Inventing a Marketing Function: An Interview with Kim Feil
When Charles Walgreen opened his first pharmacy in 1901, little did he know that this was the beginning of a company that would become a household name for the next 100 years. One common theme that has not changed in over a century is the consistent customer focus. At Walgreen’s first store, every customer was personally greeted by Walgreen himself or a colleague. Equally impressive was Walgreen’s popular “two minute drill” used when neighborhood customers would call for non-prescription items. Mr. Walgreen always repeated—very loudly and slowly—the caller’s name, address, and the complete order. This way, his store assistant and handyman Caleb Danner could quickly prepare the order. Walgreen would then prolong the conversation which allowed Caleb to reach the doorstep of the caller, often before he/she was ready to hang up!1 Now that’s service.
Fast-forward 100 years and we now find that the company has over 8,000 stores across the U.S., handles 40 million customers every week, enjoys 20% market share in the retail pharmacy business, and 75% of the U.S. population lives within five miles of a Walgreens’ store.
Despite such a laudable customer focus, Walgreens as a firm had never really “grown up” into a full-scale customer-focused operation. Driving customers into the store and serving them well in the store continued as core values. However, thinking about the entire business and building business operations around that customer focus were not perceived as a business growth strategy. “Marketing=Sunday circular” was marketing’s role in the company. The circular was designed and managed in-house with the sole aim of driving traffic into the stores. Undoubtedly, this “front-end” promotion strategy was highly successful. However, as competition increased, including big boxes like Walmart and tougher pharmacy competitors such as CVS, it was necessary to professionalize the firm’s customer focus. This was a key reason behind the decision three years ago to hire Kim Feil, the company’s first Chief Marketing Officer. In Kim’s words, her job was to help Walgreens understand “who our customers are, what they want, and how we can help our customers understand what they can find at Walgreens.”
Kim’s first day on the job was September 29, 2008—the day the Dow Jones industrial average plunged 778 points, the largest one day drop in its history. From Kim’s vantage point, there was only one way to go from there—up.
The former CMO of North American operations at Sara Lee, Kim brought 25 years of marketing experience with her to Walgreens. Her CV includes marketing stints with Frito Lay, Kimberly Clark, Cadbury Schweppes, and Information Resources Inc.
With a laser-like focus, Kim went after the building blocks of effective marketing: customer insights, a crystal clear value proposition driven by these insights, a strategy that follows from the value proposition, an accountability and measurement system, and unlocking marketing talent within the company.
Walgreens is organized into six different business units—Retail Front End, Retail Pharmacy, Onsite Pharmacy (at hospitals), Walgreens.com ecommerce business, Take Care Clinics (both within stores and at employer worksites), Specialty Pharmacy, and Home Care. Taking a closer look at its business model, at competitors, and customer needs, Kim and Walgreens’ executive team collaborated to focus the Walgreens’ brand on the concept of “well” and the aspiration to be the customer’s “first choice for health and daily living needs.”
This value proposition is implemented effectively in each business unit. In retail stores for instance, the focus is on “Living Well Daily” with the goal to simplify the shopper’s experience. This includes offering a wide assortment of products (food included), trip solutions (such as personal care regimens, beauty and gifting), easy in-and-out store access, and personalized service in the store. Through its Retail Pharmacy, Take Care Clinics, and other pharmacy businesses, Walgreens helps its customers “Get Well,” “Stay Well,” and “Manage Well.”
Walgreens overarching value proposition differentiates it from competitors in important ways. Reducing the shopping time, while putting health at the forefront of all aspects of the business, places Walgreens in a league of its own. Other retailers have a positioning focused less on health and more on convenience (Dollar stores), design (Target) or low price (Walmart). With the pharmacy at the core, Walgreens plays to its strengths in creating its competitive advantage.
A good example of how this value proposition played out in the pharmacy and “Take Care” clinics was Walgreens’ flu shot strategy during 2010. The objective of the campaign was to inspire 5 million people to get their flu shots at Walgreens, which would be a five-fold increase over the 1 million flu shots in 2009. The target segment for the strategy was a group of moms that Walgreens’ called “Intender Moms.” As noted by a recent blog, “These women had every intention to get a shot last year, but didn’t. They were really busy serving others (including making sure their family got flu shots!) that getting a flu shot for themselves became a low priority.”2 The campaign motivated moms to get protection for themselves. The message “Arm yourself for the ones you love”—asked moms to get a shot to stay healthy herself and thereby protect the health and well being of their families. Online media, TV ads, print ads, outdoor media, in-store messages, and stickers proclaiming, “I got my flu shot for…” worked. Six million people got flu shots during the flu season! For this achievement, Walgreens was awarded three Silver Effies (from the American Marketing Association) and three Gold Reggies and a Super Reggie (from the Promotional Marketing Association) and crowned “Retail Advertising Campaign of the Year” in the world for 2011 by Oracle. More importantly, Walgreens uncovered and executed on a high-profile strategy to place the company at the center of “well.”
