Pharmacy Service

Improvement at CVS
Alexis Saint-Jean | Liz Herd | Riffat Lakhani | Susan Marinelli

Problems facing CVS

CVS has experienced growth, but sales are
muted
Customers are having negative customer
experiences during pharmacy transactions
Lost of repeat customer sales, totaling $2.5B in
lost revenue in 2002

Pharmacy Customers

Pharmacy Customers

Fulfillment Process

Data
Entry

Drop Off

DUR

Insurance
Check

Production

Quality
Assurance

Pickup

Fulfillment Process: Problem

Drop Off

Data
Entry

Production

- No Refill Allowed (6%) - Partial or complete

- DUR Hard Stop
stock shortage(17%)
(20% 2%)
- Insurance Issue (17%)

Quality
Assurance

Pickup

SWOT - Strengths
Location - over 4,000 stores
Growing firm
Buying power, which can translate to
lower prices for customers
Pharmacy information system connects
all customer information
Quality assurance (QA) procedures and
safety standards
Drug Utilization Review (DUR) allows for
careful review of the drug and patient
profile
Dedicated team of pharmacists
Convenient drop-off: either in-person or
over the phone

SWOT - Weaknesses
On-demand prescriptions are often delayed

Refill system is inefficient

Little communication with customers about their order
Delays in communication with doctor
Formulary and refill limitations

Low employees motivation and high employee turnover

Untrained front-line staff (technicians)

SWOT - Opportunities
Aging U.S. population
Customers perceive poor pharmacy service
Improve the prescription fulfillment process
Focus on the heavy use customer
Provide additional services
Acquire and learn from other pharmacies
systems

SWOT - Threats
Competitors educating customers about
switching policies
More stringent controls by insurance companies
Mail prescription services

1. Increased Visibility & Service Recovery

2. Strategic CRM & VIP Program
3. The Status Quo

Options

Option1:
Increased Visibility
Process
Inform customer (call,
SMS, email)
Inform about progress
made
hotline for more
information

Result
Understanding of the
problem
Increased visibility of
CVS actions
No surprise at the
counter

1
Outcome
Customers are better
educated
Better experience at
the counter

SUPPORT PROCESS

CUSTOMER
CONTACT PERSON
(Back Stage) (On Stage)

PHYSICAL
EVIDENCE

Option1:
Blueprint

Arrive
at
Store

Give Prescription

Come
Back to
Store

Leave
Store

Take Order
& Pay

Leave
Store

Line of Interaction
Pick Script
& Return
Time

Give Bag
& Take
Payment

Line of Visibility
Put Script
In Box

Data
Entry

Production

Quality
Assurance

Put Order
in Sealed
Bag

Line of Internal Interaction

DUR

Insurance
Check

Payment
System

SUPPORT PROCESS

CUSTOMER
CONTACT PERSON
(Back Stage) (On Stage)

PHYSICAL
EVIDENCE

Option1:
Blueprint

Arrive
at
Store

Give Prescription

Leave
Store

Receive
Information

Come
Back to
Store

Waits until
Issue is
Resolved

Take Order
& Pay

Leave
Store

Line of Interaction
Pick Script
& Return
Time

Give Bag
& Take
Payment

Line of Visibility
Put Script
In Box

Data
Entry

Production

Contact
Customer

Quality
Assurance

Put Order
in Sealed
Bag

Line of Internal Interaction

DUR

Insurance
Check

Customer
Database

Payment
System

Option1:
Service Recovery
Apologize
Explain what happened

No refill allowed
Conflict with other prescriptions for patient
Insurance issue

Provide a solution

Obtain correct refill amount for the future

Explain safety precautions taken for customers by DUR
Confirm patients insurance before they leave

Follow-up

Input any previous service problems into information

database so can follow-up and make sure same issue
does not persist.

Option1:
Increased Visibility
PROS:
Internal Solution
Increased customer education
Better counter experience

CONS:
Not a company strength (hotline)
Lengthy implementation (HR, IT)
Does not really try to resolve issues

Option 2:

Strategic CRM & VIP Program

What does it take?

Improve technician customer service training
Customer focused HRM
VIP program: exclusive check-in for heavy users
Customization/personalization
Kiosks, online portal, text messages
Streamlined operational processes
Decrease stock shortages that delay Rx fulfillment

Option 2:

Strategic CRM & VIP Program

PROS:
o More satisfying experience through customization bonds
in store via VIP program
o Platinum segment customers are happier due to
decreased order delays
o New operational processes improve repeat-customer
conversion to increase ROI per customer
CONS:
o Increased upfront costs (staffing, technology, delivery)
although there might be a decrease over the long-term
o Main issues of the process occur in data entry and are not
addressed

Option 3:
The Status Quo

Pros:
o No monetary cost
o CVS has a profitable business even with a loss of
customers, ~$13B from Rx revenue
o Customers perceive switching pharmacies to be
difficult
Risks:
o Continued customer loss at a higher rate
o Another pharmacy emerges with extremely enhanced
customer experience

Next Steps

Proposal & Implementation:

Best Next Steps
Recommendations:
Option 2

Reasons
Short-term v. long-term implementation
Relies on core strength

Sensitivity Analysis:
Revenue Saved through Process Improvement

Focus on key customers

$500
$450
Revenue ($M)

$400
$350
$300
$250
$200

Light Users

$150

Heavy Users

$100
$50
$0
60%

70%

80%

90%

Process Improvement

100%

Long Run Plan:

CVS CLEAR Initiative

CC

Option 2: Strategic CRM & VIP Program

& Option 1: Increased Visibility & Service Recovery

Set expectations: signage/brochures

Empower customers to help with the process Drop off kiosk
Keep clients updated
Hotline employees to help with common issues

CVS Clear Initiative

Clearly about Customer service
Clearly about Visibility
Clearly about Safety

Build a trusting relationship and create a customer for life!

Long Run Plan:

Impact on Relationship Bonding

CC

Option 1: Increased
Visibility
Option 2: CRM &
VIP Program