How to make money on the England v Italy game. Maybe.

I remember someone telling me years ago that in what was then the emerging era of online betting, there was an easy and certain way to make money,  Bet on international competitions only, and arbitrage the distortions in the market resulting from the emotions of each team’s home fans.

So, for example, imagine England are playing Italy at football.  Bet on England with an Italian bookie, and on Italy with a British one.  I can’t remember how, or where, you’re supposed to bet on a draw, but I do remember that the emotion factored in to the available odds means you’ll make a profit whichever team wins.

Yes, OK, this is all a bit hazy, but I now have some evidence to support it.  For reasons I won’t bore you with, I recently found myself one of a group of about 25 taking part in a Rugby World Cup sweepstake – and I should say that all but about three of us were middle-aged male actuaries, who you might have thought would be a cautious and level-headed bunch not overly prone to outpourings of nationalistic emotion.

The aim of the sweepstake was to pick the first four, in finishing order.  At this point, I do have to murmur modestly that I did in fact win, with the first three right and in the right order (no, I didn’t spot Argentina – who did?).  But my point (or at least my other point, alongside the point that I won) is the reason why everyone else lost:  the reason is that out of about 25 of us, all but three picked England as one of the final four.  In fact, of course, we didn’t even make it out of the Group stage and into the final eight.

Which goes to show that the “emotional distortions” I was talking about are absolutely for real, even among a research sample made up almost entirely of actuaries.

England are in fact playing Italy at football this weekend.  If this blog helps you make any money, a note of thanks would be welcome.


How disruptive must disruption be?

It’s one of those words, “disruption.”  A digital-era word that has been used and over-used across the digital economy for at least 10 years (maybe more), and has now fairly recently landed in financial services.

It’s in the title, for example, of a new publication from the consulting firm EY (to be exact, the document is called “Disruption In The Life, Pension and Investment Markets”).  And although the weakness of my position arises from the fact that I haven’t actually read past the first page of it yet, it still made me ponder, on my journey into the office this morning, whether I think, by digital economy standards, that what we’ve seen so far in financial services really amounts to “disruption.”

Certainly the industry has had to contend with a whole load of change.  My involvement is this whole weird world dates back fairly exactly to the passing of the 1988 Financial Services & Markets Act, which introduced various important ideas like the distinction between tied and independent advice, and the changes – occupying all four boxes in every offsite strategic brainstorming’s PEST analysis – have come thick and fast ever since.  But by the digital community’s definition of the world, do they amount to “disruption?”

Of course the difficulty I’m facing with this blog is that there is no digital community definition of the word.  It’s a judgment call.  But I’d say that the first and most obvious sign of disruption is the sweeping-away of tired old legacy players, and their replacement, either immediately or at least pretty rapidly, with shiny new digital players.  Uber is disruptive because it’s supposed to kill black cabs.  Amazon killed small bookshops.  Wikipedia killed encyclopedias.  Digital photography killed Kodak, Polaroid and pretty much the whole film-based photography industry.

Or, second, if sometimes the legacy industry lives on, then the “disruption” consists primarily of bringing about a whole new kind of consumer behaviour that the legacy industry had never encouraged.  Low-cost airlines, for example, have got millions of us all going off for long weekends in Vilnius or Katowice in a way that sad old British Airways had never imagined.  eBay is apparently responsible almost single-handedly for the massive growth in self-store facilities around the country, because huge numbers of us are now trading in something or other – vintage jukeboxes, Norton motorbike parts, low-cost Polish strawberry jam we bought from a bloke we met in Katowice – that we need secure storage for.

If you look at life, pensions and investments for signs of developments like any of these, the picture is pretty mixed.  Some legacy players have disappeared, although usually as a result of mergers and acquisitions than anything more dramatic.  But with only one big exception – workplace pensions, of which more in a minute – I can’t say that the shiny new breed have achieved any great success.  There are certainly dozens of new or newish entrants in pretty much all parts of the industry, but the very large majority are small and struggling.

Disruption may be imminent.  In particular, the slew of D2C investment services now coming onto the market under the terrible “robo-advice” descriptor might really change the sleepy old investment industry.  And as I just mentioned, as the auto-enrolled workplace pension sector gathers momentum, it may very likely achieve a strange slow-motion kind of disruption, diverting more and more mass-market long-term savings into young brands and businesses like NEST, NOW Pensions and The People’s Pension rather than any of the legacy alternatives (be they pensions company, bank, shop or pub).

