Mail-Order Pharmacy May Dominate Drugstores - ' Warehouse'

As Medco attempts to grow the mail-order pharmacy business, its chief goal is to move as many clients as possible to use its Web site. The reason is simple, says chief executive officer David Snow. Every prescription processed via the Web saves the company $3. At 88 million prescriptions a year, that's a potential savings of $264 million.

But moving clients online is no simple task. Consider the typical user base. Seniors make up about 20% of Medco's total clients, but they are responsible for 53% of prescriptions filled. A study released by the Kaiser Foundation in January found that only 5% of seniors say they have ordered drugs online.

To meet this challenge, Medco launched a major site-redevelopment project in 2001. Besides conducting interviews with seniors and other site users, Medco worked with Cooper Interaction Design of Palo Alto, Calif., to create a series of "personas" representing its target audience.

The idea behind the personas, says Tom Feitel, Medco's e-commerce vice president, was to synthesize the needs and wants of a large segment of the customer base into a single person. "You want the portraits to be so real that if you heard a knock on your door, you could half expect to look up and see that person coming in," he says.

Working with Cooper, Feitel's group created four personas: Chris Bell, a 33-year-old accountant from Atlanta, who suffers from diabetes; Sandra Reizler, a 56-year-old secretary from LaGrange, Ind., who has osteoporosis and cares for her ailing 79-year-old mother; Maude Baruso, 75, of Philadelphia, a retired nurse who suffers from arthritis; and Frank Anderson, a 63-year-old worker at the Denver Mint, who has heart disease and "hates taking all those damn pills." Complete profiles of the imaginary customers were created, including their individual desires. Frank, for example, wants to stay out of hospital, live a life without restrictions, and be treated like a human, not a condition.

To begin the Web redesign effort, the 100-person development team held a launch party in the fall of 2001 and actors were hired to play the parts of each of the personas.

Feitel says the exercise led to a number of insights that were put into practice. For starters, in its existing Web site design, Medco had used a number of pop-up windows to make promotional offers. "Seniors told us, 'Stop distracting me. I'll look elsewhere when I've done what I need to do,'" Feitel says. The site also had offered multiple forms of navigation, such as drop-down menus, but the team found that some seniors, particularly those with arthritis or shaking hands, found drop-downs difficult to use, so that feature was eliminated. The team also simplified the process for refilling a prescription. Now, when a user logs in to the site, a view shows him "Prescriptions you can order today."

Back in 2001, out of 75 million mail-order prescriptions that Medco processed, 7.2 million came over the Internet, or 9.6%. In contrast, by 2004, Medco.com handled 17 million prescriptions out of 87.7 million, or 19.4%. That's good for an estimated savings of $29.4 million.

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Most significantly, Feitel says, 27% of Medco.com's users are now age 65 or older, significantly higher than the Kaiser Foundation's estimate of 5% for the general senior population.

"The insights we gained [with the personas and user groups] were critical," Feitel says. "Until that point, we developed the site based on what we thought our users wanted.

"We'll never make that mistake again."

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