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- Herausgeber: John Wiley & Sons
- Kategorie: Wissenschaft und neue Technologien
- Sprache: Englisch
A 13-point manifesto for a new financial services marketing model Anthony Thomson knows a thing or two about new and disruptive financial services, having co-founded and chaired first the ground-breaking Metro Bank and then the purely digital, app-based Atom Bank. And as a financial services marketing specialist for over 30 years, Lucian Camp has helped develop more new and innovative financial services propositions than anyone. Now they've put their heads together to write No Small Change, a passionate, opinionated and practical manifesto arguing that the fast-changing financial services world urgently needs to rethink the whole of its approach to marketing. Most of all, they propose that an increasingly digital, fintech-driven industry needs not just more marketing, but also better marketing to make sure it's successfully identifying consumers' real needs, and finding powerful and successful ways to engage with them. After detailing the forces of change that demand a new approach, the book then examines in 13 chapters what the key components of that new approach should look like. It takes a broad and multi-faceted perspective, exploring areas as diverse as the crisis of consumer trust, the ever-growing power of Big Data, the importance of leadership and corporate culture and the rapid advance in thinking based on Behavioural Economics. In developing these themes, the authors don't pull their punches. The book is fiercely critical of some of the industry's long-established marketing habits, providing compelling reasons why it's time to abandon the practices that have given it a bad name. Marketers will applaud, but the book is also intended for a broader audience. Thomson and Camp challenge senior management in financial firms to appreciate the real value that marketers can bring to shaping the business agenda at the highest level, and not just to label marketing with that tired old phrase "the colouring-in department." Rich in anecdotes, comments from leading industry figures, personal experiences on the part of both authors and findings from original research, No Small Change is an entertaining and rewarding read - and, at this point in the development of financial services, a timely and important one.
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Table of Contents
Cover
Preface
NOTE
Acknowledgments
About the Authors
CHAPTER 1: About This Book
NOTES
CHAPTER 2: What Is Marketing, And Why Does It Matter?
NOTES
CHAPTER 3: From ‘Best Advice’ to ‘Satisficing’
NOTE
CHAPTER 4: Why Not Then? And Why Now?
A NOTE ON SELLING VS MARKETING
NOTES
CHAPTER 5: Retail Financial Services How?
ANNUITIES
CARDS
CRITICAL ILLNESS INSURANCE
CURRENT ACCOUNTS
EQUITY RELEASE
FINANCIAL ADVICE
FUNDS
GAMBLING
LIFE ASSURANCE
LENDING
MORTGAGES
MOTOR INSURANCE
PAYDAY LENDING
PEER-TO-PEER LENDING
PENSIONS (ACCUMULATION)
PENSIONS (DECUMULATION)
PRICE COMPARISON SITES
PRIVATE MEDICAL INSURANCE
ROBO ADVICE
SAVINGS
TRAVEL INSURANCE
TRAVEL MONEY (FX)
WEALTH MANAGEMENT
NOTES
CHAPTER 6: Real People, Real Lives
NOTES
CHAPTER 7: Cutting in the Middle Man
THE INTERMEDIARY MARKET TODAY
THE NEW INTERMEDIARY MARKETING
NOTES
CHAPTER 8: Introducing the New Financial Services Marketing
THE NEW FINANCIAL SERVICES MARKETING
NOTES
CHAPTER 9: How Does Your Firm Define Its Purpose?
BACKGROUND TEST 1: HAS THE STATED PURPOSE BEEN ADOPTED RECENTLY?
BACKGROUND TEST 2: IS THE ORGANISATION LARGE, COMPLICATED AND SILOED?
BACKGROUND TEST 3: SIMILARLY, AS A CUSTOMER, ARE YOU DEALING WITH A PERIPHERAL PART OF A LARGE, COMPLEX BUSINESS?
BACKGROUND TEST 4: HOW IS THE BUSINESS'S RELATIONSHIP WITH ITS EXTERNAL SHAREHOLDERS?
BACKGROUND TEST 5: IS THE BUSINESS FINDING IT EASY TO MAKE MONEY?
NOTES
CHAPTER 10: Does Your Firm Have a Strong and Distinctive Culture?
NOTES
CHAPTER 11: How Much Is Big Data Changing Your Business?
NOTES
CHAPTER 12: Do You Get the Power of Behavioural Economics?
NOTE
CHAPTER 13: Are You Really Any Good at Innovation?
NOTES
CHAPTER 14: Are You Absolutely Sure About ‘Restoring Trust’?
NOTES
CHAPTER 15: Whatever It Is, Can You Make It Simpler?
‘ATTITUDE TO RISK’ QUESTIONNAIRES
NOTES
CHAPTER 16: Are You Just a Little Bit Boring?
NOTES
CHAPTER 17: Call That a Brand?
SOME BRAND MYTHS DEBUNKED
BRAND ARCHITECTURE AND PRODUCT BRANDING
NOTES
CHAPTER 18: Yes, But Can You Prove It's Working?
NOTE
CHAPTER 19: Must Planning Your Comms Be So Horribly Complicated?
IT'S BROADCAST
AND
NARROWCAST, NOT
OR
WORRY MOST ABOUT BEING IGNORED
THE RULES OF DIRECT MARKETING STILL APPLY
NOTHING MATTERS MORE THAN THE BRIEF
FOR HEAVEN'S SAKE, TRY TO BE A GOOD CLIENT
BETTER TO BE CONSISTENTLY (A BIT) WRONG THAN INCONSISTENTLY RIGHT
MAKE SURE YOUR ORGANISING IDEA REALLY ORGANISES
APPROACH CONTENT MARKETING WITH GREAT SUSPICION.