But that’s the thing about disruption in financial services.  It always seems to be on the point of happening.  If you look at all the major sectors of the market over, say, 30 years or more, the only one that I would say has been clearly and fundamentally disrupted is general insurance, where the coming of Direct Line back in the mid-80s really did change everything.  Otherwise, on the whole, we wait and hope.  Or, in the legacy industry, we wait and fear.



More on this customer-acquisition-cost business

I think I may finally have found something to say in conference presentations which gets some attention, and hopefully not in a Gerald Ratner way.

At the Platforum conference three months or so ago, I did a talk about the cost of acquiring customers, and particularly about the hopeless situation and brief life-expectancy of start-up financial services businesses with no customers and no money to recruit them with.  In this talk, I quoted the very first hard numbers that I learned in the world of financial services direct marketing a million years ago – that whatever your proposition, market sector, target market or media strategy, on the whole, as a universal average, at least for initial planning purposes, you’re doing OK if you can generate a lead for £30 and acquire a customer for £200.

Much has changed since I first learned these numbers – well, let’s face it, nearly everything has changed.  But at least for initial planning purposes, I’d say they still work.  (They certainly work a very great deal better than the ridiculous notion that in today’s world of social media you can recruit any number of customers for no money at all, except perhaps the bus fares of the intern you get to write your Twitter posts.)

What’s interesting – by which I mean both surprising and pleasing – is how much interest these numbers of mine have attracted, and indeed continue to do so.  For example, a new Finametrica report on the emerging robo-advice (bleurgghh) market quotes a typical customer acquisition cost of £200:  without paying £995 for the report I can’t tell whether or not they’ve nicked my number, but let’s just say it’s a funny coincidence if not.

The great thing about a figure like this, of course, is that you can build a whole business plan on it.  If you want 10,000 customers, it’ll cost you £2 million to acquire them.  100,000?  £20 million.  A million customers?  £200 million. And so on.

Of course there are lots of reasons why it’s not that simple.  Particular businesses have particular issues which will force their costs up or down.  There are many of these, and perhaps the most important are the economies of scale, or perhaps as I always say the diseconomies of lack of scale:  if you only wanted, say, 1000 customers then the full weight of your establishment costs would bear very heavily on them.  The figure will require some refinement in the light of your specific circumstances – and of course the best and most accurate refinements will be made in the light of real-life experience.

But still, it’s something.  And as a corrective to the view of all those clever people starting up new FS businesses of one sort or another who all seem to be assuming they can recruit their customer bases for nothing or next to nothing, it’s actually something quite important.

In Professional Adviser’s piece about the Finametrica report today, they mention various robo-advice start-ups tackling the customer acquisition cost challenge.  One of these named in the piece is that well-known deep-pocketed financial services giant which is “Rutland-based Echelon Wealthcare.”

When the history of the robo-advice market is written, and the names of the firms which made the crucial breakthroughs are listed in the roll of honour, I will be astonished – no, let’s make that totally bloody dumbfounded – if Rutland-based Echelon Wealthcare is among them.

Yet another new tribe discovered. (New to me, anyway.)

I’ve written a couple of blogs recently about the Customer Experience (CX) tribe, and how they’ve managed to live in much the same part of the jungle as my own Brand Development tribe without any of us catching more than the occasional glimpse of each other through the undergrowth.

Now it turns out that there’s yet another tribe living in much the same area, and if anything they’re even more reclusive than the CX lot.

I met a very nice and intelligent chap yesterday who works for something which he describes as a culture change management consultancy – in other words, a bunch of people who go into companies, mostly financial, which need help achieving some sort of change which requires changes in people’s behaviour.

This is pretty much exactly the situation in my clients’ businesses when I’m there doing my brand thing. The brand thing, after all, is pretty much completely pointless if it doesn’t have some implications for people’s behaviour:  going back to my key point in previous blogs about the experiential nature of most financial brands, it will be primarily through experiencing changes in employees’ behaviour that target groups’ brand perceptions will be changed.

