Why I don’t think gambling is part of financial services

Did I mention that I’ve been writing a book lately?  Or that it’s called No Small Change and is available for advance order on Amazon?  Oh, I did, did I?  Sorry about that.

Writing a book makes you think about things so that you have something to say when you write about them.  One of the things that my co-author Anthony Thomson and I had to think about was the question of what should, and what shouldn’t, be included within our definition of “retail financial services.”  And without more than a few moments’ deliberation, we decided that gambling – whether in casinos, on sporting events or on who’ll replace Theresa May and when – was out.

If you think harder about it, this was a questionable decision.  As consumers in group discussions never tire of telling us, perceptually gambling exists at the right-hand end of a financial services spectrum which has mainstream investing roughly in the middle or towards the middle-right, and building society savings over to the left.  And in fact there are other things over towards that right-hand end which are undoubtedly gambles, but which are undoubtedly financial services too – things like spread betting, CFDs and these scary-sounding newish things called Binary Options.  At the end of the day, they’re all about putting money in and hopefully, though not probably, getting more money out.

So why did AT and I take seconds to exclude gambling from the book?

I guess partly it’s that gambling doesn’t present itself in any way as a part of the financial services world.  Gambling as seen on TV, at any rate, presents itself overwhelmingly as part of the world of sport – presented by football commentators and pundits, and featuring people, mostly young men plus Ray Winstone,either playing or watching the game and occasionally doing things on their phones while other youngish men plus Ray Winstone shout at us on the soundtrack.

But as financial services marketing professionals, AT and I aren’t taken in by this determination to break the category rules.  Plenty of other brands do that – how about animated meerkats? – but Comparethemarket.com is still part of the financial services world.

No, I think the reason we made the decision to leave it out was simply that we hate it, don’t want anything to do with it and definitely don’t want it cluttering up our book.  The business is horrible, the propositions are horrible and above all the advertising is horrible.  There’s a lot wrong with financial services, and it’s taking a distressingly long time to put it right.  But thank God we’re not working in gambling.

The most useless message ever

Has there ever been – could there ever be – a message more useless than the NO JUNK MAIL stickers that you seem to see stuck on or around more and more letterboxes?

And not just useless, but silly, prissy and naive too.  Naive because most junk mail is of course pushed through letterboxes by postmen, and it’s just inconceivable that a postie would scrutinise every envelope, decide whether it’s junk mail and then…well, then what, exactly?   Then not put it through your letterbox and do what with it?  Take it back to the sorting office?  Return it to sender?  Put it in a bin?

It’s inconceivable for a whole bunch of ridiculously obvious reasons.  First, it’s just stupid to imagine that a busy postman with a full mailbag has time to peruse every envelope and take a view on whether they’re junk mail or not.  Second, even if he or she did, it’s often really hard to tell.  Crappy Barclaycard 0% balance transfer mailings come in anonymous envelopes intended to sneak through your defences by looking like proper mail.  Statements from proper insurance companies come in garish envelopes carrying full-colour images in a desperate (and usually unsuccessful) attempt to achieve “engagement.”

Third, these stupid sticker-stickers don’t seem to realise that the Royal Mail’s contract isn’t with them, it’s with the customers paying for them to deliver things.  If postpeople were deflected from fulfilling this contract by a front-door sticker, the Royal Mail’s contract business would collapse into chaos.  And, of course, long before than, your kind, helpful, sticker-reading, envelope-perusing postie would have lost his or her job.

Similar considerations apply to non-Royal Mail deliveries.  You have 500 restaurant menus to post through letterboxes before you can collect your four hours’ money on minimum wage.  Apart from the fact that you’ll certainly be sacked if a stack of them are found in a bin somewhere on your delivery round, how keen are you to politely desist from posting a leaflet whenever you see a NO JUNK MAIL sign?  Not keen at all, 100% unkeen, is the answer.

There are four of these useless stickers in my street alone, and there must be hundreds of thousands across the country.  They can’t possibly achieve any part of their aim, so what’s the point of them?

I think they’re there, as most communication is, to say something about the communicator rather than something to the communicatee.  In their abrupt rejection of JUNK MAIL, they say the residents aren’t taken in.  In the same way that research focus group respondents smugly tell us how utterly they remain unaffected by advertising,  NO JUNK MAIL:people choose their restaurants on the basis of the review in the Good Food Guide, unbiased recommendations on social media and personal, objective experience, not on fliers pushed through the door offering freed delivery on orders of £20 or more..  NO JUNK MAIL signs are a sort of virtue signalling, although somehow that isn’t quite the right phrase – I’d be grateful if you could suggest a better one.

And one final thing – they’re ugly, too.  From the point of view of passers-by, rather uglier than the mail inside, lying on the doormat.

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Segmentation. So important in theory, such a shag in reality.

I think I first started getting my head round segmentation about 37 years ago, maybe 36, when I was a creative group head looking after the Co-op’s food retail business.  The stores were pretty grim, and to be honest so were our ads, but our senior client Barry Silverman was probably the closest thing to a mentor that I’ve had in this business, and segmentation was a big theme of his mentoring.

