Driving customer engagement with digital
Digital engagement is an integral part of CVS Health’s growth strategy, and for good reason. The digital customer at CVS spends 4.5 times more and engages with the CVS brand six times more than non-digital customers do.
(To download Special Report: Double Down on Health, click here.)
Charged with driving digital growth and innovation for the company is Brian Tilzer, SVP and chief digital officer for CVS Health. “[We’re] dedicated to making health care convenient, personal and affordable, and digital tools are key to delivering this experience,” Tilzer told Drug Store News. “Over the past few years, we have been focused on investing in and developing cutting-edge digital services and personalized capabilities to support our corporate strategies.”
“We know that 1-out-of-3 CVS Pharmacy customers use at least one or more digital tools,” Tilzer said, and many of them are tools deployed by CVS Health. “[As many as] 18.8 million people have enrolled in text messaging, and in 2015, CVS sent 300 million prescription text message reminders to customers,” he added. That digitally driven engagement generates 13 million mobile visits per month and accounts for 3 million weekly visits on average.
As part of its digital strategy, CVS Health is focusing on innovation areas including mobile, personalization, connected health and digital therapeutics in an effort to develop future-looking healthcare solutions, ranging from beacon capabilities that deliver customers in-store pharmacy reminders, to applications that turn mobile phones into remote diagnostic tools.
According to Kantar Retail ShopperScape, CVS’s app boasts the highest engagement levels among drug store operators, with 20% having used the app in the prior four weeks. In the past year, more than 12.2 million CVS shoppers have downloaded the app, representing growth of 67%. “Unbeatable pharmacy experience, personalization and loyalty; next-generation convenience and expert digital tools — that’s the new strategy,” said Brian Owens, director retail insights at Kantar Retail. “[Suppliers] have to invest here.”
To help drive that innovation from concept to real-world application, CVS Health’s digital division has engineered partnerships with leading digital health venture fund RockHeath and start-up accelerator MassChallenge. Last year, CVS opened its Digital Innovation Lab in Boston. The goal of the lab is to embody the CVS Health digital team’s mission to run like a start-up, accelerating speed-to-market and impact of digital innovation across the enterprise by using the resources of the lab to rapidly test, improve and implement new programs.
And it’s working. “Over the past year, the Digital Innovation Lab has brought to market a number of new digital tools that make shopping at CVS pharmacies easier and more convenient, [such as] launching CVS Curbside, or letting our customers hold their place in line at MinuteClinic through our app,” Tilzer said.
CVS announced in September it will be offering curbside pickup at more than 4,000 locations, or roughly half of all CVS Pharmacy locations, following a successful pilot launch in San Francisco; Charlotte, N.C.; and Atlanta.
“The response and adoption of CVS Curbside from our customers has been very positive,” Tilzer said. “We actually saw CVS Curbside as an added convenience and way to create more visits to our store. Through our pilot testing, we found that on average, basket purchases were larger through online delivery and curbside pickup versus in store.”
“We see this service as another way for customers to have access to the products they want — anywhere and any way they would like,” added Judy Sansone, SVP front store business and loyalty and chief merchant for CVS Health. “So they shop our store, or on CVS.com, and they now have another way to shop via mobile or web,” she said. “Whether the kids or pets are in the car, or [they] have a mobility challenge, … we are providing access — anywhere, anytime — to make the shop most convenient.”
CVS Health also recently introduced CVS Pay, the company’s exclusive mobile payment solution that integrates the entire digital CVS experience. Customers can link their ExtraCare card with CVS Pay, meaning a single scan at checkout will process all ExtraCare deals, earn new rewards and handle payment for the transaction.
Creating an exceptional digital shopping experience across the front of the store is one way to capture today’s digital-savvy consumer, but CVS Health also is leveraging its digital solutions to help improve such health metrics as medication adherence.
For example, the CVS Pharmacy mobile app includes a tool called MedRemind that helps customers stay on track with their medication schedules by enabling them to customize medication reminders.
“CVS Health digital tools allow for easier access to programs that help people start and stay on their prescriptions while reducing healthcare costs for clients of CVS Caremark, the pharmacy benefits manager of CVS Health,” Tilzer said. “Research from the CVS Health Research Institute shows that those patients who enrolled online at CVS.com, Caremark.com or CVSspecialty.com were more likely to fill their prescriptions and adhere to their medications. Among CVS Caremark members with common chronic conditions, such as hypertension, 10% more members improved their medication adherence to optimal levels after enrolling online at Caremark.com compared [with] members who did not enroll.”
