Assessing CVS’s New Membership Program, CarePass

Assessing CVS’s New Membership Program, CarePass

I’m a big fan of CVS, a chain of pharmacies plus convenience stores, both as a consumer and as a business strategist.

Living in the Boston area, there are two things you can expect to find every few minutes as you’re driving around: CVS and Dunkin’ Donuts. Once you get inside, CVS sells everything you might need in a pinch. So they’re highly convenient. From a strategy standpoint, they were the first national pharmacy to stop selling tobacco products (a move that probably cost them short-term profits, but they’ll make up for it in the long run by positioning themselves as a health brand, rather than just a convenience store).

As an admirer of the brand, I was excited to hear CVS was piloting a membership program here in the Boston area. It’s called CarePass, and I think it’s a great starter membership program.

So what can we all learn about the program design as we’re launching or optimizing our own membership businesses? And what suggestions would I make on how CVS can bring CarePass to the next level? Let’s take a closer look.

Background and Context

For those who are already CVS customers, you’re likely aware of their existing ExtraCare program, which offers coupons and discounts on purchases. But it’s important to note ExtraCare is not a membership program, it’s a straight discount program. The CarePass program is CVS’s first step into the membership game; the benefits they offer are much greater than just a couple of dollars off here and there.

On the CarePass landing page, they tout:

  • Free one- to two-day shipping from CVS.com.
  • Free one- to two-day delivery on qualifying prescriptions.
  • A 24/7 pharmacist helpline
  • A 20% discount on CVS Health brand products
  • A monthly $10 coupon

This does come with a price. Unlike their free ExtraCare program, the CarePass membership is $5 per month, or $48 per year.

On the CarePass homepage, CVS has the following text above their call to action button:

“The membership for your non-stop life. Enjoy great member benefits like FREE Rx delivery and much more. Join for only $5 a month. Ready to become a member? Join CarePass now.”

Who are They Targeting?

Rule one for launching a membership program is don’t try to be everything to everyone—focus on a specific group of whales—engaged and enthusiastic customers.

Upon hearing that CVS was establishing a membership, my first guess was that the program would be targeted at seniors. They’re a group that usually has greater health and pharmacy needs and could probably benefit from such a membership program.

But upon seeing the landing page for the program, I think they have another audience in mind. Of course, I don’t work for CVS, so I’m not privy to their discussions around target audience. But the messaging and images allow us to take some educated guesses about who they’re really targeting.

Let’s start with that header at the top of the page. They declare CarePass, “The membership for your non-stop life.” That headline is accompanied by an image of a young mom with her kids, juggling CVS packages in her arms. As you scroll down, there’s a video of two young moms walking through a house filled with very energetic children. One of the women is talking about the benefits of the program, while opening her CVS package and squirting her newly-purchased hand sanitizer into the many little hands in front of her. Once you get down to the FAQs, you see that certain Medicare benefits are excluded from the program.

Armed with this information, it doesn’t look like they’re targeting retirees. It seems instead that their focus is on busy parents.

Is the Value Proposition Compelling?

Once you’ve identified your target audience, create a value proposition that is compelling to them. It’s a statement that tells them why you and your membership program are best suited solve their problems.

Assuming that analysis is correct, and the target for CVS CarePass is busy moms and dads, then let’s review the benefits and try to determine what problems the membership is solving.

First up is the free one to two day shipping on products and prescriptions. This could certainly be valuable for moms and dads. We parents are always running around doing things for our kids, so eliminating a trip to the local CVS is time well-saved.

Plus, we’re all conditioned by Amazon to purchase things online and expect them to show up on our front porch in a day or two. Points to CVS for also calling this out as the main benefit on the membership enrollment page.

Next up is the 24/7 pharmacist hotline. This one I’m not so sure about. Normally access to an expert is a key driver of membership enrollment, so, on that hand, this perk makes sense.

But access to a pharmacist is something that would be valuable only sporadically—when you’re filling a prescription for the first time, perhaps. Not only that, but when you have a prescription emergency in the middle of the night, it’s more likely that your first call will be to your physician, not your pharmacist.

Lastly, you have the discounts, both the monthly coupon and the 20 percent savings on CVS Health brand products. Generally speaking, I’m not a huge fan of relying so heavily on discounts to drive membership enrollments. This often has the unintended consequence of attracting people looking to game the system, rather than grabbing the attention of your whales.

Plus, this particular discount program has a lot of exceptions. If you use your coupon in store for something under $10, the coupon is considered used in full for that month. The 20 percent excludes sale items.

If I were advising CVS, I’d tell them to simplify the benefit. Say everyone gets $5 off their first purchase each month and 10 percent off everything, no exceptions. This still provides consumers the benefit of getting their membership fee back easily, and it makes the discount simple to understand and generous enough to drive more frequent and larger purchases.

What Could Make the Value Proposition Stronger?

It seems like CVS has a pretty good idea of what busy parents are looking for: chiefly, benefits that are convenient and save them time. But looking beyond that, what else can CVS do to enhance their membership?

I’d start by playing up the community element to tap into the emotional benefits of being a member. Again, assuming the target is busy parents, why not consider an online community for moms and dads? A forum where they can ask questions and get answers from other like-minded parents, or even experts in the field. If this is too hard to build, is there an existing forum out there worthy of acquisition?

Next, introduce an in-person component. Can there be special days to drive store traffic and member interaction and, potentially, interaction with experts in the field? What about a monthly in-person lecture from a leading pediatrician or pharmacist for members only? Special members-only giveaways? These ideas both drive membership loyalty and “show off” the membership to non-members who might see all the excitement in the store and get curious about what’s going on.

Since saving time is the focus of the program at the moment, CVS should consider adding other tangible convenience-based benefits. Things like product subscriptions (e.g., get content lens cleaner every month without having to remember to reorder), dedicated check out lines in-store, or curbside pickup would be a nice next step.

In the end, the CarePass program, like all memberships, is an effective concept for CVS to build direct relationships with a key segment of their customer base. While there are some ways to strengthen the program, it’s a good first step in enhancing the CVS customer experience and thus lifetime value!

About the Author

Rob Ristagno, Founder and CEO of Sterling Woods, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. He started his career as a consultant at McKinsey. Ristagno holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.

Rob is the author of A Member is Worth a Thousand Visitors: A Proven Method for Making More Money Online. He regularly speaks at key media conferences, including at Niche Media events, Specialized Information Publishers Association meetings, and the Business Information and Media Summit.

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