Because of the nature of his organisation, his approach was largely product-driven, not consumer-driven –  basically he’d segmented his food outlets into three, superstores, supermarkets and corner shops, and segmented their propositions and communications on the basis of the needs that each met (respectively, main shop for car users, main shop for non-car users, and secondary or top-up shop)..

This was basic stuff, but it still reflects an approach that’s fairly uncommon in large parts of retail financial services today.  Well schooled by Barry, I can remember when I moved into the financial services world how troubled and surprised I was by the usual practice when promoting products to end-consumer and intermediary target audiences:  to the end-consumer we said “You’ll love this top-performing fund,” and to the intermediaries we said “Your clients will love this top-performing fund.”   This is search-and-replace segmentation, not the real thing at all.  Although I don’t actually think we have search and replace in those days.

This particular approach is less common these days even if only because there are fewer propositions targeted simultaneously to end-consumers and intermediaries, but nevertheless our approach to segmenting markets and targeting propositions to different segments is still rudimentary in the extreme.  Quite often we start well, observing that a number of segments with different needs and attitudes exist.  But, all too often, having recognised this, we decide there’s no way (or no cost-effective way) to identify, prioritise and target any of them, so we need an approach that speaks to them all at once.  (That’s how, as I’ve said before in this blog, a few years ago I found myself writing a mailing about Child Trust Funds to customers of a Big 4 bank that began “Whether you have children or grandchildren, or don’t have children at all…”.)

This failure to segment and target has a devastating effect on our ability to involve and engage.  Our propositions and communications could be incredibly much more powerful if we could develop them with real insight into the way people are – or, rather, the way some people are.

(And, by the way, at risk of stating the obvious, segmentation isn’t just about offering and saying different things to different people – it’s also about deciding which segments to address, and which to ignore.  A proposition which excites a quarter of your market can be massively more successful than one greeted with a yawn by all of them.)

I don’t suppose many people would disagree with much of what I’ve written here – and for once, by way of additional firepower, I even have the regulator on my side.  The FCA may not be much concerned about marketing effectiveness, but it is very concerned about people understanding things.  As a result, it more or less demands that we segment our markets so we can address them in terms they find comprehensible, but much of the time we seem to ignore this demand.)

So what’s going on?  To take a couple of big current examples, why is it that neither the Pensions Freedoms of the last couple of years, or the coming of PSD2 in the last few weeks, seem to have sparked off the kind of highly segmented, highly targeted activity most likely to deliver results?

I think there are two key issues. The first is a largely emotional problem with the whole business.  Segmentation involves a lot of extra work and ultimately extra expense to make life more complicated and/or to make our target markets a lot smaller.  These both feel like un-smart things to do.  If we can keep it nice and general and generic, we can generate business from everyone.  Our slice of the cake may be a little smaller than it could be, but just look at the size of the cake!

The other issue is that for all the data revolution that we’re living through at the moment, our ability to access and use the data we need at the one-to-one level is still very limited.  That bank I mentioned earlier can’t tell, or at least not with certainty, which of its customers have children, or if so how many, or if so how old they are.  It may know whether some of its customers have children, but targeting its Child Trust Fund activity only on them seems like a missed opportunity.  On the whole, it looks like a better bet to target the campaign very broadly – and to begin the letter with that cringe-worthy first sentence I quoted earlier.

I expect it was Barry Silverman who told me all those years ago that the secret of all good marketing – and, even more so, of all good copywriting – is to do what you’re doing with a clear and full picture of just one single individual in your mind.  Not far off 40 years later, we’re still spending most of our time with our heads full of hazy, ill-understood crowds..

Why do financial advisers make such terrible clients?

Some say it’s bad form to use a business blog to wage a personal vendetta, but I’m far from the first – I may even be the last.

Honestly, this is really true, not just brown-nosing – in the seven years since I launched Lucian Camp Consulting, the overwhelming majority of my clients have been an absolute pleasure to work for.  They’ve ticked all three of what I think of as the Good Client boxes – they’ve been friendly and amiable, they’ve been receptive and they’ve been open and communicative.  (Actually nearly all have ticked a fourth box too, come to the think about it – they’ve paid up remarkably quickly on receipt of their invoice.)

So, lots of grateful thanks to a long list of admirable firms and individuals.  But, there’s no denying, it’s an incomplete list.  If you grouped all those clients – I guess there must be either side of a hundred of them – into financial services industry sectors, while most sectors would be basking in warm sunlight there’d be one beset by dark clouds and rain.  Yes, the exception would be the independent financial advice firms.

I should say that a few years ago, I doubt whether this sector would have been represented at all.  Very few of the thousands of firms in this fragmented cottage industry could see any sense in spending money on people like me.  Most, quite frankly, wouldn’t have bothered even if my services were on offer free of charge – marketing and branding and all that daft colouring-in nonsense just seemed like a waste of time.  But as a waste of both.time and money, well, no-brainer.

