ExtraCare holds the key to personalization efforts
The ExtraCare loyalty program has grown to become CVS Health’s crown jewel. In 2015, the program — now in its 15th year — helped drive nearly $4 billion in savings for its roughly 70 million active cardholders. More important, it has emerged as the key engine driving CVS Health’s personalization efforts — a critical component of the company’s five-pillar strategy to reenergize its front-end business.
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The program, which first launched in 2001, made waves as the first loyalty card program at a national pharmacy retailer. Over the years, it has proven to be a treasure trove of data that is now enabling the retailer to respond to customers on a more individualized level and personalize the shopping experience with offers and rewards that are more relevant to them. Not only is it using the card as a lever to get its best customers to spend even more, it also is helping the retailer to get more business from less active shoppers.
“We work hard to use what we’ve learned from our most loyal customers to make a real impact on everything from what coupons and offers we present to our customers, to what products we carry and even the overall design of the store,” said CVS Health VP loyalty and personalization Michele Driscoll, who leads ExtraCare for the company. “These learnings not only benefit those most loyal customers, but also create a more enhanced experience for our customers that maybe only shop at CVS Pharmacy occasionally. As a result of that positive experience, we hope to see visits from them increase in frequency. Ultimately, we benefit when we can create the most meaningful engagements with all of our customers.”
With its sights set on customer-driven personalization, CVS Health is striving to drive higher sales and higher margin growth, especially among its “higher-value” customers. CVS Health’s “higher-value” customers represent 30% of its customer base and drive more than 80% of sales in the front store, CVS Pharmacy president Helena Foulkes noted during a meeting with Wall Street analysts in December.
One area in which the company has been particularly successful in driving more business from its best customers has been in beauty. CVS’s Beauty Club, an extension of ExtraCare, has attracted about 17 million members since its kickoff in January 2011. Through Beauty Club, members get $5 in ExtraBucks rewards for every $50 spent on beauty products and $3 ExtraBucks Rewards on their birthday.
“The ExtraCare Beauty Club has been a great addition to our ExtraCare Savings and Rewards program, as we understand that some customers see us as a beauty destination first and foremost,” said Driscoll. “We know those customers are passionate about beauty products and love to save money on specific brands.”
One key learning from the program, said Driscoll, is that beauty customers do not necessarily want the same types of coupons and savings as other customers. Oftentimes, they are more interested in being alerted when new products arrive from their favorite brands or categories. “Specific communications, like showcasing Allure’s Best of Beauty products, are most relevant to them and are an important element of attracting these customers,” Driscoll said.
The ExtraCare Beauty Club is helping the retailer re-imagine the beauty segment and get even closer to its goal of becoming a leading health and beauty destination.
“[Beauty Club] is a totally different experience,” Brian Owens, director of retail insights for Kantar Retail, told Drug Store News. “Vendors pay extra to be part of it so, as a result, there’s more of a partnership between the retailer and the brand to make sure it is effectively managed and the returns are higher. There is also a smaller number of people to target, [so] it enables them to be a little bit more strategic in terms of how they reach the consumer, and then, when you have a limited assortment, it is easier to curate the right products for them.”
The emphasis on health and beauty — along with its social responsibility initiatives, personalization efforts and digital innovations — also is helping position the retailer to better engage millennials, a top priority for CVS Pharmacy, said Driscoll.
“We understand [millennials] have unique shopping behaviors, and we want to provide solutions that resonate with them for a positive shopping experience. That’s why many of our new features that we are rolling out to support ExtraCare are digital and mobile-friendly,” she explained.
Earlier this year the company, whose long paper register receipts had become a target for scrutiny and fodder for late-night comedy show hosts, introduced optional digital receipts instead of printed ones. Showing a sense of humor and helping to humanize the announcement, Foulkes appeared on ABC’s “Jimmy Kimmel Live!” in May to introduce the paperless receipts.
In addition, ExtraCare members also are able to scan the card right from their phones, features that help “make the checkout process more convenient and faster for our customers, something shoppers from any generation can appreciate,” Driscoll added.