worth of Extra Bucks and apply them to a $5 purchase, the rest are forfeited.
As if all that didn't stack the deck enough in CVS' favor, the company also places a limit of up to 60 days on its Extra Bucks. Use 'em or lose 'em.
Yet by enrolling more than 64 million customers in the program and asking them to have their CVS card scanned during each purchase, the company has created a gold mine of data by keeping tabs on what each person buys, how often and where -- an enormous asset for marketing, inventory control and partnering with other firms.
"The CVS practice of attaching the reward to the end of the receipt is, as best as I can tell, unique," said Douglas Friedman, an assistant professor of marketing at Penn State Harrisburg. "From a consumer's standpoint, it's not a good system because, more often than not, no one looks at the receipt."
Like me and those 64 million other people, Friedman said he's a member of the program and produces his CVS card at the cash register whenever he buys something. But, like me and probably about 64 million other people, he said he seldom remembers to carry his receipts with him.
"Maybe I'll put it in my coat, maybe in my pants pocket," Friedman said. "I'd say I end up actually using my Extra Bucks once a year at most."
Rob Price, CVS' chief marketing officer, said this isn't how the company wants it rewards working.