Walgreens CMO Pat McLean On Becoming A Digital Health-And-Wellness Brand

When Pat McLean joined Walgreens as CMO in November of 2019, he made some big plans for 2020 that included sponsoring the Summer Olympics in Tokyo, Japan. Then a global pandemic happened. And while the 119-year-old retailer sprang into action as an essential service, the crisis exposed the company’s lagging digital strategy. With a renewed focus on health and wellness, McLean is committed to setting the brand apart and making critical investments to bridge the digital gap.

Rob Reed (RR): You joined Walgreens as CMO late last year, so the majority of your time has pretty much been during the pandemic. You obviously went into 2020 with a marketing plan. How has that changed?

Pat McLean (PM): Well, it’s changed dramatically. It’s been an amazing ride. I mean, 10 months. Some days it feels like it’s been about three years just because of everything we’ve been through. We had a solid plan, and we were on our way to executing—we had some really good campaigns that we’d executed in late fall of last year, and a great holiday campaign—and we were starting the new calendar year off really well.

We had a big sponsorship of the Olympics, for example, where we were all gearing up for a really big Olympic-related campaign. Clearly, what happened with the Olympics was a big impact so we had to change our thinking in terms of what we were going to do with that investment and what we’re going to do instead. Then also, it changed dramatically the way we did promotional activity and our everyday marketing to bring promotions, and bring people into the store, and drive our retail business in particular.

So much so that one of the big dramatic things we did throughout this year is—a lot of people would know Walgreens from the printed circular that we would put in newspapers all over the country and things change so dramatically that in the middle of the COVID period, we actually suspended that printed circular.

That just gives you an indication of how significantly plans changed during this period as you go from planning a big Olympics-related sponsorship and relying on what I would say is a pretty traditional tactic to reach customers with promotions through the printed circular, and now, neither one of those things is happening. Those are a couple really big examples of how plans changed.

RR: Walgreens was obviously top of the list among essential businesses. Was there any disruption in service at all?

PM: Well, what was amazing to me was, being relatively new to Walgreens, just watching the operational capability that we have as a company. Because we knew we were going to be an essential service, but the environment in which we’re providing that essential service needed to change dramatically. The company really quickly went in to action mode to make sure all of our team members and all of our customers and patients were safe.

While there was some disruption where, for some periods of time, we had stores closed here and there. If we had someone who was sick, or if we had to alter some hours to make sure that we had adequate staffing, and things like that. But for the most part, there wasn’t widespread disruption, but there was disruption in terms of our operations, right?

You can imagine all the extra cleaning that we’ve been doing, we had to put that in place really quickly. We put plexiglass into all of the front counters and in the pharmacy experience. We put a lot of communication into the marketplace and in our stores, on expectations of social distancing, and placing placards on the floor to make sure that people knew to be six feet apart–

RR: Across 9,000 stores.

PM: 9,000 plus stores, in the middle of a pandemic, and then we had all these supply chain things going on where, pretty much the whole world ran out of toilet paper and paper products and things like that.

RR: That seems so long ago.

PM: It does seem so long ago. It was amazing to see the company rally. And that was everything from our leadership team—we were meeting daily just to try to keep pace with the new expectations of the CDC and the government—and then changing expectations of our customers and then, obviously, the primary thing was to make sure that we were keeping everybody safe.

It was amazing to see our leadership swing into action and then all the way through to the real heroes on the front lines—the people, the pharmacists, all the people in the store, keeping the essential service in place throughout all of this. We owe a lot as a country, and we owe a lot as a brand and as a company to all of our team members. We want to thank them.

RR: Indeed. So what were some of your key learnings about the Walgreens brand and its customers through this?

PM: We learned a lot and, as I mentioned, the strengths and weaknesses of the company show up. As marketer, it was like a compressed version of customer insight and brand strategy at its best. Because, for example, we’ve got this terrific strength in terms of our retail presence and all the value we bring to the whole health-and-wellness category.

But on the flip side, we were not equipped at all to handle digital volume that exploded overnight. We were behind in our e-commerce capability. We didn’t have things like curbside pickup. We had supply chain issues back in our e-commerce. We knew that those things were obviously important, and there were lots of investments planned to go into those things, but it heightened the intensity of the need for those aspects of our value proposition.