Nevertheless, the fact is that the nice and intelligent chap I met yesterday reports that his people in his firm never deal with those responsible for brand in their clients’ businesses, and never form part of a team with external brand agencies.  Indeed, in their basic “who we are and what we do” presentation, the word “brand” doesn’t appear.

All this, combined with my recent CX discoveries, has disturbed me more than somewhat.  For a start, it’s got me worrying about how many other tribes may be milling about out there, occupying almost exactly the same corner of the consultancy jungle but somehow managing to remain invisible to all the rest of us.

But more fundamentally, it’s making me wonder how the hell we can imagine that we’re ever going to get anywhere with the whole brand thing when more than half our available firepower is pointing in entirely different and unco-ordinated directions. (And as I say, it may be much more than half, if there are still more undiscovered tribes out there.  My suspicions have been aroused, for example, by sketchy reports of a digital bunch who specialise in User Interfaces, or UI for short:  this is another area which I’m pretty sure is massively relevant to brand, and indeed vice versa, but very rarely makes the connection.)

I suppose that on a more upbeat note, this strange situation gives hope for the future.  If we could actually bring all these separate but overlapping tribes together into one single co-ordinated uber-tribe, we might really start to get somewhere.

But until then, I’m afraid we have to live with the rather dismaying realisation that our own consulting industry is just as siloed – if not rather more so – than any of our clients’ businesses.

In praise of idiosyncracy

I’ve written about this before, but not for a while.  And anyway, I’ve written about everything before, or everything I know about financial services branding and marketing at any rate.

This is the second blog to be sparked by the Financial Services Forum session about customer experience, and how as things are currently organised there is very rarely any attempt to differentiate it:  as we said in the meeting, those involved are all preoccupied with moving along the axis that goes from “bad” to “good,” but hardly anyone pays any attention to the axis which goes from “generic” to “different.”

All this reminded me of a theory which I used to feel quite excited about, that the differentiation of many of the strongest brands flowed, directly or sometimes indirectly, from the personal idiosyncracies, beliefs and even in some cases prejudices of the people responsible for them (and, most often, the business’s founder/s).

I’ve written before, for example, about the way that the emphasis on nutrition and food value in the Mars Bar brand stems not from clever research insight into ways to help consumers feel less guilty about consuming them, but rather from the deeply-held personal views of the eccentric food scientist Forrest Mars, back in 1920s America, about the dietary benefits of chocolate.  Or how McDonald’s achieved a role as the family restaurant of choice in 1950s America because the founders happened to have a thing about cleanliness and hygiene which made McDonalds acceptable to families in a way that greasier burger joints could never be.

There are loads of other examples, from Anita Roddick’s ideas about beauty without cruelty which gave the original Body Shop much of its distinctiveness, through to IKEA’s obstinate determination to stick to their Swedishness even when expanding into markets where half their product names sound like swear words or skin conditions.

Yes, it’s true, I’ve said all of this before.  But what I hadn’t realised until now was the extent to which a large, growing and successful part of the external consultancy marketplace is spending all its energies in helping clients manage their customers’ experience at best without any regard to this kind of idiosyncracy, and at worst with a view to stamping it out wherever they can find it.

The result may be (I say “may” because I’m not at all sure) customer experience which is gradually getting a bit better, but it certainly isn’t customer experience which is getting any more different.

It would be unfair to blame the customer experience industry for not getting brand, or indeed for not getting idiosyncracy as a major component of brand.  It’s not a big issue in their world, or in the worlds of the clients who hire them.

Look at it the other way round, though and it’s a very different picture.  Customer experience is a huge thing in my world, and in the world of anyone who cares about brands in service industries.  It’s up to us to get our point of view across to the people who haven’t got it yet.

Oh dear, I wonder if I’ve just discovered the fatal flaw in my thinking

Actually, I think I may have had a bit of a road-to-Damascus moment – but in an entirely bad way, as any experience involving roads going anywhere near Damascus tends to be at the moment.

Exhibit A:  the universally-held belief held by people in my kind of line of work that brands in service industries like financial services are overwhelmingly experiential, and so are built in people’s minds out of the sum total of their experiences of the brand in question.

