• by Aaron Baar , September 29, 2008

Cheap generic drug prices are all the rage among pharmacies right now, and while they may do a good job of getting people in the door, it's old-fashioned customer service that keeps them there, according to J.D. Power and Associates' National Pharmacy Study.

"You can win customers with $4 generics, but you don't see loyalty," Jim Dougherty, executive director of J.D. Power and Associates' health care practice, tells Marketing Daily. "People who shop on price are always shopping on price."

The chains that scored the highest customer satisfaction marks on the company's second pharmacy study were the ones that took time to explain to the customer about the prescriptions, side-effects and other issues, Dougherty says. On a 1,000-point scale, chain pharmacy Medicine Shoppe had a customer-satisfaction score of 873--the highest of all national chains, including mass merchandisers such as Target and Walmart.

While, on average, customers were more satisfied with pharmacies that offered cheap generics programs (826 versus 817 on the 1,000-point scale), Dougherty noted that Walmart--which started the $4 generic trend--had a customer satisfaction score of 779, well below the segment average of 802. "It's not that price doesn't matter. But it's not the be-all and end-all," Dougherty says. "Personal service trumps it. ... If the pharmacy technician takes time to talk to [the customer], satisfaction explodes."

Target had the highest customer satisfaction ranking among mass merchandisers, with a score of 847. Kmart had a score of 842, and ShopKo had a score of 837. Among chain pharmacies behind Medicine Shoppe, HealthMart had a score of 840 and CVS had a score of 815.

The company also rated mail-order pharmacies. Prescription Solutions ranked highest with a score of 864, followed by Express Scripts with 845 and Medco with 833. Even for mail-order companies, personal service affected customer satisfaction, Dougherty says. "As long as [a company] can appear service-oriented, that improves the satisfaction," he says.

According to the survey, customers ages 65 and older account for 26 percent of mail-order prescriptions, compared with 18 percent of prescriptions filled at brick-and-mortar pharmacies. Seniors, on average, fill about five times more prescriptions than other age groups, Dougherty says.

Another trend shaping the pharmacy sector will be the implementation of in-store health clinics, Dougherty says. Although only 6% of consumers polled in the J.D. Power survey had visited an in-store clinic, 24% said they were interested in the idea. "Stay tuned," Dougherty says. "It's still new enough that we don't have the data. But it's caught the attention of the pharmacy customers."