Walgreens Relents, Revising Unpopular Balance Rewards Changes

It’s not exactly a corporate mea culpa or a public plea for forgiveness, but Walgreens appears to be acknowledging that changes to its Balance Rewards loyalty program late last year didn’t go over well. So it’s rolling back some of those changes – not quite returning the program back to the way it was, but making it much better than it is now.

Word started leaking out over the past week or so, but it became official over the weekend as Walgreens began informing Balance Rewards members via email of the new changes to the program, which awards points for purchases that can be redeemed for discounts off future purchases. “We heard you like the flexibility to use points at high levels – maybe even to treat yourself,” the email read. “Starting May 5, use your points your way with three new options.”

So beginning next month, Walgreens is raising the limit of how many Balance Rewards points can be used in a single transaction. Instead of capping redemptions at just 5,000 points for a maximum $5 discount at a time, members will be able to redeem 10,000 points for a $10 discount, 20,000 points for a $20 discount, or 50,000 points for a $50 discount. In all, users can redeem up to 100,000 points per day, for a maximum $100 discount.

That undoes one change introduced last November, but leaves in place another – which is sure to please some shoppers, but leave others feeling that the new changes don’t go far enough.

The return of the higher redemption levels will make it a lot easier for Balance Rewards members with large point balances to claim their rewards. When rewards could only be redeemed 5,000 points at a time, members who had saved up tens or hundreds of thousands of points worth hundreds of dollars found themselves forced to make small purchases in order to save just $5 at a time. “Standing in line 5,000 times is not a good plan,” one member of an online message board complained. So these shoppers will be pleased they’ll soon be able to redeem more points at once for larger discounts.

That is, if they don’t mind that their points aren’t worth as much as they used to be.

The new tiers lock in a consistent redemption value for Balance Rewards points – you’ll get $1 off for every 1,000 points you redeem, no matter how many points you use at once. Before the November changes, points were valued on a sliding scale. It took only 18,000 points instead of 20,000 to earn $20 off. 30,000 points would get you $35 off, and 40,000 points would give you a maximum $50 discount. So the more points you had, the more they were worth – which encouraged many shoppers to save their points instead of using them right away.

In an apparent attempt to discourage point-hoarding and encourage members to use their points more frequently, Walgreens claimed last fall that “customers find the existing escalated tiers confusing” and that “over 80% of our high value customers are unaware of the escalated tiers.” So its changes were aimed at streamlining the program “to a more simplified five-tier redemption structure”.

But many Balance Rewards members weren’t pleased with the supposed “simplification”, prompting them to use up whatever rewards points they had left, then taking their business elsewhere. “I didn’t make a single purchase from them after the change – I suspect I’m not alone,” one message board participant wrote.

Walgreens says it heard those complaints, and decided to act. “We initially made a change to the Balance Rewards program in order to simplify redemption levels,” Walgreens spokesperson Emily Hartwig-Mekstan told Coupons in the News. “However, we realize there are customers and team members who prefer to use larger amounts of points and wanted to ensure we addressed their feedback.”

Walgreens hasn’t said whether its decision to reinstate higher redemption tiers also had anything to do with declining participation in the program, or the defection of disgruntled shoppers to competitors. But its announcement comes just days after the company reported weak earnings and sales, in what the CEO called “the most difficult quarter” in years. While that was due to a number of factors, alienating some of its most loyal customers by devaluing their loyalty program rewards couldn’t have helped.

But then it’s always possible that this was part of the plan all along. Hartwig-Mekstan would not confirm or deny it, but one might argue that the current changes are the ones Walgreens should have implemented in the first place, if it wanted to simplify the “confusing” program and encourage members to redeem their points for rewards more often instead of saving them up for bigger discounts. But if Walgreens simply went ahead and raised the number of points needed for high-value rewards, it would have been difficult to spin that as a positive. Better to eliminate the higher tiers altogether as an interim step and call it a “simplified” program, and then bring back the higher tiers exactly six months later and say it was in response to customer requests – with the hope that, by then, many members wouldn’t notice that the more valuable rewards cost more points than they used to.

The fine print of the Balance Rewards program’s membership agreement states that Walgreens can “change the terms or conditions of the program or terminate the program… at any time, for any reason”. So it will be up to you whether to use your points once the new rules take effect, or hold out for something better. Because depending on the reaction to these changes, not to mention the financial performance of the company in the next quarter – there’s always a chance this latest Balance Rewards update may not be the last.