Exhibit B:  my own empirical observation, that while some financial services businesses provide good service, some are mediocre and many are terrible, hardly any provide a kind of service which could in any way be described as distinctive or specific to what their brand is supposed to stand for.  (There are a few exceptions to this, but not many.)

Exhibit C:  the observation by my old friend Christopher Brooks, agency man now turned customer experience consultant, at a Financial Services Forum event on this subject yesterday, that in his experience when FS businesses are working on aspects of their customers’ experience, “invariably brand simply isn’t at the table.”

Hmm.  Taken together, these exhibits are distinctly alarming.  At worst, they suggest that no-one important on the client side has ever bought a single word of what I’ve been saying for the last god-knows-how-many-years:  they simply don’t seem to accept that designing customers’ experiences in a brand-minded way is worth the bother.

Why is this?  Is it because they don’t accept that service-sector brands are indeed very largely experiential?  Is it because they just don’t care about their brands and can’t be bothered to build them?  Or is there a third reason which makes me feel a bit less miserable?

I think there might be. Imagine if you will a four-box grid about service quality, with the south/north axis going from “Bad” to “Good” and the west-east axis going from “Generic” to “Distinctive.”  My proposition – much confirmed, I must say, by the discussion at yesterday’s event – is that at most organisations, most of the time, the overwhelming priority seems to be to move up the bad/good axis, ironing out some of the truly abysmal service failings that are still endemic in our industry.

For as long as that’s the case, no-one is much worried about moving positively along the west/east dimension, building experiences which are distinctive, hard to copy and specifically designed to build the intended brand perceptions.  In short, when your inbound calls are waiting an hour or more to be answered, no-one’s too bothered about the tone of voice of the poor sod who eventually picks up the phone to another infuriated customer.

I get that – it makes perfect sense.  But, in my brand-centric terms, it’s still not ideal.  My preference – in heading towards that top-right box where we all want to be in four-box grids – would always be to move diagonally upwards.  Yes, move from bad to good by all means.  But, at the same time, move from generic to distinctive too.  In my book, brand considerations are always part of the agenda, even when you are dealing with abysmal service failures in urgent need of improvement.

It looks, though, as if those currently responsible aren’t seeing it that way, and this discovery gives me a useful sense of a focus – or a proposition – for my customer-experience-oriented activities.

And at the same time it gives me a nice clear objective for my lobbying on the subject – trying to find a place for that chair marked Brand at that Customer Experience table.

“Money On Toast targets high earners,” says the newsfeed. Targets how, exactly?

Money On Toast’s You Tube film has had 801 views.  On Twitter, they have just over 700 followers, nearly all of them as far as I can see either IFAs or industry people of one sort or another.  They have about 150 likes on Facebook, which is kind of surprising because there is very, very little to like on their extremely dreary page.

I’ve never seen a Money On Toast ad, online or offline, and although it’s always dangerous testing these things on oneself I am pretty much right in the middle of their target market, as defined in the article appearing beneath the trade press headline quoted above.

You’ve heard me grumble before that the new world of direct, D2C online investment services is never going to happen until a number of the leading players start spending some proper money on marketing communications.  It doesn’t look as if Money On Toast are anywhere near doing so.

Happy to have wasted a morning in court today

My headline is serious, not ironic.  Here’s why.

18 months ago, a lorry scraped along the side of my car while it was parked outside my house.  While the car was being repaired, my insurers fixed me up with a replacement vehicle for a couple of weeks – not, I’d have said, being a car snob, quite on the like-for-like basis promised in my policy, but a perfectly satisfactory upper-mid-range Mercedes.  A couple of weeks later my car was fixed, I gave the Merc back and I thought no more about it.

Until a year later, when a firm of solicitors based in Bromley got in touch and asked if I’d fancy being the claimant in a small claims court case.  Apparently the other side’s insurance company, while admitting liability, were disputing the cost of the hire car and refusing to pay more than half of it.  And although I had no financial interest at all in the outcome, strictly speaking it was me who had signed the rental agreement and so technically I would have to be the claimant in any legal proceedings.

Of course I could have refused to take part, but actually I thought it was right that the case should be heard so I agreed.

Which is how I came to find myself in  Clerkenwell & Shoreditch County Court this morning, represented by a barrister called Jake with a fashionably voluminous Clerkenwell beard.

