CVS/pharmacy’s path to personalization

Fifteen years of ExtraCare data is influencing everything from how the company builds stores to how it communicates with customers

Personalization. In a single word, it is what is at the heart of every strategic initiative and important retail program occurring at CVS Caremark today.

“The overarching thing that we’re working on, and I think is the big key to our success, is this theme of personalization,” Mark Cosby, president of CVS/pharmacy, told Drug Store News in an exclusive Sept. 20 interview. “Any of the success we’ve had in pharmacy, front store or the total company has been under the halo of personalized experience. It is the core of everything that we’re working on right now.”

Talk to any member of the CVS Caremark executive team these days about the company’s core retail strategy and how it aligns with its broader plans to grow the total enterprise (read: the continued integration of one of the nation’s largest network of stores, one of the big three PBMs and the largest retail clinic footprint), and the conversation routinely comes back to that single word: personalization.

To learn more about CVS Caremark’s personalization efforts, and how those efforts are manifesting across its entire business — from how it is training its associates throughout the company, to how it markets and communicates with its customers, how it designs and merchandises its stores, and the pharmacy programs it is using to drive patient adherence and improved health outcomes — DSN recently sat down with Cosby, as well as SVP merchandising Judy Sansone and SVP/chief marketing officer Rob Price, at the company’s headquarters in Woonsocket, R.I.

Really, it’s nothing new, they’ll tell you; this has been going on for years now — about 16 years, actually, ever since it first launched the ExtraCare loyalty program in 1997.

But that commitment has definitely been amplified recently, and is resulting in a series of new initiatives and programs that the company either has introduced recently, or plans to introduce in the coming weeks and months, including:

• myCustomer — A customer service initiative that began in January with a new email-based customer survey tool, and culminated in March with the training of all 188,000 CVS store associates on the critical behaviors needed to better engage customers and deliver the best possible customer experience;


• Segmentation — How the company is identifying and communicating with its best customers;


• myCVS — How it is segmenting its stores into manageable clusters to match the local trade area;


• Conversion — How it is engaging customers to purchase more broadly across different departments of the store;


• Supplier collaboration — how a new information gateway rolled out this fall, developed with IRI, is enabling its vendors to use and plan from the same data used by CVS’ own category managers; and


• myWeeklyAd — Launched just last month, the digitized circular program creates a personalized list of offers based on the actual items an ExtraCare member historically purchases.

Identifying top customers

And just as it all began with ExtraCare, today, with more than 70 million active members, the program clearly remains a central driving component of CVS Caremark’s personalization efforts. “A big piece of personalization is how we take ExtraCare to the next level,” Cosby explained.

It is no news flash that after many years of being the only loyalty program in the drug channel, competition to ExtraCare has emerged in recent years, as both Rite Aid and Walgreens have introduced programs of their own. “We have seen a greater saturation of conventional loyalty programs,” Price noted. “What it has told us is that we need to be unconventional.”

But it’s not just being different for the sake of it. “The card itself — and even the basics of a loyalty card program — is not the heart and soul of customer engagement,” he explained. “The easy part is distributing cards — we’ve distributed 327 million cards. The disbursement of plastic is not the hard part. The hard part is the personalization, and the access and the ease of use, and the insights and relevance that you build over time.”

And that is an area in which CVS Caremark executives are quite confident that their 16-year head start gives it a significant advantage. “We think that relevance is an advantage that is very hard to catch up with,” Price said. “We think of ourselves as a matchmaker, or a personal shopper, between a customer and their very best deal — that’s something you can only earn over time.”

As CVS Caremark has discovered over the years, the true beauty of its ExtraCare loyalty program — used in about 84% of total front-store sales, according to the company — is the data that helps CVS identify segments of customers in order to deliver relevant rewards to each segment.

“What has become more important is providing more personalized service to our top customers based on their healthy habits,” Price said.

CVS’ best customers concentrate in one of three areas, he explained, which the company has identified as:

• Health seekers — Customers who tend to over-index in terms of managing chronic conditions and who are enthusiastic and curious about how they can take personal control of their health;


• Health strugglers — Similarly struggling with chronic conditions, but these customers tend to be more uncertain about how to take control; and


• Quality actives — Valuing convenience and ease of use when taking care of their acute needs. “They may not have as much presence of chronic disease in the house,” Price explained, “but as they grow older, become caregivers and perhaps develop chronic disease themselves, and begin to fall into that ‘Seeking’ or ‘Struggling’ phase, we are going to be their preferred destination.”

Why health? Because it enables a powerful alignment between its best customers’ core interests and CVS Caremark’s core strengths as a dominant force in pharmacy healthcare innovation, and its broader mission to leverage its unique three-pronged, integrated structure to help fix health care — lowering costs, increasing access and improving outcomes.

One clear example of how personalization has played out in pharmacy and health care across the CVS Caremark enterprise is the work it has done with Pharmacy Advisor; by definition, that program, which identifies gaps in therapy and adherence at the patient level, relies on a personalized intervention with the patient, Cosby explained.

CVS Caremark pharmacy teams have performed more than 100 million of these types of patient interventions through Pharmacy Advisor since the launch of the program.

Similarly, ExtraCare has evolved in design in recent years, with a growing range of opt-in programs that aim at the sweet spot of its “Seekers/ Strugglers” strategy, including the addition of ExtraCare Pharmacy and Health Rewards and the ExtraCare Advantage for Diabetes program.

For the “Actives” part of its strategy, ExtraCare has spun off fun, hip programs like Beauty Club.

While executives are reticent to discuss how these opt-in niche programs would continue to evolve ExtraCare, it is clear that CVS will continue to work closely with its best vendor partners to leverag