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CVS Loyalty Program Drives Bottom Line Revenue

With the economy in a tailspin, the retailers that are flourishing — and floundering — may surprise you. Everyone knows low-price leader Walmart is the recessionary darling, but what other marketers are seeing their strategies pay off, and which ones are not?

Drug Store CVS unlike much of the retail category, the chain posted a 2% rise in revenue during the third quarter, and sales at stores open at least a year have handily beat competitors’. In November and December, same-store sales rose about 6%. Still, CVS has lowered its marketing spending. Measured media spending declined 10% to $140 million in 2008, according to TNS Media Intelligence. Rob Price, the chain’s senior VP-marketing and advertising, pointed out that not all of the retailer’s programs are captured in measured-media data. Its massive ExtraCare loyalty program, for example, is not tracked. That program, which counts more than 50 million cardholders, has spawned more targeted marketing efforts, with promotional offers at the register, coupons, e-mail and direct mail.

“We have one-to-one marketing to millions of customers, where we can have a very personalized conversation,” Mr. Price said. “In our media selection, we’ve been very careful to pick not only the right demographics but also the right programming environment, so that our message resonates…We’re not just advertising for awareness but for activation.”