Elevating beauty: Unlocking the health connection
Anyone without a clear vision of the link between wellness and beauty hasn’t heard CVS Health’s VP/merchandise manager for beauty and personal care Alex Perez-Tenessa describe the synergy.
(To download Special Report: Double Down on Health, click here.)
The health-beauty connection is a driving force for the company as it continues rolling out its new “Elevate Beauty” concept, which is now in about 2,000 of its stores.
“The future of beauty is health,” Perez-Tenessa — who stepped into his current role overseeing beauty and personal care for CVS Pharmacy after 15 years of retail consulting experience at McKinsey & Company — told Drug Store News. “Every piece of customer research and category trend that we look at confirms this.”
With pharmacy accounting for more than 65% of CVS’s volume, getting customers to stop in beauty and buy items to boost the basket is crucial. That mission became imperative to compensate for dollars lost by the health-minded decision to eliminate tobacco sales at CVS in 2014, too.
Presenting beauty as part of the health equation is a natural, Perez-Tenessa maintained. “Many beauty categories — such as moisturizers, oral care and sun care — are truly fundamental pieces of a good personal healthcare routine,” he noted.
But even the more cosmetic beauty categories can play a role in health. Research CVS conducted in conjunction with Dr. Vivian Diller, a psychologist who studies the role beauty plays in women’s lives, revealed that cosmetic products can impact what Diller calls “subjective well-being.” Citing the example of a bold lipstick to provide an emotional lift, Diller said beauty products can help enable physical and emotional well-being.
That research fits neatly into CVS’s vision for the beauty category.
Excluding cosmetics, all of the growth in the past three years [in beauty] has been driven by beauty brands and items with a strong “health orientation,” Perez-Tenessa explained. As a response, CVS has doubled the number of health-oriented items in several beauty categories. “In many categories, such as body lotions or oral care, we have been first to market full sets of these items in our stores.”
CVS also is using exclusive brands to stake out a health position in beauty care and help set itself apart from its competitors, through such brands as the dermatologist-tested Skin+Pharmacy, Enlite and premium derm-brand Jouviance. “We want to give our customers better, healthier choices across multiple categories that they can’t find anywhere else in the market,” he said.
Skin care is the anchor of CVS’s healthy beauty strategy. “Skin is the largest organ in the body and needs to be looked after,” he said. “This year, we’ve practically doubled the number of CVS stores that carry CVS’s premium dermatologist brands.”
Among those labels are La Roche-Posay and Dr. Hauschka Skin Care, a highly coveted natural brand that was added to the mix in 2014. At the time of the introduction, Dr. Hauschka CEO Victor Morrison praised CVS beauty advisors for their ability to “prescribe the right skin regimen for each shopper,” he said.
CVS’s strategies come to life in its Elevate Beauty department enhancements, which started rolling out to stores in 2015, with an initial 2,000 doors. With a mission to make the shopping experience more enjoyable — especially in the SKU-intensive beauty category — CVS implemented compelling trend stories throughout the space, via signs and displays, enhanced education and improved guidance on shelves. Skin care and cosmetics are the headliners in the reboot.
“Beauty remains a complex and highly sensorial category. The customer needs to be guided so they can find what they want and then be inspired to try new styles to make them look and feel even more beautiful,” Perez-Tenessa said.
According to Perez-Tenessa, in order for the changes CVS was making in beauty to be successful, the goal needed to be on driving innovation that was scalable, allowing it to touch the maximum number of stores and customers. “From the beginning, our focus was on scalable elevation,” he explained, “to touch thousands of stores and [more than] 50% of our core customers in a meaningful way.”
So far, the initial results have been encouraging. Stores that have been enhanced with the new Elevate Beauty concept have seen growth of about 3% compared with stores that have not received the changes, he told DSN. Further, “we are also seeing the kind of highly engaged beauty customers, those who like this type of prestige-like experience, grow within our stores.”
So far, stores that have received the new-look departments were largely comprised of CVS’s top beauty doors, but the chain also rolled the Elevate Beauty concept in different geographic areas to provide a true snapshot of shopper interest.
Buoyed by the early results, CVS unleashed a second wave of Elevate Beauty enhancements in 2016. “We are touching more categories and more stores this year,” he said.
