In rolling out its first paid membership loyalty program, CarePass, CVS Pharmacy not only is demonstrating confidence in its 20 years of rewards expertise, it’s recognizing the nation’s readiness to pay for good health.
The program, CarePass, is the first CVS paid loyalty program that offers free national pharmacy delivery and around-the-clock healthcare access, expressly to make it easier for members to care for themselves and their families. CVS began testing the paid loyalty program, an extension of its ExtraCare service, in Boston in October 2018.
In addition to serving customers, CarePass serves to distinguish CVS’s loyalty efforts from those of its direct competitors and, for that matter, the whole retail industry. CVS competes with supermarkets, drug stores and even department stores in certain categories, such as beauty. To better resonate with shoppers, the $195 billion chain is transforming itself into a holistic wellness brand. The new CarePass offers a level of exclusivity to those customers equally serious about it.
And it is a serious business. The wellness industry is approaching $4.2 trillion globally, according to the Global Wellness Institute. Spending in wellness beauty, personal care and nutrition alone generates $1.8 trillion.
“Building on two decades of success with ExtraCare, we know how powerful it can be for our customers and our business to design and leverage our loyalty program specifically with our customers’ actual preferences and pain points in mind,” George Coleman, senior vice president of merchandising at CVS Pharmacy, said in an email conversation.
How CVS CarePass Works
CarePass is designed to be flexible. Members can opt for the $5 monthly fee, for month-to-month membership, or pay a flat $48 for a year.
Benefits include free one- to two-day online purchase delivery (on eligible items and prescription drug orders), a 20% discount on certain CVS Health brand products and access to a live pharmacist, around-the-clock, who has secure access to members’ prescription histories with CVS Pharmacy.
As an added thank you, members receive once-monthly $10 CarePass promo rewards, which are automatically added to their ExtraCare reward cards at the beginning of each monthly cycle and expire at the end of the monthly cycle. (Note: Membership is limited or unavailable in some states, and not valid at Target stores.)
Behind CarePass: A Q&A
Coleman took time to answer questions about CarePass. Following are edited excerpts of our Q&A.
Q: Why did CVS introduce CarePass?
George Coleman: We know people love our ExtraCare program, which has more than 64 million active members, but we also recognize that some people want both simplified value and access to our unique services and offerings. We created CarePass with those customers in mind, making it easier for them to save money while taking care of themselves and their families.
Q: What results of the test in particular contributed to the decision to take the program nationwide?
GC: Our pilot of this program exceeded our expectations across all metrics. We are expanding this program ahead of schedule based on initial results from a few select markets, which shows we are seeing increases in traffic and spending levels for enrolled members that beat our projections.
For example: Average CarePass members spend three to four times more than our average CVS customers. As a retailer, we’re looking to drive growth and attain new customers, and CarePass has appealed to a wide range of consumers, with 30% of CarePass members being new or previously unengaged customers.
We’ve also seen incredible engagement by members across all of our digital channels, including pharmacy delivery, our app and CVS.com. Based on all of this data, it’s clear our members have enthusiastically embraced the program.
Q: Did certain consumer groups react to the new paid loyalty program offering in notable ways?
GC: We’re excited to see that CarePass appealed to a broad audience, including millennials, who make up 20% of our memberships.
Q: What changes did you make to CarePass during the test as a result of feedback?
GC: We rewarded our members with different surprise perks at key moments throughout the year. For example, members have been able to receive free sports physicals at their local MinuteClinics and free photos during the holidays. We’re going to enhance and evolve the program after hearing even more feedback from our customers following the nationwide roll-out.
Q: What’s next for the program?
GC: We’re most excited about the potential for growth for this program across the enterprise. We’re constantly working on the evolution of our programs and considering new ways to deepen the access to health care and health service that will make it easier for our customers to take care of themselves and their families.
At $5 a month (or $48 a year), CVS believes it has identified its shoppers’ comfort level when it comes to paying the price of priceless advantages, such as wellness. It may have also discovered a virtuous cycle.
Those memberships fees will help pay for the program, but ideally will support more accurate communications and offers to its frequent members, for even healthier rewards. Thus, it could lead to the promising pattern: the healthier the members live, the better their rewards, the more engaged they become in CarePass, and so on.
Bryan Pearson a Featured Contributor to The Wise Marketer and is the former President of LoyaltyOne, where he has been leveraging the knowledge of 120 million customer relationships over 20 years to create relevant communications and enhanced shopper experiences.