Embedding the value proposition across the company essentially means that marketing must play a consistent role in all business units. To this end, Kim placed a Vice President of Marketing within each business unit. All Walgreens’ units are now positioned to support “well” and help grow the business around that idea through their particular objectives. With all these VPs reporting to Kim, the brand can be unified and synergies can be created across the different units.
Learning about the Customer
Kim clearly understood that marketing could not add value to the company unless its recommendations were driven by customer insights. When she took over, she observed that “We were interacting with 6 million customers every day but we didn’t know much about them.” Transactional excellence was being achieved, but Walgreens did not have a sense of how well it was managing its customer relationships. There also was insufficient input on how customer learning could drive growth in each business unit.
To gain that understanding, Kim built a Center of Excellence that focused on insights and analytics. Selecting talented employees who were running pricing studies, location studies, or collecting customer satisfaction data, Kim created a group that would fuel the creation and evaluation of Walgreens’ marketing and overall business strategies from the customer’s point of view. Step one was a segmentation study that revealed five types of customers based on their attitudes toward and use of Walgreens. These included “Efficient Eileens” who like transactional efficiency and “Care Seeking Carols” who want more help with their health questions. Understanding who these customers were and their yearly value to the company made serving them much more effective.
In addition, Kim’s experience of working for several manufacturers means she understands their value as sources of shopper insights. She spends considerable time picking the brains of these customer experts and using these insights in the store. Kim noted while beginning this strategy, “We are going to be reaching out a lot more to our vendor partners to share insight and learn from them. We’ve been doing quite a few ‘top-to-tops’ with a number of our largest vendors over the last several weeks to share our strategies with them and that has been really exciting for both parties. They share their deep knowledge of categories, brands and products and we share insights about our shoppers, their trip missions and the communities in which our stores serve.”3
Kim established what she calls her “multidimensional marketing scorecard” to provide both insight and accountability. Included in this scorecard are typical consumer metrics, such as basket data, traffic, share, and price gap to competition as well as price sensitivity, attitudes, opinions, and net promoter score. For each store and each department in that store per week, Kim measures customer satisfaction. Some of these metrics request customers to compare Walgreens to its competitors, which allows the company to understand how well it is succeeding on the goal of being the “first choice for health and daily living.” These insights are further complemented by qualitative work in stores and online surveys using Facebook, Twitter, and other tools.
These systems do more than just drive strategy. Kim, a self-described data geek with eight years of experience at Information Resources Inc. (a consumer-packaged goods insights firm), firmly believes these systems are the key to good marketing. In fact, at the end of the interview when I asked Kim to share what makes a great CMO, she shared two key ideas—(1) be crystal clear about the company’s value proposition and ensure it is relevant to customers and better than the competition and (2) create accountability and measurement systems that bring credibility to the work you do.
Kim spoke about the how the insights and analytics teams work within Walgreens. This is an area that clearly highlights Kim’s strategic foresight and process skills. The focus of these efforts is, as she described it, “on identifying the white space in each business unit’s knowledge” and then putting together an 18-24 month learning plan with the focus on what managers need to know in order to make good business decisions. This long time line, plus the fact that insight team members have deep knowledge of the businesses, means the work has had important effects in the business units. One example is the insight about chronic customer conditions and how people with these conditions seek pharmacy care. Customers with short-term ailments behave much differently from those with an everyday health issue. As a result, new customer service strategies are being implemented that recognize the additional personalized consultation time that those with chronic conditions might need.
Results are presented with team members across the company to determine what happened and how the strategy can be improved or replicated. Kim shared that the she knew these accountability systems were effective when one of the CFOs in a business unit turned to one of her VPs and asked “Where can I spend more?” When finance professionals ask marketers to guide spending, it is fair to say that the system is working pretty well.
