When CVS Health announced two years ago it will no longer sell or stock tobacco-related products, it was a game-changing move for the Woonsocket, R.I.-based brand, one that even received accolades from first lady Michelle Obama. But, according to Norman de Greve, CVS' svp and CMO, the step was part of a larger strategy that had been in the works for the last decade to shift the brand from being the proverbial "drugstore on the corner" to a "multifaceted healthcare company." In 2006, CVS acquired MinuteClinic, a walk-in clinic provider; the next year it merged with pharmacy benefits manager Caremark; and in 2013, it bought home infusion services company Coram. Earlier this month, CVS revealed its latest initiative to combat tobacco addiction with its "Be the First" campaign, a five-year, $50 million effort through education, advocacy, tobacco control and healthy behavior programming. Adweek's Kristina Monllos spoke with de Greve, who joined the brand last year from DigitasLBi, about CVS' brand shift, Obamacare and what's next.
Adweek: CVS' decision to change its position on tobacco has helped distinguish the brand from its competitors. Why do you think that was right for the company, and why do you think it resonated?
Norman de Greve: When you want to be a healthcare company, it's really hard to sell cigarettes. What's interesting to me about that and what was compelling to me was I cannot think of another example in corporate America where a company sacrificed $2 billion of revenue for what they felt was the right thing to do. It's a stunning thing. And we know these facts are true, that more purpose-driven companies, a) millennials and consumers want to do business with … and b) it's great for recruiting. It proved out for us in both of those ways.
Do you think it's worked in getting consumers to view CVS as a healthcare brand?
We came out with this idea of helping people on their path to better health. We launched the [CVS Health] brand, we got the exit of tobacco, and people gave us credit for that. I think the question is how do we keep the momentum with consumers so that they truly perceive us as differentiated?
Is there something in the works to keep the momentum going? Is that where the "Be the First" initiative came from?
Well, we have a couple of things. We launched this "Be the First" initiative, and we just committed $50 million to creating the first tobacco-free generation. I'd say there's a couple of focuses we have. One is driving the brand into all of the [customer] experiences. So it's a little different than advertising, but it is marketing—how do we make sure people feel the differentiation and not just a story? The second is on the advertising. We're really focusing on all of the different ways we can help people. It's a little bit more tangible than the brand. [For example, if] you are on a page researching allergies, we'll highlight how MinuteClinic has ways to help you, or a pharmacist can help you. And so it's getting a little bit more specific about how we help people on their path to better health.
How has the shift to a healthcare player been received?
There are a number of ways we can see the impact of our branding strategy. We see it in our financial success, particularly our sustained growth. We see it in how much of the prescription market we are capturing. At the same time, our internal brand research shows that we're viewed as a health leader among influencers and large employers, and that helps enhance our reputation and attract new business. We also see it in key marketplace rankings. For example, we were recently ranked No. 27 on Fortune's Most Admired Companies list, and No. 3 on Fast Company's Most Innovative Companies list. Certainly brand building is an ongoing process, but we're pleased with how CVS Health is being viewed in the marketplace, and our success bears that out.
Has this also positioned the brand to be healthier financially down the road?
We certainly believe so. As we continue to expand our core pharmacy business, reach new healthcare channels, invest in new capabilities and build our brand, we are poised to enjoy steady enterprise growth. Last year, revenue grew 10 percent to a record $153.3 billion, with more than 85 percent of it coming from healthcare. As long as we continue to deliver on our purpose of helping people on their path to better health, we can win in a changing healthcare market.
But what will CVS do if Obamacare is repealed?
Certainly it would be inappropriate to speculate on any future changes to the Affordable Care Act. What's most important is that we are singularly focused on our purpose of helping people on their path to better health. We recognize that healthcare delivery is rapidly changing, and we've built a company positioned to play an important role in solving the cost, quality and access issues for patients, payers and providers.
Do you see any of your competitors emulating the shift that CVS has made as a brand?
I think when you look at our competitors, they'll talk a lot about beauty and health in the front of store. You've got Walgreens, and they're trying to—they'd be silly not to look at what we're doing, which I'm sure they do every day and evaluate if they should do aspects of that. But at the moment, they've decided to see if they can do something [with] Rite Aid, which takes a lot of attention and capital. That's a different strategy than we've had, which is to connect to all of these different pieces of the healthcare landscape. So I haven't seen it yet. Could it happen? Things change all the time.
Does it worry you that your competitors aren't trying to emulate CVS' new brand strategy?
No. I think what worries us is about delivering what's right for people every day in a way that creates economic value for the business.
Given that a portion of CVS' business is retail and the brand cut tobacco sales, where do you draw the line with unhealthy product sales? For example, will you stop selling products with lots of sugar?
You know, that's something we evaluate all the time. We have been putting more healthy food in the stores, but I think the thing that is interesting about tobacco is it's the thing that there is no degree of moderation that is good—there's nothing good about it. And that's what made that a pretty clear one. We have a lot of stores, and we're pushing on lots of other healthier products. And we'll continue to do that and evolve the business. I don't know if I see one at the moment that we're going to make a big statement about.
Is there a particular target you're going after?
It's partly because of the uniqueness of our business we have targets that kind of cross the spectrum. They can be older; they can be younger. We have a pretty good sense of who we want to connect with and with which sorts of offerings, and then we tailor the communications to them and the products to them.
So you're not necessarily a brand that's going to say, "We need to win over the millennial." Or are you?
Listen, 18 to 34 is a very important group, certainly for the front of our store. And I think if you look at the millennials from the point of view of the zeitgeist and you think about solving for them, you end up solving for a lot of people. So I think that's really important. But they're not the only group.
After the tobacco announcement, CVS shook up its agencies, tapping BBDO and UM. Can you tell me a bit about those agency relationships now?
[Those agency changes] happened just as I joined, so it started before I was even here. But what we've done and what we're working on, together with our agency partners, is how to actually reengineer the way campaigns are getting constructed and delivered. We're starting from the very beginning with what is the context that's in the moment, and what's the content that we're going to have to fit in that—which is different than a lot of the marketing that's being developed. At the core, the problem still starts generally with "What's the big creative idea?" and then "Where are we going to connect with people?" We're saying, "Where are we going to connect with people?" and then "What's the idea that fits in there?"
Do you have any thoughts about how a healthcare brand should be advertising?
I think the question is, how are you helping people in a really easy-to-understand, helpful and modern way? Healthcare is very personal and I think you've got to connect with the right people and have the right discussion with them.
This story first appeared in the March 28 issue of Adweek magazine. Click here to subscribe.