How CVS’s Customer Service Investment is Expected to Cost CVS $2Billion in Sales – Interview with Mike DeAngelis, CVS

When can great customer service be bad for business?

We are told investing in excellent customer service has a strong ROI.

So how will CVS lose $2 billion on its customer service investment?

Keep reading for this interview which reveals the decision process behind CVS’s bold move to end cigarette sales in October 2014.

The Shocking Decision

I was recently very fortunate to speak with Mike DeAngelis at CVS about their decision to end all cigarette sales in their stores.

Mike indicated that this change, which is set to take place by October 1, 2014 comes as a response to CVS’s continued commitment to their customers health but also as a commitment to being on the front line of health care as they move forward.

His response to this change in sales was a critical glimpse into customer focused service and the similar responses required of those of us who are leaders in the customer service industry after making a controversial, but necessary decision.

CVS is taking its role as a health care service provider seriously and CVS has recommitted to the health of their customers against continued revenue from cigarette sales.

$2 billion dollars is estimated in lost revenue as a result of this decision.

So this is not a financially driven decision for CVS.

Far from it.

In fact, this decision was about being better equipped to deliver quality health care and health related products in a time where we know cigarette sales are as lucrative as they are controversial. It was about putting the welfare of their customers ahead of profits, and that may just be the most customer friendly response I’ve seen yet. This decision may have been made easier however, by better understanding that long term client satisfaction and loyalty was worth a short term sacrifice in profits.
What We Can Learn

What I’ve learned from this decision is that it is possible to better respond to your customers true needs than wants.

This decision meant that CVS is publically declaring their commitment to being on the front line of healthcare and existing as a responsive and evolving organization putting customer’s health first. Mike indicated that CVS were aware that 7/10 smokers wanted to quit and so they did actually respond to smokers wants and needs, even if their decision to cease the sales of cigarettes may negatively affect the short term. Therefore, the launch of their new and significant smoking cessation program also addresses their customers’ needs and took a shot at understanding how those needs may change over time.

CVS is not just responding to the immediate needs of their customers but addressing industry gaps and the changing landscape of the health industry. As customer service industry leaders will tell us, this is where creative marketing and strong relationships with your customers will pay off in the long run.

The Long-Term Impact

As far as customer service goes, this particular decision may be unpopular to some but it is strategic and responsive and it is in keeping with the vision of a quality healthcare provider. CVS’ decision to launch a smoking cessation program is a proactive respectful response. It acknowledges smoking as a personal choice but maintains a commitment to healthcare.

Mike was clear that the focus for CVS was not only about the sale. He stated that every decision that they made started with a few key questions. “What do customers want? How can we innovate to serve them better? How can we make their lives better through the products and services we offer?”

You’ll notice that if we stop after that first question, and if we only ever consider what our customers want in a moment, we won’t be delivering the best response. We won’t develop strong and anticipatory support. We’ll be stuck in trying to manage whims and wishes without carving out our vision so that it may align with the long term visions of those we serve.

CVS may have made a controversial decision in eliminating cigarette sales, but it may have driven forward customer loyalty significantly.

I will be waiting to see the numbers after October 1st. I have a feeling that CVS commitment to customers health will actually pay off in the end.

Here is my interview with CVS. Feel free to leave your comments- I’d love to hear what you think!

My Interview with CVS

Customer Engagement Blog: Please explain the decision to end cigarette sales at CVS?

Mike DeAngelis: Our decision to end tobacco sales at all CVS/pharmacy stores by October 1, 2014 underscores our role in the evolving health care system. 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. All of these conditions are made worse by smoking.

Customer Engagement Blog: How has this impacted your customer’s experience at CVS?

Mike: Our decision makes CVS/pharmacy the first national pharmacy chain to take this step in support of the health and well-being of our patients and customers.  We feel a tremendous amount of pride that consumers, health care organizations, and many elected officials have reacted so positively to this decision. 

Customer Engagement Blog: Obviously, CVS has many customers that smoke. How have they reacted to this change?

Mike: We recognize that smoking is a personal choice, and we know that many of our customers who smoke may continue to do so even once we stop selling cigarettes by October 1. We also know that 7 in 10 smokers say they want to quit, and we want to help them do so.  That’s why we will be launching a robust national smoking cessation program in all of our stores later this year.   

Customer Engagement Blog: How will this decision impact CVS’s Bottom line?

Mike: While we do expect to give up about $2 billion in annual sales as a result of this decision, the simple fact is that tobacco products have no place in a setting where health care is delivered and this is right thing to do.  

Customer Engagement Blog: How does this relate to CVS’s customer service policies?

Mike: CVS/pharmacy remains committed to delivering superior customer service by focusing on delivering the most accessible and personalized expertise.  Our entire retail business is focused on a mindset we call “THINK CUSTOMER,” which means putting our customers at the center of everything we do in order to help them have an outstanding service experience. Every decision we make starts with asking ourselves: “What do customers want? How can we innovate to serve them better? How can we make their lives better through the products and services we offer?”

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Amy Clark is the Lead Author & Editor of IWantItNow Blog. Amy established the Customer Engagement blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to customer service, support and engagement.
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