Specifically, CVS currently is introducing a consistent prestige design for its cosmetic end caps; has added a cosmetics brush bar; is elevating and expanding the header system to more categories; and has created a high-impulse, front-of-checkout beauty display called Beauty on the Go. “It is getting rave reviews from customers and performing very strongly,” Perez-Tenessa confirmed. There’s also a groundswell of loyalty for CVS Pharmacy’s exclusive brand Makeup Academy — featured prominently near the entry to the department — consisting of brushes and select cosmetics. The look is upscale, and the products are getting positive consumer reviews.
Signage is paramount in beauty, but not all categories respond to a one-size-fits-all approach. Color cosmetics, for example, appeal to shoppers via inspirational messages and are more visual. Clinical skin care, however, requires displays that are more educational in nature. “The customer wants to know why those products are so strongly recommended. Signage is not there to decorate; it is to help the customer, and we are very thoughtful [with] how we use it,” he explained.
Upping the ante on service
The level of service also hits a new zenith in CVS’s new beauty department. “Premium beauty has to come with a stronger focus on service,” he confirmed.
To meet that need, CVS has an amplified Beauty Service program in about 900 of its stores that redefines the role and responsibilities for its in-store beauty advisor position. For years, the beauty industry had struggled with how to balance department housekeeping with attention to shoppers. CVS has found the remedy, Perez-Tenessa explained.
“We have come to the realization that many beauty advisors were spending more time on store tasks than they were helping customers,” he observed. “So we changed our model from beauty advisors to beauty consultants who were selected for their passion for beauty and customer service,” he explained.
CVS’s beauty consultants undergo intensive training to be familiar with the different product offerings and benefits — much akin to prestige beauty training programs.
“We’ve taken all the tasking away, and our beauty consultants can focus on customer service and events,” Perez-Tenessa said. CVS supports them with tools created specifically for higher service offerings.
The payoff has been “hugely successful,” he said. “We’ve seen great customer response.”
About half of its 900 beauty service stores are operating with the new program; the other half will ramp up before the end of the year. “It is a very dramatic change in how we think about our colleagues,” he said.
CVS currently is laying out plans for the next wave of beauty elevation, Perez-Tenessa said, but for now at least, he’s keeping those details under wraps, adding only, “in our mind, elevating beauty is not a project; it is how we do business.”
More than meets the eye
The chain’s focus on the beauty category isn’t only about merchandise and presentation. CVS has a laser focus on personalizing its messages, especially tapping its ExtraCare rewards members. Beauty is a category where matching the customer to the message is critical, he said.
“The customer is frustrated with the large amounts of mass marketing she is receiving, which for the most part is meaningless to her,” Perez-Tenessa said. “With our 70 million ExtraCare members — the leading retail loyalty program in the country — we are uniquely able to talk to her in a way that is more relevant, highlights the categories she loves and helps her discover new ones we also think she will love.”
CVS leverages all the strategies in its toolbox to take beauty personalization to a new level beyond traditional item, brand and price propositions. “We are tailoring how we approach our customer with styles and trends that we think match her preferences. In beauty, the trend and style is different by customer,” he said.
CVS also has a secret weapon — its Beauty Club. The No. 1 retailer beauty club in the country allows CVS to tap into that audience with curated content and value. And that’s also helping it curry favor among millennial shoppers, too.
The vendor community has been instrumental working with CVS in its mission to elevate beauty, Perez-Tenessa told DSN. The best-in-class companies, he said, are rethinking the traditional retailer and supplier roles. “They are embracing the complexity and fluidity of today’s shopping patterns. They leverage all of our joint assets to engage her not only in the store, but during the pre-shop, shop and post-shop phases of her shopping journey,” he said.
This was evident in CVS’s recent social media campaign “Long Live Skin,” which received support from myriad suppliers to help promote healthier skin routines to consumers, driving shoppers into the store, drawing them to the right products for their needs and following up after the purchase. “Some of our best skin care suppliers partnered with us, truly thinking differently,” he said. Among those teaming up for the campaign were Johnson & Johnson and Procter & Gamble, to name just a couple.
In addition to social media, which clearly is helping to move the sales needle in beauty, beauty in general is a major component of the chain’s digital reinvention strategy. “It is a big focus for beauty,” Perez-Tenessa said. “There are a lot of things we are doing for the beauty customer experience online that complement what we’re doing in stores.”