TIME TO CLOSE UP THE FRONT OFFICE/BACK OFFICE DIVIDE
SPEND MORE MONEY ON INTERNAL COMMUNICATIONS
NOTES
CHAPTER 20: How Far Can You See Beyond Financial Services?
NOTE
APPENDIX 1: Winning Entries from the Financial Services Forum Marketing Effectiveness Awards
SANTANDER
DIRECT LINE GROUP
POLICE MUTUAL
NOTES
Further Reading
Index
End User License Agreement
Guide
Cover
Table of Contents
Begin Reading
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E1
No Small Change
Why Financial Services Needs A New Kind Of Marketing
LUCIAN CAMPANTHONY THOMSON
This edition first published 2018
© 2018 Anthony Thomson and Lucian Camp
Registered office
John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom
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Library of Congress Cataloging-in-Publication Data is Available:
ISBN 978-1-119-37803-7 (hardback) ISBN 978-1-119-37801-3 (ePub) ISBN 978-1-119-37804-4 (ePDF)
Cover Design: Wiley
Cover Images: © RoBeDeRo/iStockphoto; © Rawpixel.com/Shutterstock
Anthony dedicates this book to Louise, James, Sarah and Felix.
Lucian dedicates this book to Judy, Chloe, and Oliver, without insisting they read it.
Preface
No-one at all familiar with our CVs will be surprised to find this book calling vigorously – indeed, passionately – for more and better marketing in retail financial services. Between us, after all, we've been focused on financial services marketing for over 60 years. After such a very long time, it would cast a large and dark cloud over both our careers if we concluded there wasn't much to be said for it.
Naturally, we haven't. On the contrary, we're convinced that good marketing is the driving force behind a virtuous circle, in which companies succeed by providing customers with things they want and need. And the reverse, we believe, is also true: if customers aren't getting things they want and need, and/or the companies providing them aren't succeeding, then by definition there must be a lack of good marketing.
But while you might justifiably think that our belief in the benign power of marketing can be more than a little idealistic, we don't want you to think we're naive. This book wouldn't be useful if it was just a plea for peace, love and understanding to enlighten the wicked world of financial services.
In particular, there are two kinds of naivety from which we're determinedly immune. First, while this book certainly doesn't hold back from criticism of the financial services industry, we don't believe that practices in financial services are much worse than in other major sectors of the consumer economy. For reasons we'll consider, we think there has been more marketing in most other sectors, but we don't think that much of it has been better. It seems to us that in a competitive world where it's increasingly difficult for firms to behave with transparent fairness and still make profits, sustain their share price and hit their bonus targets, a lot of opacity and unfairness are all too common. Whether it's car builders cheating emissions tests, or international corporates creating elaborate structures to duck local taxes, or digital media owners channelling advertisers' money to terrorists and paedophiles, or just supermarkets injecting chicken breasts with water to increase their weight and price, there are a great many more pots than kettles. And these examples, of course, have all broken the golden rule ‘Thou shalt not get found out’: how many others still remain unknown?
The second species of naivety that we don't entertain is perhaps more fundamental. Our championing of ‘good marketing’ can, we know, sound a little hippy-dippy. Oversimplified, our message can take on a tree-hugging tone, seeming to propose a world of total transparency, uncompromising quality and rock-bottom pricing, in which consumers' needs are always perfectly identified and met by means of sales and marketing techniques that ooze with fairness, balance and impartiality.
To be clear, we don't think marketing can or should be like that at all. Marketing is by its nature a partisan and persuasive activity, intended to encourage people to do things they otherwise would not have done: buy a firm's products and services in preference either to other firms', or to not buying anything at all; pay more than the lowest price for a product, in the belief that it's worth the extra; pay attention to a communication that they otherwise might have ignored. In all these ways and many others, marketing is manipulative and self-serving. It has to be. But our point is that at the same time, it can and should serve the interests of consumers, too.1
This book discusses why we think it's important and urgent that it should do so much better, and much more often, than previously, and then goes on to examine, in some detail, what we think ‘better’ should look like.
These views are based on a very great deal of experience, but still in the end they are just views. We'd take some persuading that financial services marketing doesn't need to move on, but we're very open to persuasion about exactly how. One of the least controversial themes of the book is that when it comes to communication, what once was a monologue must now be reframed as a dialogue, and what's true of financial services marketing is also true of books on the subject. If you'd like to agree with, disagree with, add to or indeed subtract from anything you read here, we'd love to hear from you.
NOTE
1
Although its proponents don't quite like to admit it, the fact is that this kind of mutuality of interest is also the basic premise that underlies much of the behavioural-science-based ‘nudge’ marketing that has developed so rapidly in recent years. Initiatives such as auto-enrolment into workplace pensions involve ‘manipulating’ consumers by exploiting behavioural biases that make them more likely to participate – in their own long-term interest as well as the country's.
Acknowledgments
Neither of us has ever written a book before. That meant that we needed a lot of help.
We needed help with the content, and we got it from a great many people in the industry who generously shared their thoughts, opinions and insights.
We needed help with the innumerable practicalities, from arranging to record and transcribe all those interviews and focus groups through to maintaining some sort of grip on the head-spinning subject of version control.
We needed a lot more help than most experienced authors with the lengthy, complex and often somewhat mysterious process of making the initial sale, and then producing and promoting the eventual product.
And finally we needed both practical and emotional support from the people around us, both at home and in our day jobs. You can't write a book without imposing a good deal on them.
In return for all this help, the only thing we had to offer was a name-check in the Acknowledgements section, so in the next few paragraphs we'll aim to pay what we owe.
