ORLANDO, FL: CVS Health, the pharmacy-focused retailer, has demonstrated how brand purpose can pay off in practice by sacrificing $2bn in tobacco sales, then reaping the rewards of healthier customers and new business contracts.
Norman de Greve, SVP/CMO of CVS Health, discussed this topic at the Association of National Advertisers' (ANA) 2016 Masters of Marketing Conference.
"CVS was willing to give up $2bn in annual revenue from the sale of tobacco to protect its customers from harm," he said. (For more, read Warc's exclusive report: CVS Health wins risk/reward gamble in purpose-driven marketing.)
The decision to no longer sell these products came into effect two years ago, as the company decided its overall purpose could not support offering such goods in stores.
"When your purpose is helping people on their path to better health, how can you sell lifesaving medications at the pharmacy counter and cigarettes at the checkout counter?" said de Greve.
"When that's your purpose, selling cigarettes and antibiotics in the same store moves from being ironic to cynical."
In making the business case for this choice, CVS hoped its boldness would be well-received by current and prospective healthcare partners, as well as helping improve the lives of consumers.
"We were calculating that by selling fewer $10 packs of cigarettes in the front of our stores, we'd sell more $10m contracts to provide the pharmacy benefits to health plans and hospitals and employers by demonstrating our commitment to the health of their members and employees," said de Greve.
And this theory has paid off, as some 500,000 people have visited the brand's digital smoking-cessation hub, and 260,000 have asked in-store pharmacists for guidance in kicking the habit.
The firm's revenues have grown, too, not least because health plans and employers have recognised that CVS is a "serious player in healthcare" and deepened relationships with the company.
"We've had record revenues and earnings since the brand relaunch," said de Greve.
Data sourced from Warc