It was the RDR that changed things, and specifically the bit about needing to tell clients what they’d get in return for that “ongoing adviser charge.”  (Previously, of course, that was what had been known as “trail commission,” and what most clients got in return for that could be briefly summarised in the word “nothing.”)  This new need for advisers to justify the ongoing charge connected strongly to what people like me call “defining the value proposition,” so all of a sudden I found I was speaking on this topic at quite a few IFA events and leaving the events with a pocketful of business cards from advisers wanting follow-up meetings.

Which all sounds great, except that it really hasn’t been.  In case any of my adviser clients are reading this, I should say that two or three have been lovely.  But most really haven’t been very lovely at all – not easy at a personal level, suspicious and dubious about everything I have to say to them and, probably worst, hopelessly uncommunicative.  The default is that most just don’t reply to things.  They don’t answer phones or respond to voicemails or emails.  The only time when they’re not maintaining a couple of months’ worth of radio silence is when they are in fact maintaining a permanent period of radio silence, having just decided to stop dealing with you without ever quite getting round to saying so.  And, needless to say, as regards that fourth box, a well known expression about blood and a stone is the only one that comes to mind.

The reasons for all this, I do appreciate, may be a) good and b) circumstantial    The firms I’m talking about here are small, and no doubt both busy and under-resourced.  And I suppose there is some benefit to me in these otherwise useless experiences – as the proprietor and indeed entire workforce of a small firm which is often busy and arguably under-resourced, they do give me the clearest possible education in the art of pissing your clients off.

The theory behind this born-again blog is that I’m supposed to choose topics that whet your appetite for my forthcoming book on financial services marketing, co-written with my old friend Anthony Thomson.  This morning, though, I’ve gone off-topic.  There’s nothing in the book about (most) financial advisers making rotten clients.  Which, if you’re among those who think this kind of personal grumbling is n’t really appropriate, is probably just as well..

Robo advice. Still happening, still a stupid name, still a mystery.

Looking back at entries in this blog written before the Great Suspension (i.e.before April 2016) I’m surprised how many of them are about robo advice.  This is a subject that still feels like fairly new news to me, or at least like a fairly new (as well as stupid) name.  But in fact I was grumbling about the stupidity of the name back in late 2015, and expressing major doubts about the viability of the whole concept at the same time.

The viability doubts all focused, one way or another, on a single issue:  are we sure there are enough consumers out there who are keen to engage with services like these?  As I’ve said a million times, there is certainly a small number of enthusiastic investment “hobbyists,” who love everything to do with investing and make up the bulk of the customer bases of most established D2C investment services (particularly Hargreaves Lansdown).  But is it the case that just below them in the pyramid there are a few million potential investors, ready to become more engaged and active if only they could find a nice, simple, accessible service which they felt comfortable with?

There is undoubtedly a “next level down” more or less like this in a great many markets, and welcoming them in with that nice, simple accessible new option can be a very successful and profitable thing to do.  I could argue that in (fairly) recent years this has been the secret of the success of car manufacturers with “hot hatchbacks” from the Golf GTi onwards;  of the “casual dining” sector with restaurant brands including Cafe Rouge, Frankie & Benny’s, Carluccio’s and Nando’s, among dozens of others;  and in a slightly different way of the game-changing success of low-cost airlines like easyJet, Ryanair and Norwegian.

But is it true in investment?  Of course the “next level down” investment brands will pick up some business from curious, promiscuous hobbyists, just as my automotive, restaurant and airline examples  have done.  But that’s not how you make the big money – you make the big money when you find the formula that expands the market.

In robo advice, I’ve never believed that any of the existing players has come up with a propositiion anything like simple enough, a brand anything like appealing enough or a marketing budget anything like big enough to become the GTi, Cafe Rouge or easyJet of the sector.

It seems that quite a few of the existing players share my doubts, because one thing that has been happening while I’ve been away is that a number have been partnering with, or indeed being acquired by, big institutions who, it’s believed, can give them access to millions of warm customers and wonderfully nice low cost.

This blog, indeed, has been triggered by an announcement of another of these partnerships, with the oddly-named Scalable Capital partnering in some sort of way with Dutch bank ING.  (Is it just me, or is there something a bit troublingly reptilian about that “Scalable”?)   Blackrock already owns a big slice of Scalable, and of course Aviva has bought Wealthify,  LV= owns Wealth Wizards and Schroders has invested a lot of money into Nutmeg.

At boardroom level, I’m sure all these deals make excellent sense.  But out there in the market?   I’m still not detecting much excitement in the pyramid’s middle tier

To be honest, I can’t actually remember if we develop this theme in our forthcoming book on financial services marketing, No Small Change, written jointly by my old friend Anthony Thomson and myself and due for publication in the last week of May.  All I can say is that there may well be.  I’ll give you the pre-ordering details as soon as I have them,. and you can find out for yourself..

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