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 Drop Off Data Entry Production Quality Assurance Pickup DUR Insurance Check .

Partial or complete .Fulfillment Process: Problem Drop Off Data Entry Production Quality Assurance Pickup .DUR Hard Stop stock shortage(17%) (20%  2%) .No Refill Allowed (6%) .Insurance Issue (17%) .

over 4. 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 .000 stores  Growing firm  Buying power.Strengths  Location .

SWOT .Weaknesses  On-demand prescriptions are often delayed  Refill system is inefficient W  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) .

S.SWOT .Opportunities  Aging U. 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 O .

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

The Status Quo Options . Increased Visibility 2.1. Strategic CRM & VIP Program 3.

email) •Inform about progress made •hotline for more information 1 Outcome •Customers are better educated •Better experience at the counter Result •Understanding of the problem •Increased visibility of CVS actions •No surprise at the counter . SMS.Option1: Increased Visibility Process •Inform customer (call.

Option1: Blueprint CUSTOMER CONTACT PERSON (Back Stage) (On Stage) PHYSICAL EVIDENCE 1 Leave Store Come Back to Store Take Order & Pay Leave Store Arrive at Store Give Prescription 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 SUPPORT PROCESS Line of Internal Interaction DUR Insurance Check Payment System .

Option1: Blueprint CUSTOMER CONTACT PERSON (Back Stage) (On Stage) PHYSICAL EVIDENCE 1 Leave Store Receive Information Arrive at Store Give Prescription Waits until Issue is Resolved Come Back to 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 Contact Customer Production Quality Assurance Put Order in Sealed Bag SUPPORT PROCESS Line of Internal Interaction DUR Insurance Check Payment System Customer Database .

1  Provide a solution  Follow-up .Option1: Service Recovery  Apologize  Explain what happened  No refill allowed  Conflict with other prescriptions for patient  Insurance issue  Obtain correct refill amount for the future  Explain safety precautions taken for customers by DUR  Confirm patients insurance before they leave  Input any previous service problems into information database so can follow-up and make sure same issue does not persist.

IT)  Does not really try to resolve issues .Option1: Increased Visibility  PROS:  Internal Solution  Increased customer education  Better counter experience 1  CONS:  Not a company strength (hotline)  Lengthy implementation (HR.

Option 2: Strategic CRM & VIP Program 2 What does it take?  Improve technician customer service training  Customer focused HRM  VIP program: exclusive check-in for “heavy users”  Customization/personalization  Kiosks. text messages  Streamlined operational processes  Decrease stock shortages that delay Rx fulfillment . online portal.

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 2: Strategic CRM & VIP Program 2  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.

Option 3: The Status Quo 3 • 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  Focus on key customers $500 $450 $400 Revenue ($M) $350 $300 Sensitivity Analysis: Revenue Saved through Process Improvement $250 $200 $150 $100 $50 $0 60% 70% 80% 90% 100% Process Improvement Light Users Heavy Users .

Long Run Plan: CVS CLEAR Initiative  Option 2: Strategic CRM & VIP Program & Option 1: Increased Visibility • • • • CC Set expectations: signage/brochures Empower customers to help with the process – Drop off kiosk Keep clients updated Hotline employees to help with common issues Clearly about Customer service Clearly about Visibility Clearly about Safety  CVS Clear Initiative 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 .

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