First, we received a lot of input from members of the Financial Services Forum, the membership organisation dedicated to improving standards of financial services marketing and chaired by Anthony. All this help was orchestrated for us by the Forum team, and particularly by the irreplaceable Richard Nolan, ably supported by Kate Taylor and Rachel Shackleton and led by David Cowan.
We're grateful to all the members who completed our quantitative research questionnaire, and even more grateful to those who took part in our focus group discussions: Ian Henderson, Malcolm Oliver, Mark Mullen, David Lundholm, Mark Evans, Nicola Day, Annabel Venner, Ali Crossley, Sue Simpson, Clive Kornitzer, Stephen Gunkel, David Wright, Pete Markey, Ken Hogg, Bradley Gamage, Jonathan Spooner, Nigel Gilbert and Richard Royds. Additional thanks go to Ian Henderson for making the Boardroom at his agency AML available for these sessions, and to Hobie Walker for feeding and watering us during them.
Bradley Gamage also made the facilities of his agency, SapientRazorfish, available for our ‘30 Under 30’ workshop in which we consulted a number (actually rather fewer than 30, and not all of them aged under 30, so not our greatest-ever workshop branding) of the financial marketing world's rising stars. These included Joe Buzzard, Audrey Adjei, Sophie Church, Jessica Cordery, Richa Jaiswal, Pete Knott, Hayden Leith, Charlie Lynch, Jeremy Morat, Victoria O'Callaghan, Jess Over, Phil Rook, Alex Sangster, Daniel Saunders, Charleen Sparks, Laura Steel and Ben Stokes.
And Tony Langham made the Boardroom at his agency, Lansons, available for an exceptionally illuminating session on data, artificial intelligence and machine learning with a group of pointy-headed gurus who somehow managed to share their wisdom with us in remarkably understandable English. This group was recruited by Ian Hitt of Ninety, and included David Francis, Giles Blackburn, Peter Pugh-Jones, Nick Timon, Russel Goldie, Salvatore Pennino and Thom Rodde.
When we weren't picking people's brains in groups, we were picking people's brains individually. Rory Sutherland, who may be the single individual who best understands the overlap between the academic discipline of Behavioural Economics and the extremely unacademic world of direct marketing, was generous with his time. So too was Professor Adrian Furnham, whose academic record in financial services speaks for itself. And both John Smythe and Stewart Bromley (separately) gave great insight into the complex and difficult subject of building internal culture.
Meanwhile, this project wouldn't have advanced very far without the substantial assistance of our agent, Jonathan Hayden, who must often have been startled by the naivety and ignorance of his first-time authors and indeed frustrated by our slow rate of progress, but managed to hide all such negative emotions. And at Wiley, we're grateful for all the efforts of our commissioning editor Gemma Valler, and our tireless project editor Emily Paul.
Many thanks to Sian Rance and Emil Dacanay at D.R.ink for the jacket design and a lot of further design work on our website, social media presence and graphics for other marketing and launch events.
Thanks to our lovely wives Louise and Judy for all their necessary supportiveness and encouragement, even though it's very difficult to see anything much in it for them.
And finally sincere and heartfelt thanks to anyone we've forgotten. We recognise that sincerity and heartfeltness don't count for much when you can't see your name in print, but, honestly, we are very grateful.
About the Authors
Lucian Camp
Lucian's marketing services career stretches back well over 30 years, the large majority spent as a specialist in financial services. Over that time he has played four overlapping roles: he began as an advertising copywriter, then was for many years as an agency creative director, then founded and chaired two agencies of his own, and then after the sale of the second became a one-man brand and marketing consultant. He has also written, blogged and spoken extensively on financial services brand, marketing and communications issues. Lucian is married to Judy, and they have two grown-up children. He lives in north-west London and south-west France.
Anthony Thomson
Anthony is a marketer and entrepreneur. In the 1980s he co-founded what became Europe's biggest financial services marketing agency. Since then he went on to be founder and chairman of Metro Bank, the UK's first new High Street Bank in over 100 years, and then founder and chairman of Atom Bank, Europe's first bank delivered through mobile devices.
From 2014 until 2017 he was chairman of The National Skills Academy for Financial Services. From 2011 to 2014 he served as visiting professor to London Metropolitan University Business School, and is currently the David Goldman Visiting Professor of Business Innovation & Enterprise at Newcastle University Business School.
He is married to Louise and has three grown-up children. He lives in Somerset.
CHAPTER 1About This Book
Everything in this book is based around a single central idea: that in a consumer economy like ours, good marketing is good for consumers, companies and society as a whole.
We'll define and describe what we mean by marketing, and specifically good marketing, in much more detail further on in this book. It's important to be clear about this – of all the terms commonly used in business, there can't be many with a broader, less precise and less consistent range of meanings. For the time being, let's just say that at a high level marketing helps with figuring out what consumers want or need, and then finding ways that organisations can successfully provide products or services that satisfy those wants and needs while meeting their own goals.
On this basis, it seems clear to us that good marketing, in financial services as elsewhere, is a good thing. It results in products, services and experiences which please and satisfy consumers, which they perceive to offer them good value (a concept we'll discuss later), which offer a profitable and sustainable future for the companies providing them and which generate economic activities that benefit society as a whole.
All of which makes it particularly regrettable that in financial services, unlike many other parts of the consumer economy, we've seen little good marketing over the years. There has been a growing amount of not-very-good marketing – much of it simply ineffective, but a good deal of it actually bad for consumers and for the companies responsible for it. And a lot of firms have carried on without very much marketing at all, relying on other ways to build and maintain their businesses.