When Kim began in 2008 at Walgreens, her group included 65 people who designed and produced the Sunday “marketing” circular, fewer than ten marketers and a handful of insights people working across the firm. In order to reduce production cycle times and improve circular quality, she outsourced the circular production to RR Donnelley which had the technology to produce it more efficiently. Relocating some people from the marketing circular group into different areas of the firm such as an insights group and a design group was an important step. With the right structure in place, Kim was able to “unlock the talent” of these employees to create a terrific marketing group.
She also shaped existing marketers into a new marketing group by hiring additional talent with expertise in healthcare marketing, marketing services disciplines, multicultural marketing, project management, new marketing communication techniques, and more.
Kim spoke extensively about how Walgreens is planning to engage with consumers using a variety of digital tools. In a recent interview, Kim spoke about the importance of Walgreens building a capability in this area and not to make one of two common mistakes—(1) to become enamored with these approaches and begin trying different things to see what works or (2) to simply use old mass marketing approaches and ideas transposed to newer digital platforms. In Kim’s opinion, the key is to “refine what we know” and then “build a strategy from a core capability.”4 She thinks, and I must agree, this is the way to really resonate with customers.
Walgreens’ physical presence in neighborhoods and its strong online presence is a perfect marriage, in Kim’s view, to demonstrate the value of the company as a multichannel retailer available to customers online at home and on their mobile phones, in addition to being conveniently located in their neighborhoods, often 24/7. The recent acquisition of drugstore.com expands access even further. Online prescription refills and automatic alerts, using apps and smart phones to learn about and order products, and interacting with the company online means that “Walgreens is in your pocket” and close by to fill your needs. Kim notes that it is essential to make these assets a competitive advantage.
Walgreens is also taking action in and out of the stores to help customers “stay well” through education, prevention, and early detection of the three leading illnesses: heart disease, diabetes and cancer. First, since stores are so near 75% of the population, Walgreens is inspiring customers to “Walk with Walgreens” because walking is recommended by the American Heart Association, the American Diabetes Association, and the American Cancer Society as the best first “step” anyone can take to ward off these diseases. Through organized walks in every city, “Walk with Walgreens” raises funds for these organizations and when customers register at www.Walgreens.com/walk they can log their steps and get rewarded through offers for health items in the store. Over 40,000 Americans have registered for these events so far.
Second, for every purchase of a Walgreens brand health and wellness product, a donation is made to provide free health screenings to those who lack access to health services. Walgreens has committed a minimum of $100 million worth of free services over the next four years. Third, the Walgreens Wellness Tour takes screenings on the road with buses and screening centers to provide early detection for heart, cancer and diabetes conditions. Each year this scheme serves over 250,000 people, where many actually discover they are at risk and seek further treatment.
Walgreens Advertises Its Own Brands
During the spring of 2011, for the first time in the company’s history, Walgreens launched a national TV and interactive media campaign about its store brand—Walgreens Brand Health and Wellness products. In the past, such efforts have been relegated to in-store coupons and the Sunday circular. Kim is clear, however, that this is not an exercise in pricing out the competitors. Instead, she notes, “It’s important that we elevate the Walgreens brand and product, as an equally effective and lower cost option supported by pharmacists available in the store to advise on how to choose the best options.”5
Walgreens Pharmacy gives it an advantage in helping consumers accept its store brands as high quality alternatives because each product is “Pharmacist recommended.” In the ads, the pharmacists are shown giving advice to customers. All of the messages are warm and funny such as a women in an elevator advised to take “cold tablets and hot soup,” a mother advised to use “bubble gum flavor and patience” on her young son, and a man in a restaurant advised to eat “antacid tablets and only one taco.”
Kim Feil’s Two-Minute Drill
Three years into the job, Kim Feil is already breaking the industry average for CMO tenure. She gives a lot of credit to Greg Wasson, CEO and President, for supporting her efforts. She also sees the appointment of Graham Atkinson as the company’s first Chief Experience Officer as a terrific decision that will marry well with the work she has begun within marketing to enhance customer service and expand the role of in-store experts.
While it isn’t quite the same as Charles Walgreen keeping a customer on the phone while Caleb Danner rushes the prescription to her home, it is easy to see how Kim will use her strategic vision and systems to create a twenty-first century version of the two-minute drill and maintain Walgreens as America’s top retail pharmacy. By bringing Walgreens historical focus on the customer to each part of the business, Kim has helped write the next page in this company’s history.