Tech Transformation Podcast: CVS Health's Zach Dennett Talks Loyalty and Convenience

Maia Jenkins
Editor
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Loyalty programs give retailers and consumer goods companies invaluable access to shoppers, and – if done correctly – can create dedicated brand evangelists. CVS’ ExtraCare program is one of the oldest loyalty programs on the market, but that doesn’t mean its not in a constant state of evolution and change. In this episode of Tech Transformation, we’re talking with Zach Dennett, VP of loyalty and omnichannel at CVS Health, about some of the ways they’re using consumer insights to build more customer-centric personalization approaches, and how the company is laser focusing on convenience as the decisive factor in creating loyalty and engagement. 

  • Why CVS is focused on making the company itself stand out, rather than just its loyalty program 
  • How they’re using AI to offer personalized interactions, driving value through customized promotions and seamless shopper experiences
  • How they’re leveraging consumer insights in new ways, while also protecting privacy
  • How they’re measuring success and the metrics they use
  • How they’re marrying in-store and online experiences to maximize convenience 
  • How CVS is constantly tweaking its online platform to enhance user experience and boost conversion rates 
  • How they collaborate with manufacturing partners for mutual success 
  • What’s next for loyalty, retail media, and convenience at CVS 

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Excerpts: 

On creating personalized experiences: “We are able to do customized promos based on your shopping behavior, based on what we know about you in a way that is quite compelling. What that means is we are constantly looking at all of your purchase histories. We are constantly looking at your propensity to spend based on the promo we give and we're optimizing. So the amount of data you can imagine that we're dealing with is astronomical, right? Every shopping behavior you did every day, you didn't buy because that tells us something about what we sent you. But the implication to you is a very, very simple. Here's a coupon. Wow, CVS knew exactly what I wanted. When you come to CVS, and you search for toothpaste, we shouldn't have to show you, if you're a single guy, kids toothpaste, that's not what you want. And if you're a Crest family, we shouldn't be showing you Colgate, similarly if you're Colgate family, we shouldn't be showing you Crest.  We should be really focusing you on what we need, making sure that the personalization is true throughout.” 

On marrying digital and in-store experiences:
“You often hear at conferences or things, people talk about the digital shopper or the in-store shopper, and they talk about these channel shoppers. And I keep looking for them and I can't find them. Because as far as I can tell, there are no only digital shoppers or only in-store shoppers left in the country. So this concept of like an omnishopper is of course the only way to think about it.”

On receipts and constant tweaks: "Digital is such a fun place to experiment because you can constantly be experimenting. So, within the app, we are constantly making changes. And we don't share our conversion numbers externally. But I can tell you the improvement we've seen in the last year and a half an hour conversion is really astronomical. And that's from this just continuous tweaking.

We have this small insight on the way customers are shopping. We have a small insight into the way customers are looking for products We have a small insight and search and they all seem tiny But when you start looking at it, the growth is really impressive So a constant level of tweaking, you know, where does that button go exactly? What should the default be? How do we save you one click and check out? How do we save, you know a couple of microseconds in the load times and we're really seeing a lot of changes there in-store and then in the program. So, in-store, the CVS receipts, the ones are people love to talk about, right? The long receipts with lots of coupons. And what's interesting about the receipts is as much as people love to talk about them, we have a lot of customers who love them. A lot of customers who [say] that's the way they shop. They get their receipt. That's their interaction with the program. You know, they look, they're like, oh, wow, look at that. It's one of the lowest tech ways to be incredibly high tech, right? You go and check out and then all of a sudden, a huge bunch of AI in the background figures out what the right coupon for you is and it prints out on the little receipt. So that's really cool. But we realized that some customers didn't want them and they were just throwing them out. So, we now offer the ability to get your receipt emailed or opt out of a receipt. And in fact, 40% of customers are now preferring a digital receipt or no receipt. So, a pretty large group of people are like, okay, great, actually digital is much easier for me because then I always have it, I know exactly where it is. It's in my email. 

And then in the programs, we're constantly tweaking. We have lots of little pilots that we put out to see, does this new benefit resonate with customers? And when it does, great, and when it doesn't, no loss, but we also made a change where customers get immediate access to their 2% cash back. When you think about the progra, one of the key things people love is they get 2% cash back on all of it. And to make sure that there's no delayed gratification, we started it such that you can get that kind of pretty much immediately.” 

On retail media and manufacturing partners: "When we think about the loyalty program, it has huge value across a number of different facets, but one of them is how well we know our customers. And we know our customers, we know our approximately 74 million customers unbelievably well. We know what they shop and it's a long program. So we know what they've shopped for years and years. That data is really, really valuable to our manufacturing partners. So one of the things that we're really excited about is our retail media network, which we call CMX. What we are finding from our partners is that they hear a lot about retail media networks, but what they find at CVS is that the richness of the data gives them a higher ROI than they're getting other places. That the level at which we can target customers, the level at which we can understand the customers has really been very valuable for them in terms of targeting. We're also finding that some of our manufacturing partners, the ones where we have close relationship with, are able to use some of our insights to figure out what products they want to be building and figuring out how they evolve their lines, how they think about new products. I will say that CVS takes privacy extremely seriously. And with everything I just said about the value of the data and how we use it, we are very, very intent on making sure that we are only using data in a way that you would be very comfortable with us using it. And we spend really a lot of time thinking about

On convenience: “Convenience is one of the areas that we're going to see a lot of innovation and we have some things coming up soon that we'll be able to talk about. But when you think about convenience, convenience is really multiple things, right? What is convenience? If I ask you, you know, if I get home, I said to my wife, oh, she asked me, how was your shopping today? I said it was really convenient. There's no way she would ask me like, what does convenience mean? She would know immediately.

But actually for each customer, it's different. And what we're really excited about at CVS is how we go ahead and make it hit customers conveniently, what it means for them to be convenient. So you're driving the kids to soccer, and you're already in the car, really convenient to go pick it up curbside. You're at home sick in your pajamas, you don't want to go out. Really convenient if we can figure out how to deliver it to you.

You happen to be walking to work and there's a CVS right there. Super convenient to just go in and buy things. Digitally, you're shopping. Convenience might be, how do we make it super fast for you to get in and out of the app, right? Incredibly fast load times exactly like that. Or convenient might be, you're looking to do some research on your next allergy medicine, and we did a great job of helping you go ahead and read up all about it. Convenience means lots of different things, but I think where we're moving is really towards a maniacal focus on how can we win in convenience.”


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Tech Transformation is also published on Consumer Goods Technology. 

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