There are exceptions. There are always exceptions. Inevitably, this book will deal largely in generalisations, and may not always emphasise the exceptions that exist, but they always do. The most basic of our many generalisations, of course, is the idea that there is any kind of single, homogeneous thing that can meaningfully be described as ‘financial services’. In fact, as we discuss in Chapter 5, the term embraces a huge number and very wide variety of businesses with little in common. In many respects mortgages have little in common with asset management, which has little in common with car insurance, which has little in common with retail banking.
In this large and diverse industry there are a few sectors where we have seen heavier investment in marketing for longer than others, particularly those where firms deal directly with consumers. And within almost every sector there are individual firms that have chosen to do the same thing. But on the whole the retail financial services industry has grown extremely large, and extremely successful, employing some 2.2 million people, over 7.3% of the UK workforce, and contributing almost 11% or £176 billion to the total UK economy, without feeling the need for a great deal of marketing.
This is in sharp contrast to almost every other major sector of the consumer economy. Marketing as a discipline emerged, back in the Victorian era, in the field of packaged goods: it was an essential function enabling firms to make the most of their new ability, as a consequence of the Industrial Revolution, to manufacture consistent products in large volumes. Marketing has been integral to the success of fast-moving consumer goods (FMCG) manufacturers and retailers ever since.
An integral part of this development of marketing was, of course, the development of brands and branding. As soon as you can make every day's production of Pears soap or Bass beer look and perform exactly the same as the previous day's, it becomes important to give consumers a way of recognising the brand from one day to the next. And from there, it's a small step to the realisation that at the same time, it would be helpful to give consumers a clear and distinctive sense of what they could expect from your product. At this point, you've started to create the first true brands – a subject we discuss in much more detail, as far as financial services are concerned, in Chapter 17.
But over the years, the essential role of marketing has spread far and wide from its beginnings among grocery brands like Pears soap and Bass beer. It played the same vital role as industrialisation started to create similar volume manufacturing opportunities in much higher-value sectors, like motor cars and electrical appliances. And for well over a century, marketers have also been establishing an increasingly important role in service sectors, like travel, hospitality and entertainment.
That said, while the distinction between ‘products’ and ‘services’ was once fairly clear, there were always grey areas between the two, and over time these have steadily expanded. Today, as we discuss in Chapter 5, the dividing line is very blurred indeed, and we suspect that the distinction is on the way to losing any real meaning. After all, there is a single key requirement that underpins marketing and branding activity in product and service sectors alike: the need for consistency of customer experience. True, on the whole consistency is easier to achieve in packaged goods than in services, but a certain core level is essential before any kind of effective marketing can be brought to bear. (We're aware of the odd, rather desperate service brand that claims that this core consistency in fact lies in the organisation's amazing diversity, but we're unconvinced by this attempted sleight of hand.)
In developing volume manufacturing it was essential that the product was 100% consistent, that every can of beans tasted exactly the same. In financial services, the products are not 100% consistent. Your authors could have exactly the same car insurance policy, but our experiences of making a claim are quite likely to be different.
Nevertheless, in every sector, product and service alike, the basic story is always the same: as firms develop the ability to deliver consistently and at scale, it becomes increasingly important to make sure that what is being delivered meets – and is seen to meet – a real requirement of at least a segment of consumers in the marketplace. There's little point in delivering a million bottles of shower gel in a market where no-one showers, or building 1,000 hotel rooms in places where nobody stays.1
These days, it's difficult to think of many significant parts of the consumer economy where marketing has not successfully and visibly played this directional or navigational role, aligning what a company delivers with what a consumer segment wants and/or needs. Two main areas come to mind.
One consists of those service sectors that are still highly fragmented and populated by very large numbers of extremely small firms or even single individuals. You won't find many marketers working in the window-cleaning sector, for example, or among child-minders, dog-walkers or landscape gardeners. Small firms or individuals in sectors like these are effectively responsible for their own micromarketing, usually in their own local catchment area – and many, by the way, are extremely good at it.
The other (on the whole, and allowing for a fair few exceptions) is retail financial services. This very large and very diverse sector has relied on other factors for its growth and success, with marketing playing a supporting but generally much more limited role. We'll consider those ‘other factors’ in a later chapter. But at this stage, we should raise two broader points.
First, we think it's clear that the consequences of this marketing-lite development have been generally bad both for firms and for consumers. Time and again, situations have arisen in which consumers have been presented with products and services that haven't properly met their needs, or indeed in some cases haven't met their needs at all, or which have not been priced fairly or sustainably and so have not delivered good value, or which have failed to deliver appropriate levels of service. Just as often, the corollary has also applied, and the industry has failed to identify big and obvious needs or to develop products and services that satisfy them. We think that all these failings have resulted, at least to some extent, from firms choosing to put decisions affecting their customers into the hands of people with little real customer insight or focus.2
Second, and more happily, there are good reasons – and in fact surprisingly many – to believe that things are now finally changing, and that marketing is beginning to occupy the kind of central directional role in financial services that it does in most of the rest of the consumer economy. We share some of the research we undertook on this in Chapter 2.
A lot will still have to change to get us there. At this moment, most marketing departments in financial services still play a limited role. Far too many are still unkindly, but often accurately, known internally as ‘colouring-in departments’. (Regrettably, our own research among financial marketing professionals indicates that quite a few of them use this term to describe themselves.) The important decisions about what firms should provide to their customers are still resolved elsewhere, and the marketers are then tasked with producing the marketing collateral, the website and the brochures.
