CVS Health Investing in Digital to Capture and Keep New Customers
CVS Health is investing in its digital capabilities as it tries to make the “seamless connection” across the consumer experience and capture new customers for the long term via COVID-19 vaccine appointments.
The drugstore retailer has administered approximately 15 million COVID-19 tests nationwide and more than three million COVID-19 vaccines to date. Its fourth-quarter 2020 earnings beat Wall Street’s expectations, CNBC said, as prescription volume lifted sales and it attracted new customers through testing and vaccines.
“We do see an opportunity with the vaccines and building relationships with new customers to convert them to long-term CVS Health customers,” COO Jon Roberts said on the retailer’s earnings call.
After customers get the vaccine they have to wait 15 minutes for observation to make sure they don't have an adverse reaction, he explained. During that time the retailer is giving them a series of value adds to encourage them to engage further, from shopping passes in the store to MinuteClinic education and ultimately CarePass rewards membership onboarding.
“Every one of these customers is coming through our digital front end,” said Roberts. “So we have their email. We have their text message and we have the ability to communicate with them regularly. So I would think of it beyond just the add-on front store. I would think about it as adding new customers to the CVS channel and getting their pharmacy business plus their front store business.”
The retailer said it expects capital expenditure of $2.7-$3 billion, above historical levels, as it expands investments in technology and digital, enhancing app and systems workflow, and continued investment in its health hubs.
“As you would imagine we are investing more in our digital capabilities clearly to demonstrate that seamless experience or in-person connections connected to our digital capabilities,” said president & CEO Karen Lynch.
“We are trying to make the seamless connection across the consumer experience,” she continued. “Today our consumers interact with us through the healthcare segment, through the pharmacy segment, through the retail segment and we really want to make sure those connections are seamless across all our segments so that consumers can engage with CVS Health once and feel that experience as a CVS Health.”
“We did a thorough kind of review of our technology and decided to accelerate in a few areas and it is all about improving the customer experience while reducing costs,” said EVP & CFO Eva Boratto.
In example, Boratto said CVS is deploying intelligent agents across call centers and it utilizes this technology for COVID vaccine scheduling. The deployment of the technology took 70-80% of the calls out of retail stores and the call center, which she called “meaningful impact in a very short period of time.”
“Another area that we're really focused on is how we utilize machine learning for greater personalization across all aspects of our business to increase the returns there. So we'll continue to evaluate and look at the returns and invest and learn here to drive the business forward.