Among the efforts are 50,000 new enhanced product images detailing shades and other information to help consumers ease the path to finding the right item. Customers also can use CVS.com for such options as finding their last purchase for replenishment, and a new “Hello Trends!” feature highlights emerging products. Many of these are inspired by what’s trending on social media. For instance, at press time, with the Halloween selling season well underway, the page featured “Goth Glamour” and tips for how to achieve the look — specifically using some NYX color cosmetic products featured at CVS.
With an eye on giving information-hungry shoppers more knowledge, CVS also has added a skin care ingredient glossary online. “It makes it easier to know what ingredients you are getting, which is extremely important to millennials,” Perez-Tenessa noted.
The sparkling new look at CVS is a team effort, he said. “I believe we have the best team in the industry.”
Indeed, Perez-Tenessa understands the importance of assembling a strong team. In addition to his background in consulting and a Harvard MBA, CVS’s top beauty merchant’s resumé also includes a stint as Second Lieutenant in the Army of Spain from 1997 to 1998, training soldiers in infantry tactics and anti-guerilla fighting.
Today, his team in the battle for shoppers’ confidence includes Maly Bernstein, DMM beauty; Grant Violanti, senior director of loyalty and personalization; and Rebecca Sears who, as the director of brand marketing for beauty, health care and edibles, helps curate CVS’s exclusive items. In the competitive beauty field where everyone from the local health club to the convenience store is adding cosmetics, having something the competition can’t offer is a major coup.
Industry observers agreed that CVS is making huge headway in beauty — and is doing so in a sustainable manner. Undoubtedly, the company learned that beauty enhancements must be part of a larger cultural shift rather than just a glitzy move that translates to only a handful of certain stores. Ahead of its time, CVS tried an upscale boutique concept called Beauty 360 in 2008. Although it has since retrenched from the format, there are traces of its learnings evident in today’s stores.
The Elevate Beauty platform serves up what drug store shoppers want, and has been shown in leading research reports to encourage pharmacy customers to build baskets in beauty. CVS continues to pull in more higher income households than many other mass merchants, as well as a more diverse audience of shoppers, and further efforts in beauty should produce greater front-end sales, experts predicted.
“I love what Alex has been doing at CVS,” said Brian Owens, director of retail insights at Kantar Retail. “He’s doing a terrific job using his consulting acumen and background in a competitive environment where retail innovation is critical.” Owens credited him with being “daring” and using his insights DNA to make consumer-driven decisions quickly while challenging suppliers to break out of the tried-and-true and “really data mine” to be architects to build the front end.
CVS is listening to shoppers, most recently experimenting with curbside pickups in several markets. But with beauty, the goal remains courting customers to come in and do something good for themselves. “Enjoy a complimentary tête-à-tête with a beauty consultant,” the chain’s website states, “because our newly renovated CVS/pharmacy is all about creating the most beautiful you — inside and out.”
Although there’s more work to be done, Perez-Tenessa revels in going into a store — unannounced — and seeing the fruits of his team’s efforts. “We are getting rave reviews from our customers who find the environment more sophisticated, more elevated and more helpful. That’s my greatest achievement.”
Merchandising ‘Better Health Made Easy’
Two years ago, CVS Pharmacy made the bold decision to walk away from tobacco. It was the right move for a lot of reasons, but the fact remained: There was a $2 billion sales hole that needed to be plugged.
(To download Special Report: Double Down on Health, click here.)
In the wake of the tobacco decision, the company began a journey to make its stores the physical embodiment of its corporate mission to help people on their path to better health. Central to that has been one key pillar of its five-pronged strategy for revitalizing growth in its stores — something it calls, “Better Health Made Easy.”
As health care continues to shift ever more rapidly to a consumer-directed model, with an increasing share of the burden for rapidly escalating costs continuing to shift to the patient, that shift in strategic focus — to try to create a self-care center of excellence at retail — really couldn’t have come at a better time.
“As the leader in health [and] OTC, we have a heightened awareness of the importance of consumer health care to the overall well-being of our customers and patients,” Judy Sansone, SVP front store business and loyalty and chief merchant for CVS Health, told Drug Store News. “The move from sick care to self-care is happening, as customers are more educated about the benefits to proactive wellness.”
From a broad merchandising strategic view, that has meant jumping on emerging wellness trends early, “leading with an assortment that helps our customers take care of their health both proactively as well as when they need acute care,” Sansone explained. Products “geared to vitality are trending strong” at CVS, including naturals and alternative remedies, premium vitamins “typically only found in specialty stores, sleep solutions, digestive health innovations and genetic testing” — all examples of how the company is “innovating in health care,” she added.