And of course far too many of those important decisions still reflect a degree of cynicism toward customers that would make a true marketer's blood run cold. It's not so long ago that one of your authors was working on the launch of a new personal pension for one of the big High Street banks. In a working group meeting, someone pointed out that the proposed product charges would be the highest on the market. ‘That's right’, said the project leader, ‘But you have to remember, this is only for our existing customers’.
Comments like this reveal a horribly misguided view in which marketing is seen as a zero-sum game in which the company can only ‘win’ if the customer in some way ‘loses’. This book is written at a time when we believe that attitudes like this are finally on the way out, and we hope to be able to give them a further shove toward the exit. Our own belief is the exact opposite: by our definition, ‘good’ marketing can only be marketing that works in the interest of both the customer and the company.
To be clear about this book's scope, it deals with financial services ultimately delivered to individual consumers, whether they buy them directly from the provider or from an intermediary (and whether that intermediary is an individual, a branch or an aggregator website). To do this, it will embrace the subject of marketing to intermediaries, en route to the end customer. But it won't attempt to deal with financial services delivered to business or corporate customers, or to large collective groups of consumers (such as members of company pension schemes).
It's written from the perspective of two authors who have seen the industry they're describing from the inside, from the outside and from many other angles. Lucian has worked in the marketing services sector specialising in the financial world for over 30 years, during which time he has founded, chaired and eventually sold two creative agencies: a copywriter by trade, he has worked for literally hundreds of financial clients, mostly in the UK, but also across the world. He has written and spoken extensively on the subject for many years.
Anthony also built his initial reputation in marketing services, but has gone on to lead two other careers since then. First, he established (and still chairs) the Financial Services Forum, a membership organisation for individuals in senior marketing roles dedicated to improving marketing in the industry. More recently he has built a reputation as one of the world's leading ‘challenger bankers’, founding and chairing the highly successful Metro Bank, the UK's first new retail bank for well over 100 years, and going on to found and chair Atom Bank, the first bank in Europe to deliver services via mobile devices.
Altogether, this adds up to a combined total of more than 60 years of financial services marketing experience.3 From that insider's perspective, we are in no doubt at all that for some time now, the industry has been moving in the right direction. Marketing is getting better, and its importance is becoming more recognised. And consumers are gradually starting to get the kind of quality, value and service that they need in this vital part of their lives.
There are many reasons for progress in the field, including increased competition. But if we had to name a single one we would both, unsurprisingly, choose the massive and exhilarating advances in the digital world, which have been gathering pace over the past 15 or 20 years.
In the same way that financial services has been comparatively slow to take advantage of the full potential of marketing, it has also been comparatively slow to take advantage of the full potential of digital, tending, initially at least, to think of it as a way of reducing costs and increasing efficiency rather than fundamentally reinventing propositions and changing behaviours. On a scale of 1 to 10, where 1 represents the pre-digital status quo and 10 represents the eventual total transformation, we'd say that with a few honourable exceptions we haven't yet got much past three. But the snowball is now rolling down the hill, going faster and getting larger as it rolls.
As it gets larger, it becomes increasingly clear that speaking of ‘digital’ as a singular thing, with a single label, doesn't make much sense or do any justice to its scale. If ‘digital’ represents a new world, then it's a world made up of any number of continents and land masses. As far as financial services are concerned, some are relatively the well developed: immense efforts and investments have been made, for example, in process automation. Others are largely unexplored: it's very hard at this stage to imagine the kinds of accommodation that financial services will eventually reach within extraordinarily dynamic and fast-changing continent called Social Media, and so far we've scarcely begun to make the most of Big Data. And others again have scarcely been discovered: in the long run, there can't be much doubt that the emerging sciences of Artificial Intelligence and Machine Learning have the most transformative effects of all. To borrow the quote from Carl Sagan ‘The future of digital has arrived, it's just unevenly distributed’.
Nevertheless, it's perfectly clear even at this relatively early stage that digital is driving more change in financial services than any other development in the industry's history – and, no less important, that while the processes of change may be difficult, the emerging consumer outcomes have every chance of being largely benign. Digital will transform every industry, but in many cases both the processes of transformation and the eventual outcomes will be painful: in today's world, who would choose to run an offline newspaper or magazine business? But for financial services customers, it just seems to make things better.
By chance, there is at least one other driver of change in financial services that, in our view, could have implications that are almost as dramatic. This is the broad agenda that comes under the heading of Behavioural Economics (BE).
We must admit to some sympathy for the view that BE as a way of thinking, emerging principally from the US academic community over the past 30 years or so, has less to teach marketers than others in the commercial world. A bit like the foolish hero of the Moliere play Le Bourgeois Gentilhomme, who is thrilled to discover that he has been speaking ‘prose’ all his life, many of the ‘discoveries’ now claimed by behavioural economists have been well known to marketers – especially direct marketers – for decades. But that's not the point. The point is that these discoveries about the ways that real people think, feel and make decisions are now increasingly owned by economists, academics and senior non-marketing management, and that makes them far more powerful than when they were understood only in the colouring-in department.4
This book is about these and many other changes and their implications. We intend it to tell a positive and exciting story, about a huge and historically slow-moving industry that has been through some dark days (or indeed decades) in the way it has treated its customers, and has come under irresistible pressure to change its ways and do things better and differently.
You'll have heard the saying that it is insanity to ‘do the same thing over and over again and expect a different result’. We think it would be madness to continue financial services marketing in the way it has been done and expect to get a different result.
We intend to spell out what ‘better and differently’ will look like. If you're accessing this copy – on screen, or paper or another, newly invented medium – at some distant point in the future, it will be interesting to see how much we got right.
