advertisement
advertisement
  • 12.15.16
  • digital trailblazers

Forging The Next-Generation Drugstore

CVS’s investment in digital tools is a blueprint for the successful retail experience

In 2014, CVS made the bold decision to eliminate tobacco sales from its stores and add the word “health” to its name, actualizing its shift into a healthcare delivery company, not just a drugstore and pharmacy. In 2015, the Rhode Island-based, Fortune 10 firm continued its evolution by opening a Digital Innovation Lab in Cambridge, Mass., that houses teams focused on designing and launching digital tools to serve its 100 million customers and change the way healthcare is delivered.

advertisement

Brian Tilzer, senior vice president and chief digital officer, joined CVS Health in 2013 to lead its digital transformation after serving as senior vice president of global e-commerce at office supplies retailer Staples, Inc. Three-plus years in, he explains how a focus on customer problem-solving, rapid iteration and testing, integration with all business units, and strategic partnerships are changing the mindset within the company and marking out a path towards innovation in both the healthcare industry and retail at large.

How does CVS go about prioritizing which digital innovations to go after?

The kind of programs I’ve seen not go well are things that are maybe good for business but don’t solve real consumer problems in really practical ways. So we do the opposite. One of the things we’ve done pretty well is we’ve worked on a number of initiatives that were quick to get to market, that generated momentum for our customers, that generated momentum for digital for our colleagues, and that generated some results. But the starting point is, is this something a customer is going to find really valuable?

What’s an example?

We’ve recently announced that in 4,000 stores we’ve scaled our curbside pickup program – that’s where you can go online, order a product, show up in front of a CVS pharmacy, we’ll detect you’re there, and we’ll walk something out to the car. We are now in pilot in San Francisco with a similar experience, except that instead of us bringing it out to the curb, we’re going to bring it to your home, in a couple of hours, on demand delivery using Uber. That’s the next-generation of convenience.

What will the retail experience – at CVS and elsewhere – look like in 5 to 10 years?

I’m convinced cars are going to become very valuable places to engage in digital. But ultimately it’ll be the things that drive convenience and that drive how people can get the most value they can. Those are enduring themes of how retail experiences are going to get better and better.

advertisement

What strategies do you use to stay on top of consumer expectations of retail experiences?

We are very connected to engaging with leading technology companies big and small, engaging with leading consumerists entities big and small, analyzing on a very methodical basis what the competition’s doing, usually that’s less our direct competition and more our inspirational competition in the broader ecosystem. We think about analogues from other industries and how they could apply. But ultimately I think the bigger thing we’ve been committed to is an approach of rapidly testing and learning and iterating. We opened the Innovation Lab to have the ability to do all of that really rapidly, not just with ourselves but with partners who can help us do so faster.

In what ways is the CVS Innovation Lab having an impact?

The lab helps us operate at multiple levels of learning and helps us understand what the newest technology innovations are. So, for example, Android is now opening the ability for push messages to go through the platform even when you don’t have an app. That’s a technology innovation we have to understand. So we recruit consumers to help us explore technologies like that and how they might see it being useful, or not useful, in their everyday lives.

How does a digital innovation lab need to operate differently from the core business?

In its simplest form, we’ve created this sandbox where technically we can operate on quicker lead times than the rest of the company. But probably the biggest differentiator is how interdisciplinary and how iterative the work is. We have lab teams that represent all the disciplines required to envision, define, execute and bring to market a new digital experience.

How do you integrate the work of an innovation lab back into an existing business?

advertisement

We have a very specific process for, once something is deemed successful, how you actually bring it to full-scale production. The other thing that has been important is making sure the lab is working on the things that are most relevant to the business units that they ultimately have to be fully commercialized through.

What are the go-to analytics you use to guide strategic decision-making?

We look at how strong the Net Promoter Score is [a measure of a customer’s willingness to recommend a new product or service]. Second thing is, if someone really had a great experience and a high Net Promoter Score, then they actually need to use it again. So, looking at repeat usage, repeat usage rates, and repeat usage frequency is really important.

You have been quoted as saying 30 percent of CVS shoppers have downloaded and use your digital tools – how does that compare to industry benchmarks?

We’re at about one-third of CVS retail customers using one or more of our tools. As we think about how high is high, I first look within CVS and we have our specialty pharmacy business where there are patients with rare diseases and that number is closer to 50 percent – those are patients with very complicated needs and they’ve adopted the tools even more so. There are industries out there – banking is a good example – where utilization of digital toolsets is well over 60 percent.

What are some insights for other businesses for building productive digital partnerships?

Increasingly, for capability gaps, we first ask, can we build it ourselves? Sometimes there’s a premium for going outside, and we just want to make sure the speed to market is really beneficial. In the digital space, there are so many things we need that require not just a technical tool or capability or plug-in but knowledge or expertise. We could have tried to build it ourselves, but at the end of the day the level of knowledge and capability and expertise the company has provided was just so great.

advertisement

What is something that has surprised you about the digital transformation you’re leading at CVS?

The power of our front-line colleagues in turbocharging the adoption of our toolset. How those colleagues are introducing what we’re doing, introducing it to the market and to consumers at scale, has been amazing.


This article was created and commissioned by Cognizant.

About the author

FastCo Works is Fast Company's branded content studio. Advertisers commission us to consult on projects, as well as to create content and video on their behalf.

More

Video