CVS tobacco decision a lesson in filtering loyalty programs
Through a special arrangement, what follows is a summary of an article from COLLOQUY, provider of loyalty-marketing publishing, education and research since 1990.
CVS Caremark’s decision to discontinue the sale of tobacco products has triggered positive smoke signals from health advocates and the White House, but what is less clear is how it will affect its loyalty membership.
CVS said its decision to become the first national drugstore chain to pull tobacco products underscores its role in the evolving health care system, and that its purchase data contributed to its decision.
"Now more than ever, pharmacies are on the front line of health care, becoming more involved in chronic disease management to help patients with high blood pressure, high cholesterol and diabetes," said Mike DeAngelis, CVS spokesman in an email interview. "All of these conditions are made worse by smoking and cigarettes have no place in a setting where health care is delivered."
Tobacco purchases are not eligible for ExtraCare savings and offers, Mr. DeAngelis said. But the absence of the products can still turn customers away, said Gary Wright, president of G.A. Wright Inc.
"You’d think that people who buy cigarettes are also people who have a higher propensity to need all kinds of other non-prescription drugs. (They have) more bronchial problems, more colds, more flu, probably buy more cough drops, more antihistamines than the average population," Mr. Wright said. "So I would think that stopping the sale of tobacco products, though it may be an admirable thing to do, may take those customers who are probably good drug store customers to another competitor."
Jeff Berry, COLLOQUY research director, said the key for loyalty operators making a major product decision is to consult their purchase data, which will reveal basket size and frequency of smoking and non-smoking customers.
"CVS has evidently analyzed its customer data before making this decision, and from the well-planned execution of the announcement, I am sure the decision was not taken lightly," said Mr. Berry. "While CVS likely realizes that it may lose some ExtraCare members who are also smokers, the company clearly thinks it is more important to demonstrate its commitment to the mission of healthy living. I also suspect that many of its high-value, target customers have a core focus on healthy lifestyles."
Should or can CVS do anything for its ExtraCare members dismayed by its decision to stop selling tobacco products? How valuable is it for loyalty programs to stress principles of healthy living?