We'd be surprised if you agreed with everything we've written. We didn't even agree among ourselves on all of it, or at least not without some heated debates. But if you work in or around financial services marketing, we hope that some of what you read here will encourage you to question what you're doing and perhaps think differently about it.
If it has, then please do get in touch. Even if you violently disagree with what we've written we'd love to hear from you. You can reach us at www.nosmallchange.co.uk.
NOTES
1
Actually, of course, this is a little simplistic. It might well be worth building a hotel in a particular location if the reason no-one stays there is a lack of hotels. There's an old joke about two shoe companies which send marketers out to a remote corner of the world to report on the size of the market opportunity. The first reports back that there is no opportunity – no-one wears shoes. The second sends back an excited message, ‘Fantastic opportunity, send as many pairs as you can, no-one has any shoes’.
2
In some parts of the industry these tend to be actuaries. One of the old jokes about actuaries says that if you have your head in the fridge and your feet in the oven an actuary will say you're at the perfect temperature. This tells you what you need to know about the average actuary's level of consumer insight.
3
As far as this book is concerned, this is a case of both good news and bad news. The good news is that we can tackle our subject from an insider's perspective: pretty much everything we have to say reflects direct, firsthand experience. The bad news is that inevitably, it means you'll find our fingerprints on a number of marketing initiatives that in some way fall short of the ideal. Nothing too disgraceful – hopefully our antennae were sensitive enough to keep us away from some of the industry's least customer-friendly practices. But, undoubtedly, a good deal of activity could fairly be described as ‘colouring in’.
4
To take a single, albeit important, example, auto-enrolled pensions represent a way of applying a BE principle to the need to increase retirement savings. It must be very doubtful whether HM Treasury and the Department For Work & Pensions would have committed themselves to this bold and radical initiative if it had been only marketing people who were championing it.
CHAPTER 2What Is Marketing, And Why Does It Matter?
This is an odd chapter title, especially in a book about marketing that's written for a readership including a high proportion of marketers. It's difficult to believe that an equivalent would be required in a book about any other large corporate department – IT, say, or HR.1
In financial services at least, when it comes to the role of marketing this kind of uncertainty is prevalent within firms as a whole, and indeed within marketing departments in particular. In all our research and discussions, we met few marketing people – up to and including some very senior marketing directors – who had a clear sense of what they and their departments were and were not supposed to be doing.2
Few, in fact, had any agreed definition of what marketing actually is, shared either within their own departments or within their businesses as a whole. This was a surprise to us, and not in a good way. How can you set goals for marketing if you can't agree on what it is? How can you successfully measure the effectiveness of what you've done if you don't know what you should be measuring?
This is clearly an issue to be tackled sooner rather than later. It wouldn't be easy to write comprehensibly about how marketing needs to change if there wasn't any clarity or consensus on what it is, and what it does now.
We couldn't think of a better starting-point than the definition provided by the professional body for UK marketers, the Chartered Institute of Marketing (CIM).
They've clearly – and necessarily – given it a lot of thought. Reading what they've come up with, it's easy to imagine the workings of the subcommittee of members tasked with coming up with something, labouring for long hours over working lunches of Pret sandwiches and bottles of Highland Spring water, covering countless flipcharts and sticky notes in their quest for the perfect form of words. In the end, we imagine, they came back in triumph to the management committee with a single sheet of paper bearing the following lovingly-crafted sentence:
Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.
And let's say straightaway that we don't think they did too badly at all.
Mischievously, we can't resist a little speculation about the drafting process. We suspect, on the basis of absolutely not a shred of evidence, that certain words and phrases in the finished product were absent from the first draft but emerged along the way in response to specific concerns, comments and criticisms:
Management process,
for example, is a term that we suspect is intended to imply that marketing is a proper part of business with its own proper process, and not in any way just a bunch of luvvies with their feet on their desks dreaming up wacky ideas.
Anticipating
suggests that marketing is a forward-looking activity, not one that's only concerned with the present (or, heaven forbid, the past).
Requirements
sounds like a term chosen to blur over the trickiest issue in the definition (to which we'll return later), about whether marketing in financial services should concern itself with consumers' needs, or wants, or both. (Unlike many other categories, consumers may not much want our products but they may need them, or even in a few cases be required by law to have them.)
And
Profitably
is added at the end for much the same reason as ‘process’, to emphasize that marketing is a serious, financially responsible part of a business and not simply a cunning plan to spend millions of pounds of the company's money sponsoring golf tournaments and rugby matches that everyone in the marketing department can attend on expenses.
But while speculation like this may be fun, it's not very helpful. True, the form of words does have a whiff of the committee-room about it, but as one-sentence definitions go, it really isn't bad.
We put it to the test in two of the pieces of original research that have gone into this book. We exposed it in the four focus groups that we conducted among senior financial services marketing people who are members of the Financial Services Forum, a membership organisation for senior executives to help improve marketing effectiveness on the basis good marketing is good for consumers. And we also took it into the half-day workshop that we held for two dozen of the best and brightest younger financial marketers, all aged under 30.
All took it as a challenge, looking as hard as they could for ways they could find it lacking. But the truth is that it came through this process of challenge remarkably unscathed, not greatly admired but remarkably difficult to improve on. (It was only later, when we moved on from the high-level definition, that the uncertainties and disagreements that lay below the surface became apparent.)
Inevitably several respondents made attempts to improve on the CIM's form of words. One particularly critical respondent in one of our focus groups, for example, claimed that the great management guru Philip Kotler had said much the same thing, but far better and more memorably. We looked up Kotler's quote afterwards, and in fact he said that marketing is:
… the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services.
Actually, we think the Chartered Institute put it better than the great guru.
