Q&A: CVS/pharmacy's Helena Foulkes

Earlier this year, CVS Caremark named Helena Foulkes to the newly created position of executive vice president and chief healthcare strategy and marketing officer for its CVS/pharmacy drugstore chain. A 19-year veteran of the Woonsocket, R.I.-based company, Foulkes was instrumental in creating and nurturing the chain's ExtraCare loyalty program – the first in the industry and currently the largest with some 67 million active members. This month, Foulkes will be a featured speaker alongside Wendy Liebmann of WSL Strategic Retail at the Shopper Marketing Expo in Chicago.SM: You played a huge role in the creation of ExtraCare nearly a decade ago. Tell us how CVS made it happen.FOULKES: In the late '90s, we wanted to start a loyalty program, but we really didn't know what the consumer wanted, so we tested six different versions. Four years later, we launched the best of the best, going chain-wide in 2001. Since then, we've continued to innovate beyond belief. It all starts by understanding what delights the consumer, and designing something that she loves.SM: What retailer programs did you use as models?FOULKES: We looked to different parts of the world. We didn't see a program in the U.S. that we wanted to use as a model. At that time, many of the grocery stores were essentially using programs not to reward loyalty but to get people to try different brands. I remember back then buying Pampers and getting a coupon for Huggies. That's not a program I would have developed. So we said, "Who's doing this well?"We took some inspiration from a drug chain in South Africa called Clicks. It was doing really innovative things and was very consumer-driven, and that's where we wanted to be. It was fun and exciting to start with a blank sheet of paper and not so much model it against other programs.SM: A lot of early loyalty programs were manufacturer-driven, and the retailer's driving attitude was, "What's in it for us?" Did you approach it differently?FOULKES: Yes. We wanted our consumer to be the core of the program. We also believed from the beginning that there was power from the insights we would get and the data we would collect. While a lot of companies were looking to outsource the analytics, we felt the analytics were the real power behind loyalty programs. Ultimately, that proved to be the case. The insights we get about top customers and their buying patterns provide a rich set of data that our merchants use to make decisions about the products we offer. If we had outsourced all of that data collection, we would have missed a lot of insights.SM: Such as?FOULKES: One of the things that we learned early on was that what differentiated top-tier customers from mid-tier customers was not how much they bought when they were in a store, but how many times they came in. We said, "Aha, frequency is the differentiator among top- and mid-tier customers. What drives frequency?" So we started to do more research into the products and the offers that drove it.SM: What were some of the hot-button products and programs?FOULKES: One of the insights we got was that food products drove frequency of visit. So while we wanted to be known as a healthcare company with a pharmacy that drives our business, we started to see grocery as a vehicle that would drive frequency of visit.SM: You are constantly tweaking ExtraCare. Can you describe the machinery behind the program that continues to keep it relevant?FOULKES: Beauty Club is a great example of our team appreciating how much women are invested in beauty and wanting to do something innovative in rewarding them. We are not only competing in beauty with other drugstores, but with department stores and standalone beauty retailers. As this woman is navigating the world of beauty, she is buying at all ends of the spectrum, and we wanted to give her another reason to be consolidating her purchases at CVS.We launched Beauty Club in January 2011, and we now have 8 million members. When you sign up, you get a 10%-off shopping pass and then ongoing rewards, a birthday offer and regular email offers.SM: Were you concerned that Beauty Club might confuse ExtraCare members or overload them with different cards and offers?FOULKES: Yes. We knew this was one more element, but we also knew that the people who sign up are probably the most invested in our stores. But we wanted to have our own area of expertise, so the risk of confusion was outweighed by the power of the entire program.SM: Let's talk about the Money Trashers campaign to increase redemption of ExtraBucks. Is CVS concerned about redemption rates getting too high?FOULKES: What we've learned is that the more people redeem their ExtraBucks, the more they spend in our stores. So we absolutely want the highest redemption we can get. Coupon Centers were one way to get there. These are kiosks where consumers can swipe their ExtraCare cards and get coupons and offers before they shop. Money Trashers puts humorous videos online in an attempt to get people to use their ExtraBucks before they expire. We have seen a 5% increase in redemption since we started the campaign in July.SM: What was your redemption rate before the campaign?FOULKES: For ExtraBucks, it's 50%. This is something we are really proud of. When you have a redemption rate that high it speaks to how much consumers love the program.SM: How many people do you have dedicated to running ExtraCare?FOULKES: About 15. They are really focused from a digital and Web perspective and want to be relevant in that space. They have been active with bloggers who are passionate about the program and have a lot to say about it. They check couponing sites, and are involved with shoppers in our own