CVS Tries New Prescription
Drugstore giant CVS Corp., Woonsocket, RI, is testing customized promotions in three markets, with plans to add major metro stores this year and roll out system-wide to its 4,100 stores as early as 2000.
The test began in September in Albany, NY, Baltimore, MD, and Greensboro, NC, where CVS mails its top customers monthly newsletters with customer-specific coupons and information on health and beauty-related subjects chosen by the customers themselves. CVS is working with a dozen HBC and general-merchandise manufacturers that test coupon offers and analyze customer purchase patterns using CVS data.
Offers are based on household purchase history tracked through customer loyalty cards. CVS has 300,000 names in its database, and “it’s going to get a lot bigger” as the program expands, says Mark Robinson, relationship marketing manager. “Having customer-level detail affords us new perspectives on the value of each customer to category and total-store sales. This will really dovetail with category management. The data is extremely valuable to define roles for categories, micro-merchandise by store, and develop more strategic cross-promotional opportunities.”
Robinson adds that manufacturers are starting to allocate more funds to data-based promotion, away from FSIs and circulars. “It’s ultimately a lot more efficient and effective to mail on a targeted basis,” he explains. Mailings and in-store incentives are structured as rewards for incremental purchases. CVS allows manufacturers to test some conversion tactics, but requires them to allocate the same number of coupons to reward loyal brand users.
As part of the test, CVS relaunched its two-year-old pilot program in Albany and debuted its internal data warehouse. Prime Response, Denver, developed the Prime Vantage campaign management software, and is handling CVS’s program. About a dozen U.S. marketers, primarily banks, are using Prime Response’s system for loyalty marketing, as are 40 major marketers in Europe.
