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CVS ExtraCare Loyalty Program Drives Bottom Line Revenue

In today’s economy the retailers that are flourishing may surprise you. Everyone knows low-price leader Walmart is the recessionary darling, but what other marketers are seeing their strategies pay off? What role does customer loyalty play in the success?

CVS/Pharmacy, unlike much of the retail category, posted a 2% rise in revenue during the third quarter 2007, and sales at stores open at least a year have handily beat competitors. In November and December, same-store sales rose about 6%.

While at the same time, CVS/Pharmacy has lowered its marketing spending. Measured media spending declined 10% to $140 million in 2008, according to TNS Media Intelligence, excluding the ExtraCare loyalty program. ExtraCare, which counts more than 50 million members, has enable CVS/Pharamacy to create one-to-one relevant, very personalized conversations with its customers. By putting personalization into practice, CVS/Pharmacy:

  • Increases conversion rates. Improving the relevance of communication increases the customer’s likelihood to buy.
  • Increases order sizes. More relevant cross-sells and up-sells increases the probability of the customer purchasing more than one product.
  • Creates customer loyalty. Presenting personally relevant content and giving each individual a satisfying user experience saves them time, create convenience, foster trust, and motivates repeat visits.
  • Enhances lifetime customer value. Improving loyalty and increasing order sizes combine to enhance the lifetime value of customers.
  • Gains greater customer insight. Customer information and intelligence captured in the personalization process can be leveraged across all channels to make every interaction more relevant and fulfilling.

The ExtraCare loyalty program has spawned more targeted marketing efforts, with promotional offers at the register, coupons, e-mail and direct mail. Rob Price, senior VP-marketing and advertising at CVS/Pharmacy, and his team leverage customer insight to target the customers with messages that resonate and build profitable long-term customer relationships.

Sallie Burnett
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