Two or three respondents found the CIM's definition old-fashioned and out of date. Some thought it was wrong to imply that marketing is something that's done by companies to consumers– as one put it, ‘rather than with them, or indeed them doing things to us’. Another made a similar point, saying: ‘There is a sense that today it’s much less about simply telling people, it's about them hearing and then crucially responding to us'.
This idea of marketing as a partnership between firms and their customers has been widely adopted across the industry in recent years, and in some firms has led to some important changes in marketing processes. One of these is the widespread adoption of co-creation, an approach that actively involves customers in development processes rather than tackling all the origination behind closed doors and then testing the output on customers in market research studies.
Others thought that especially in a service-sector business like financial services, but actually in FMCG businesses too, it is important to recognise the importance of building and developing relationships. They found the CIM's definition too narrow, one saying: ‘This is a very transactional statement, and I don’t think we work in a transactional business – it's not about the transaction, it's about the relationship'.
Another made a similar point, saying: ‘I think there’s a big gap here, and it's to do with the empowered consumer. The notion of the need for a mutually satisfying relationship is not there. And that's something which, increasingly, certainly in the space my business inhabits, is becoming really, really important'.
That said, though, not all our respondents agreed on the importance of relationships. Some (including your authors) approach this subject cautiously. Do customers actually want relationships, or indeed partnerships, with their financial services providers? Might it not be the case that for many people, and for many of their financial needs, what they really want is a brilliantly well-executed transactional service at the moment that they need it?
Faced with the CIM's definition, one radical went a good deal further, challenging the whole concept of a marketing ‘function’ or ‘department’. He said:
If you take the view that marketing is at the heart of a customer-led organisation, then it should spread through the whole of that organisation. I think that raises a big question about whether there's any need for marketing departments at all – marketing is almost a Diaspora throughout my organisation, so that those who are closest to our customers, in our branches, are the ones who do what it says in your definition, figuring out what the customer requires and how we can profitably fulfil it.
This line of thought created unease among some respondents who enjoy running marketing departments, and it does raise some practical issues. Who is ultimately responsible if something goes wrong? Who should control the budget? Who audits the success (or failure) of the activities?
Meanwhile, in the under-30s workshop, it was a different aspect of the CIM definition that ruffled feathers. There was widespread and serious discomfort with the use of the word process. To many of our young participants, this word sounded much too rigid and industrial. Marketing, in their view, should be something much looser, more spontaneous, more creative, just … funkier. Your authors were a bit sniffy about this, until it occurred to us that maybe our sniffiness meant that we were getting old.
Still, all of that said, given how much everyone in the research would have liked to have improved on the Institute's definition, it held up remarkably well. As one respondent summarised: ‘At a high level you just look at it and say, you know, from 10,000 feet it makes a lot of sense. I guess it’s missing some of the detail, but then you wind up turning it into a paragraph. Which isn't what it's meant to be'.
It was only when we began our descent from 10,000 feet and looked at the next level of detail that the picture became more complicated.
In our research, we used the best known of mnemonics to explore the main business areas that could be said to fall within the remit of marketing. This mnemonic began in the field of FMCG marketing as the ‘Four Ps’: Product, Price, Place and Promotion. Then, when taken from the original FMCG context and applied to the service sector, the list grew from four to seven Ps, with the addition of People, Process, and the slightly awkward Physical Evidence.
To be clear about what we meant by these terms:
The Seven Ps
3
What They Mean
1. Product
(Or service, obviously.) The functionality of what is provided.
2. Price
What the product or service costs the customer.
3. Place
The route to (and, in these interactive times, from) the market, before, at and after the sale.
4. Promotion
All forms of marketing communication, again before, at and after the sale
5. People
The recruitment, training, motivating and evaluating of the people involved in delivering the product or service to the customer.
6. Process
The journey as experienced by the customer, from beginning to end.
7. Physical Evidence
All forms of customer documentation, correspondence and collateral relating to the product or service – statements, policy documents, forms, websites, apps, wallets, cheque book holders etc.
The central issue is, of course, the extent to which marketers own, or should own, the responsibility for each of these areas.
In our research, opinion among marketers was extremely divided. In fact, more than divided, it was fragmented. A small number of hard-liners claimed responsibility for the whole lot; at the opposite extreme, a similar number believed that only one of the seven, promotion, should fall within the remit of marketing. Most others occupied positions on a spectrum in between.
Amid this uncertainty, it became apparent that many of our respondents weren't at all sure of their own views. Some who began by adopting a hard-line position, laying claim to all seven areas, steadily rowed back throughout their focus group until by the end they were focusing entirely on advertising campaigns and other promotional activity.
In doing so, it seemed to us that they were reflecting a widespread tendency among marketers to believe in principle in the need for a broad remit across the seven Ps but to default, in unguarded moments, to a focus on just one, promotion. For example, your authors recently attended a conference for senior financial services marketing people. Among the speakers' biographies (usually written by the speakers themselves), one described a ‘strategic marketer with over 15 years of experience in the full marketing mix including PR, advertising, sponsorship and digital’. Another described a speaker as ‘responsible for all aspects of marketing including campaigns, brand management and promotion, sponsorship, advertising, digital marketing and events’. These lists are far from ‘the full marketing mix’, or ‘all aspects of marketing’ – they're just lists of promotional activities.
We thought it was important to explore this dichotomy in more depth, so we offered our focus group respondents three options in each of the seven areas. We asked them to make a choice between:
taking the lead
having an influence
leaving it to others.
And we also asked them to contrast theory and practice, by distinguishing between what they thought should ideally happen and what actually happens in their own organisation.