As a marketer, it was fascinating: there it is in black and white, people are looking for this on an urgent basis, and this is why we need to be making these investments. To our credit, we went to free shipping almost immediately so that people could get their pharmacy and essential retail products from us without having to pay shipping cost.

We started executing curbside pickup as soon as we were able. We did things like—you’ve got the drive through pharmacy in most of our locations—we started adding retail essential products that were available through drive through. These are all like a marketer’s dream, right? Where it’s like, we’re launching this new services and these new products and these new value propositions at an incredible rate, responding to consumer insight that’s coming in real time.

That was our experience and it was a fascinating thing to go through as a CMO, as part of a leadership team that’s running the type of business that we are.

RR: Did you lean pretty heavily into the Walgreens app? Was that pretty fundamental in being able to respond?

PM: Yeah, absolutely, the app and Walgreens.com were critical vehicles, all of our social media channels. I mean, all of those were critical vehicles for, first of all, customers being able to still interact and transact with us without actually having to go into a store, but then also for us to get the word out—everything from what we’re doing to, first of all, add these other ways to interact with Walgreens and then also, all the things that we’re doing in store to make sure that you’re safe.

For people who did want to come in to the store, it was an important message that it is safe to come to Walgreens. We were communicating all the things we’re doing. But even more broadly, this whole role that we play in expertise in the health and wellness space coming from the pharmacy-centric view out from there. And the other thing we found ourselves doing was being one of the conduits for getting information in the marketplace around what’s the right thing to do.

We did this whole content series called Ask a Pharmacist, which was everything from, ‘Should I be stockpiling my pharmacy products? Should I be wearing a mask, should I not be wearing a mask? What are the symptoms of this thing?’ We were putting a lot of content in the marketplace that was broader than just pharmacy-related content. It was really health expertise.

What we learned from that is, we really do have permission and an expectation from our customers and patients, that we are providing a broader set of expertise to them on what can keep them well and what can keep them safe and what can keep them healthy.

We’re going to take that forward as a big part of our brand strategy. Another big learning out of the whole experience.

RR: Did you see a significant lift in engagement as you started to put out that content compared to the regular content you were putting out pre-COVID?

PM: We did, we really saw people and all of our brand metrics in terms of affinity for the brand, and especially equities related to health and wellness. All of those things that we did, both in terms of the operations of the business and then also the communication and content and marketing strategy we had during the period.

We saw double digit lifts in those metrics in a really short period of time, and marketers out there know, you don’t see that kind of change in a short period. It takes a long time to move those numbers. In a lot of ways, I think it got us back to the core of who we are as a health-and-wellness brand, and we learned that our strategy moving forward needs to be building from that core. We did see great engagement on the things related to that and our brand equity scores of all the things we track related to that really went high.

We want to sustain that and build on the success we had.

RR: In talking to other marketing leaders, they’ve mentioned that the pandemic really accelerated their shift to digital by about five years. It sounds like you got caught a little flat footed with that. But it also seems like the consumer expectation and behavior is not going to change, even when the pandemic subsides, yes?

PM: No question. Clearly, we knew that investments in digital and omnichannel and the e-commerce and all of that were necessary for us to compete in the future, but this put a finer point on it, and then, second of all, it accelerated so we’re in full-on acceleration mode, and we’re organizing around that. We’re shifting investment to that or shifting resources to that. It’s been a bit of a wake-up call for us and we’re taking it very seriously.

RR: Your previous two roles were in financial services with TD Bank and Capital One. If you were still there, you probably wouldn’t be dealing with the pandemic in the same way you are now, yes?

PM: Well, I think retail banking is not altogether different from the pharmacy business. Front-of-store retail is a little different because there’s just a lot of our products and a lot more promotional activity and a lot more repeat visits and traffic. But at the core, retail banking is a retail experience—a retail service experience—and so I have actually found a lot of parallels between my time in financial services. I’d say there’s actually more commonality than there are differences.

I would also say that the time I was in financial services was going through a tremendous amount of disruption. Everybody was coming out of the financial crisis, and there was a lot of disruption in terms of the digitization of banking and payments and you know, the fintech world was just becoming a reality. There was a lot of changing customer expectations around their banking experience, so it’s not altogether different from the challenge that we have at Walgreens to take the strength we have at retail, and take the strength we have in terms of our operational ability, the expertise that’s core in our business, but disrupt it so we do get to a fully omnichannel experience for customers so we can meet them where they want us to meet them and provide that personalized experience that customers are expecting.

