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CVS Pharmacy Leverages Email to Reward Loyal Customers

CVS/pharmacy (CVS) is the nation’s leading retail pharmacy with more than 7,000 locations across the country. Along with prescription medications, CVS offers a wide selection of popular beauty, health, and personal care brands, as well as an assortment of brands not available at any other U.S. drugstore including CVS/pharmacy store branded products.CVS 1

CVS’s ExtraCare program is the largest retail rewards program in the nation, with more than 62 million active cardholders. ExtraCare participants earn 2% back on nearly every purchase they make, delivered in the form of ‘CVS/pharmacy dollars’ called Extra Bucks.

Extra Bucks are paid out online and on the bottom of customer receipts at the beginning of each quarter. Additionally, cardholders receive instant Extra Bucks every time they shop simply by purchasing specially advertised items.

Free Gifts for Loyal Customers

Since CVS store brands have higher margins than name brands, the company has made it a priority to aggressively grow this business. Working with e-Dialog, CVS deploys the Free Gift campaign to give customers a risk-free way to try CVS brand products while simultaneously driving traffic to stores.

Once per quarter, CVS e-mails ExtraCare cardholders a seasonally themed message combining educational content, in-store promotions, and a large call-to-action to “Choose your Free Gift.” For example, the spring “Go Green” message included an article on fitness and nutrition, discounts on allergy medication and spring cleaning supplies, as well as a coupon to choose a free gift: a reusable CVS tote bag or a roll of environmentally friendly paper towels.

CVS 2“This program is particularly relevant in this economic climate,” explains Elisa Kleniewski, e-Dialog account manager. “Consumers are looking for value now more than ever. Not only do ExtraCare members receive discounts, but they are getting an incentive to try a CVS brand product which offers the same high quality as a name brand at a lower price. Making this product switch provides long-term value to the customer, while increasing profits for the company.”

 

A Healthy Outcome

CVS’s test and learn approach to this campaign is resulting in continually improved performance. The program’s initial e-mail offered one free gift item (travel cotton swabs) for all recipients which attained a modest redemption rate. Working from the theory that giving a choice of two items would lift results, CVS tested an offer with the option to choose between two free gifts (a bag of pretzels or a roll of tape). The theory proved correct: redemption rates nearly doubled, and have continued to increase to 10%, three times the original CVS 3redemption rate.

Customers have remained engaged with this quarterly campaign, with open rates averaging 29% and click rates averaging 20%. The click to open ratio has averaged 68% demonstrating the relevance of the message and the level of audience engagement.

“We believe the inherent value in the offers combined with the element of surprise is contributing to the continued customer engagement for this campaign,” Elisa says. “The free gifts are different in each e-mail, increasing customer curiosity and interest.”

Along with generating customer engagement and trial of CVS brand products, the campaign is achieving its primary goal: revenue generation. Comparing ExtraCare e-mail recipients to a control group, CVS has seen impressive incremental quarterly sales from the recipients, averaging $800,000.

CVS’s Free Gift campaign is generating trial of CVS/pharmacy brand products while driving traffic and incremental revenue to the retail stores.

 

e-Dialog Success Story - Loyalty Program and Drive to Store
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