online community.SM: Where is your opportunity to create loyalty through mobile communications, an area where third-party operators compete for the consumer's attention?FOULKES: The power of our program is that we understand what the consumer is buying today and we can give her offers that are relevant. That's very different from programs living out in the ether that may not know what she's buying. Those models can make sense, but they have relatively low redemption rates. We're doing things designed for a particular consumer. We know she's a beauty buyer, so we give her beauty offers. Or we know how much she tends to spend every time she's in the store, so we're going to try to stretch her to spend a little bit more or come back a little bit sooner.SM: You recently launched Care 1-on-1 to build loyalty to your pharmacies. How does this pharmacy loyalty program differ from the front-end one?FOULKES: Most consumers don't know all that we do behind the pharmacy counter to help them, so we launched Care 1-on-1 to help them understand. We have an adherence program designed to make sure they stay on their medications.SM: They have to sign up for the program?FOULKES: No, we reach out to them, and it's especially focused on people with chronic conditions. So if we see they've fallen off a medication, we have a conversation with them.SM: And if they don't come into the store?FOULKES: We'll reach out to them by phone sometimes. The statistic that is so powerful is that half the people on new medications stop taking the drugs by the end of the first year. So if we can get consumers to see how a pharmacist can be a partner for them, we can get them thinking of the pharmacy differently.SM: Let's change topics. CVS set a near-term goal for store brands to be 20% of front-end sales. How does private label fit into your marketing plans?FOULKES: We've always been known as a company to be first to market with innovative new products from branded companies. At the same time, the private-label business is a great opportunity for us to build loyalty with consumers. Two great examples of this that we've launched recently are the Just the Basics line, and Nuance by Salma Hayek.SM: How does the higher margin that's available in private label affect the marketing organization?FOULKES: It's really stretched us to learn how to build brands, which, traditionally, retailers didn't need to think about. But we now have a rich heritage in doing it. One of the first brands that we built was Lumene, an exclusive brand from Finland. We've learned a lot along the way, and every year we're getting better.Private label also helps us meet our mission of being personalized and relevant for the consumer. For instance, we might have a strategy that says Mrs. Jones has really bought into private brands in the OTC category, but she hasn't bought into buying them in beauty. Let's introduce her to some of our beauty brands with some customized offers. Those tailored insights we get from ExtraCare are producing better results for us, but more importantly, the consumer is saying, "Wow, that's really meaningful for me."SM: In your new role, you are charged with integrating the company's capabilities in enterprise branding, communications, community relations, charitable giving, healthcare-reform strategy, government relations and marketing. What's behind this?FOULKES: We are now a Fortune 20 company with a lot of stakeholders. The consumer is always going to be at the core of what we do, but we really needed to think more globally around all these other stakeholders and how we build our reputation around them. The examples might be policymakers in Washington, thought leaders in the marketplace, and elevating our brand as a healthcare company and not just a pharmacy chain. We think we will see for the better as people start to really understand the power of who CVS Caremark is. Since we bought Caremark [the pharmacy benefits management unit] four years ago, we haven't necessarily told the story of who we are.SM: So you're still in charge of day-to-day marketing operations, but this attaches some corporate policy mandates to the marketing function?FOULKES: Yes, there's a lot of policy work here. I'm in D.C. a lot. It's really interesting what's going on with healthcare reform and how that can impact our business. But it's also about how we can be helpful to some of these stakeholders. We have 5 million people a day who walk into our stores, so the question that I'm always thinking about is, where do we find the win-wins? How do we develop programs that are great for some of these policymakers but also great for us? I think it's a really interesting space for us to be in.SM: You have been called a visionary in pharmacy marketing, you are the highest-ranking woman at the nation's second-largest drugstore chain, and you are a mom with four kids. What drives your commitment to excellence?FOULKES: It's an amazing feeling to be in a business in which you feel like you're doing good for people. And when we do good for others, it's good for us, too. I oftentimes feel like the average consumer. (I have a health issue right now with one of my kids, and it's very hard to get good advice.) It's confusing. So when you walk into a CVS store with an empathetic pharmacist who can help you … not many people work for a company that can do that.SM: Next year will mark your 20th anniversary with CVS. Looking back, what single achievement are you most proud of?FOULKES: Doing things that really meet the needs of consumers that nobody else was doing. It wasn't the case 20 years ago, but we've really become a company that has innovation as part of its DNA.

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