While there’s a lot to learn in the retail business and a lot to learn in the pharmacy business, I found so far, from a marketing strategy perspective, a lot of similarities.

RR: Is the brand stewardship very similar, as well?

PM: Absolutely. Especially with some of the brands I worked on in that industry. I think TD Bank and Capital One are two brands that standout in the industry in different ways. The idea of breaking away from the pack from a brand perspective was prevalent in my experience in financial services and also very much what we want to do at Walgreens. Walgreens has a lot of strengths from a brand perspective.

But we’ve got a lot to do if we’re going to differentiate ourselves from other retailers and other pharmacy category brands. We’ve got a good strategy and a good set of investments behind our point of view there, and one of the reasons I joined here was the opportunity to take the Walgreens brand to the next level.

RR: I want to ask about you your approach to and your opinion of brand versus performance marketing. Where do you come down on that and the specific challenge you have with Walgreens?

PM: I fundamentally disagree with the premise that there is such thing as brand advertising and performance advertising. I think it is all performance advertising and performance marketing, and I think it is also all brand marketing. So, I think if your ‘performance marketing’ isn’t accreting to the brand, then you are not doing performance marketing right. If you are not doing your ‘brand marketing’ that drives performance then you are not doing your brand marketing right.

And so I think the biggest challenge is in the evolving space of measurement, right? I think we tend to make that distinction because there is a certain aspect of marketing that is easier for us to measure and connect back to ROI. But I believe that does not let the marketer off the hook. If you are spending a dollar on behalf the company, you should have a point of view, and you should have at least some form of measurement that’s tying it back to the performance of the business.

RR: I wrote that piece called CMOs Need To Think and Act Locally In The Age of COVID And Beyond. From a marketing perspective, how do you think about local? Are there local representatives that you communicate with at all? Is there a feedback loop between the stores and your organization?

PM: Absolutely, we have a really good routine with all of the field leadership that is in all of the various markets, and there is a lot of interplay. I think we can do a better job of localizing everything from our assortment to the way we market, but I think today we do a pretty good job of it, and we’re very active locally, community to community. I think one of the benefits of having such a large retail footprint is people do think of Walgreens—even though we’re massive—they think of us as a local brand.

And we’re trying to enhance that. There is this whole concept of ‘My Walgreens’, and My Walgreens is the one that you go to. That language is in the customer vernacular, which is like, ‘It’s my Walgreens.’ And it’s like, ‘Yeah, it is the local one that is just down the street. It is the one I go to all the time.’ And so there is this local feel to the brand. And I think during COVID, every community was impacted differently.

You’ve got everything from New York City to North Dakota, very different situations in terms of impact to customers and impact to operations. So it actually forced that even more, where we were looking at transaction data, customer insights, and keeping tabs on what was happening community-to-community so we could be responsive to each of the unique situations that we were countering.

RR: One of my core memories about the Walgreens brand is when I read the book Good to Great, and it described the company’s journey from good to great around this North Star metric of optimizing for profit per customer visit. Is this still true at Walgreens or has e-commerce and digital messed that one up?

PM: Well, it’s evolved is what I would say. I think the principle of that metric is still in place, but what we have done is evolved it to the customer level. So it is now revenue per customer, right? Where that revenue comes from, whether it is a store trip, whether it is e-commerce, whatever it is, whether it’s pharmacy or retail, now we ladder up to a customer metric to say, ‘Are we growing our share of wallet with the individual customer?’

So it is no longer about a trip. I mean we still track all of that, of course, and obviously the concept of a basket size is really important because if you have somebody in the store, or if you have somebody in your e-commerce experience, you want to be filling that basket as much as you possibly can to meet whatever other needs that customer might have, that they didn’t initially come in to fulfill, and so we still track all of those metrics.

But now it’s at the customer level. We have a customer score card that really is our new North Star. And that is everything from customer satisfaction, brand affinity—and so brand metrics are mixed in there—and then from a business performance [metric], the one that is the key replacement for that Good to Great metric that we are tracking is this average revenue per customer.

Note: The full podcast interview is available at Clicks 2 Bricks and Apple Podcasts.