Overall, the large majority of respondents told us that they believed they should have more control or influence in theory than was currently the case. For some the gap was enormous: in theory they believed they should take the lead in all seven areas, but in practice they had little or no say over any of them except promotion.
The enormously wide variation in the scope of marketing is clear from the following verbatim comments. Here is a selection of respondents' comments, showing the breadth of opinion on this crucial issue:
‘I think the day of the marketing department that sat there and just generated some big fantastic ad campaign and then went and smoked a cigar are long gone. Most marketers I know are deeply involved in everything that touches the customer, and shaping the pipeline of propositions – everything that's coming through the organisation’.
‘My challenge in financial services is that the cake is often half-baked by the time it arrives with me and my department. In our organisation, most people believe that marketing departments are much more about communications, lead generation’.
‘Basically, I think your job as a marketing director is to get every customer to put you on a shortlist against your competitors. We marketers create the shortlist, and then it's down to a whole bunch of other things that happen’.
‘Marketing is absolutely more than communications to me. It's everything, from the beginning of talking to customers through to making sure they're happy. Communication comes towards the end of that long process’.
‘It's important to give marketers permission to do more, but also marketers have to realise that they should do more than just doing the ads’.
‘Aligning the organisation around customer needs, and satisfying both stated and unstated needs, and all that stuff – that's my role as marketing director’.
‘Really, marketing is there to warm our prospects up, to get us on their shortlist’.
‘The company sort of does its thing, and then it's our job to present it to the consumer’.
‘Marketing supports your business purpose, and that's its function. I think marketing often gets too big for its boots’.
‘I haven't had the difficulty of trying to change the business, we had a very strong purpose and very strong values. My job is to tell the story’.
‘I don't think anyone round this table would say marketing is just communication – the influence we need to have is on the products we provide, the service, the experience’.
Of course this fundamental uncertainty about the remit of marketing, and the conflict between those who believe it's basically about doing the ads and those who believe it's about everything that touches the customer, is far from new, and the debate rages on far beyond the world of financial services. The American Marketing Association, for example, supports the broad definition, stating:
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
On the other hand, a commentator from a US media company follows the line taken by many marketing services agencies, saying simply:
Marketing is the art and science of persuasive communication.
But while we're not surprised to see this age-old schism still running down the middle of today's financial services industry, it does seem strange and unhelpful. As we wrote a few pages back, it's hard to think of any other corporate function where a similar uncertainty exists. And big-picture marketers, looking ideally for control and at least for influence across all seven of the seven Ps, must be dismayed to see so many of their colleagues happily reinforcing the colouring-in department stereotype.
The split in self-perception was so significant that we thought we should explore it further. So we included the same questions – on the role of marketing in theory, and the role of marketing in individuals' own organisations – in the quantitative research we carried out among Financial Services Forum members. The key findings are shown in the tables, the first showing what our respondents thought should ideally happen.
Marketers Should Ideally:
Take Control (%)
Have an Influence (%)
Leave to Others (%)
Product
27
71
1
Price
9
78
13
Promotion
93
7
0
Place
49
50
0
Physical Evidence
64
36
0
Process
58
42
0
People
34
64
1
Note the extremely low scores in the third column: with the single exception of price, virtually no-one thought that marketers should leave any of these areas to others (and even in the case of price, only 13% were happy to do so).
In the second table, respondents told us what happens currently in their own organisations.
In My Organisation, Marketers Currently:
Take Control (%)
Have an Influence (%)
Leave to Others (%)
Product
10
55
35
Price
7
39
54
Promotion
73
33
3
Place
21
58
21
Physical Evidence
41
45
14
Process
14
58
29
People
12
50
38
The contrast between the figures in the two tables is clear. In respondents' current organisations, the proportion of marketers taking control is far lower. And while the proportion claiming to have an influence isn't dramatically different, the proportion saying they leave the different areas to others is much higher. (At least, in six out of the seven areas it is: the exception is, inevitably, promotion, which only 3% of respondents claim to ‘leave to others’. Mind you, even at that very low level, it's an odd figure. Who are these senior marketers who leave promotion to others? And who the hell are the ‘others’?)
Finally, in this third table, to get a more accurate fix on the gap between theory and practice, we compare the mean scores given for all seven dimensions. The table shows scores on a scale of 1 to 3, so, for example, in the ‘ideal’ column a mean score of 1 would mean that all respondents think that marketers should ideally take complete control, while a mean score of 3 would mean that all respondents think they should ideally leave control of the area to others.
The Seven Ps
Ideal Level of Control
Current Actual Level of Control
Product
1.74
2.24
Price
2.04
2.46
Promotion
1.07
1.30
Place
1.51
2.0
Physical Evidence
1.36
1.73
Process
1.42
2.15
People
1.67
2.26
The middle column in this table tells us that respondents think marketers should have a very high level of control over promotion, and then, in order, slightly lower levels of control over physical evidence, place, process, people, product and finally price. However, in their organisations currently, the right-hand column tells us that they have lower levels of control over all seven areas. Promotion sill scores highest, but at 1.30 against an ideal 1.07, and of the other six areas, only physical evidence scores under the average of 2. There must clearly be a lot of frustrated marketers out there.
This despite the fact that the findings in the middle column actually demonstrate a fairly modest level of aspiration. While respondents certainly think they should ideally have more control, they don't by any means think they should have complete control. Quotes from our focus groups reflect this attitude, and give some clues to the reasoning behind it. For example, a head of marketing in asset management says:
Product has to come first, you know, you have to be investment-led. You have to think about the return you're going to deliver, how are you going to monitor its risk. There's someone there analysing the risk, so they're really building the product – it's a complex thing.