In the fourth quarter, CVS Pharmacy will roll out new end caps in the healthcare quadrant of its stores designed to help simplify the shopping experience. Earlier this year, CVS dedicated 25% of the checkout area in all stores to better-for-you snacks, and added core health care to its checkouts partially converting an area once dominated by candy bars and chewing gum.
Health is more than OTC
“Better Health Made Easy” doesn’t stop at the OTC quadrant of the store. Earlier this year, CVS Pharmacy expanded its assortment of healthier-for-you foods and beverages to more than 2,900 locations. In many stores, the front aisle of bagged candy has been converted to such healthy snacks as nuts. And 75% of CVS shoppers say they intend to shop more often for on-the-go snacks at CVS.
“Healthy snacking is the anchor” of the CVS front-store transformation, noted Brian Owens, director retail insights at Kantar Retail. “If you have any part of your portfolio that talks about health or has anything to do with snacking, you have incremental opportunities within this store.”
“This expansion is an important step as we continue to evolve into a premier health destination by making better health easy for our customers,” Sansone said. “By supporting active lifestyles and healthy choices, our customers are responding by switching to better options,” she added. “A great example is that today CVS Pharmacy sells more water than soda.”
Sansone noted that three-quarters (77%) of CVS Pharmacy shoppers reported that having greater access to healthier food offerings was either important or very important to them. Even more CVS Pharmacy shoppers (82%) were impressed with how CVS expanded its healthy eating options, according to company research.
“We work closely with the better-for-you brands we offer to inspire the evolution of healthy foods at CVS,” Sansone said. CVS’s Fit Choices shelf tagging program includes more than 520 items that are tagged in store as either a good source of protein, heart healthy, gluten free, sugar free, organic or non-GMO project-verified.
Beauty also represents a strategic priority for CVS Health, having expanded its assortment in categories linked to health expertise, including a sharper focus on organic and clinical beauty products. “Beauty is a cornerstone for CVS,” Owens noted. “Beauty is where [CVS] has very loyal shoppers, and beauty is the emotional [component] of CVS’s health-and-wellness strategy — the wellness part.”
“Beauty is important to our best customers and is often the gateway into our stores,” Sansone said. “We’re capitalizing on the success of last year’s ‘Elevation’ of the beauty department, and expanding the refreshed offerings to more stores and categories this year with enhanced navigation, exploration and inspiration,” Sansone said. To help invite more exploration and discovery in beauty, a part of CVS’s Elevate Beauty strategy included updated signage in the aisles and an emphasis on inspirational/educational display. “Other enhancements, [such as] mirrors on the cosmetics wall, product regimen trays and products grouped into categories customers most care about, have also added to the enhanced experience” in beauty Sansone said.
In addition to enhancing its health and beauty product offerings, CVS Pharmacy also has focused on personalizing the shopping experience for its most loyal consumers. “Personalization is a high priority for us because it delivers immediate value to our customers, while also helping us optimize our business,” Sansone said. “We are committed to continue to move aggressively from mass promotion to personalized value. Today’s customers expect us to offer relevant value. At the core of CVS’s personalization efforts lies ExtraCare, the longest-running loyalty program in the drug store channel.”
“Over time, our approach toward ExtraCare has evolved from offering all our customers the same offers to looking at each customer individually to better understand their behavior and deliver value that is more relevant to each of them,” Sansone explained. “For some, that could be a coupon for a specific item at a specific time. For others, it may be introducing them to new products.”
Another way that CVS is trying to become more relevant to its best customers lies in its store segmentation efforts, including — perhaps most notably — its CVS Pharmacy y más stores. Built based on insights from its 2014 acquisition of Florida-based Navarro Discount Pharmacy, the CVS Pharmacy chain now includes 12 CVS Pharmacy y más locations in Miami and nine in Los Angeles. About 80% of the products in its Los Angeles CVS Pharmacy y más store are sourced from local vendors and distributors in California, and about 300 of the products in those stores also are manufactured in California, Sansone told DSN, including such brands as El Alteño, Betel, De La Cruz, Don Francisco, La Llave, Bactimicina and more.
CVS is making bold moves to meet the customer everywhere she wants to be, with convenience and value.
“This month we launched curbside nationally in over 4,000 stores,” said Sansone. “Customers expect to shop any number of ways and we are making it easier for them, either at CVS.com, via mobile, or in our stores.”
CVS Pharmacy will continue to lead in health and beauty with a customer first mind-set.