The case, disappointingly, was thrown out on a technicality.  I think it was the solicitors in Bromley who’d screwed up, or it might have been my insurers:  I won’t bore you with the details, but there was evidence to suggest that my insurers had in fact accepted a payment for a little under half the claimed amount in “full and final settlement,” and no evidence to suggest that they hadn’t.  Our judge chose her words with care, but it was clear that she was fairly pissed off with our side for bringing the case to court in this pretty hopeless condition.

End of.  Or not quite.  The one other thing I learned this morning was the amount of the disputed hire charge, which for two weeks in a mid-sized Merc was just over £5500.  And those who’ve read my angry tirades on the subject of rip-off charges in general insurance will know that on seeing this, the red mist began to rise.

Back at the office just now, I’ve checked on a couple of car-hire websites what I would pay if I went out this afternoon to rent a similar upper-mid-range Merc for a fortnight, and the answer is somewhere between about £900 and £1500.  Absolutely nowhere near £5500. (And actually, still a long way short of the £2000-odd that the other side’s insurers paid in full and final settlement.)

It may seem disloyal to take the “wrong” side in this little teacup-sized storm, but the fact is that the bill they were confronted with was yet another example of the preposterous overcharging that goes on in the hideously opaque and exploitative world of general insurance.  (And, by the way, eighteen months after the original accident, I have zero loyalty to my own insurers – when the policy came up for renewal nearly a year ago, I was of course obliged to switch to another firm to avoid being screwed by the kind of gigantic increases in premiums with which motor insurers typically “reward” loyal customers.

I’m sure my little court case will have no significance at all beyond the fact that on this one occasion, a preposterous invoice for a hire car didn’t stand up in court, and the amount actually paid wasn’t completely unreasonable.  But even if that’s all the other side achieved, I’m happy, or at least fairly happy, to have spent most of my morning in support of this worthwhile cause.


I ate some excellent strawberries yesterday. Would you like to hear about them?

No, I thought not.  Unless you’ve come to this blog entirely by chance, with no preconception at all about what you’ll find here,  I’m certain that you aren’t here to learn about my recent red-berry experiences.  In short, the subject wouldn’t pass a relevance test.

I’m a keen reader of The Week, the news magazine that summarises the most interesting content from the previous seven days’ media.  In the last couple of issues, there have been a couple of reasonably interesting pieces about things happening in America – one about the way that almond-growers in California are contributing to that state’s water shortage. and the other about a way of organising busineses, so-called “holacracy,” where you do away with bosses and leave groups of employees to make all the decisions.

Slightly off-brand for The Week, I’d say, because neither had any connection to events or media coverage of the last seven days, but both quite readable and well-written – about as good as my strawberries piece would be, I dare say.

But relevance, or rather the lack of it,  is the connection.  Because these two articles are the latest in a series called “A view from America,” appearing every three or four weeks ago – appearing under the heading “Advertisement Feature,” and carrying the logo of American Airlines.

Waffly writers like me are generally pretty happy with the “content marketing” mania that has gripped the communications industry in the last few years.  You can write a couple of thousand words on almost any subject under the sun and find a company willing to pay you for it and put it on their website, provided that you put the words “White Paper” at the beginning.

And as the fire grows ever hotter, and the need for mountains of further fuel ever greater, buyers become less and less critical about the relevance of what they’re buying.  These pieces in The Week have the word “America” in their theme line, and so does “American Airlines.”  That’ll be fine, then!  Someone somewhere can write a content marketing strategy paper saying that our aim is to own American-ness, the link is created and the pieces start to appear.

But, as Orson Welles famously almost said in the legendary Domecq sherry commercial out-take bootleg, if anyone can tell me how these articles benefit American Airlines’ business, I’ll….

…well, modesty forbids – I’m sure it’s on You Tube.

Don’t get me wrong.  I have a mind more than devious enough to like the idea of achieving brand and communications by subtle, cunning and indirect routes.  I’m not with the client I once worked for – at Danish Bacon, if you’re interested – who once sat through an agency presentation of outdoor ideas packed with wit and wordplay, and at the end asked, in a tone of honest bafflement, “Well, everyone, I can see you’ve all worked very hard, and your ideas are very clever.  But could someone tell me – I really want to know, I’m not just being difficult – what exactly would be wrong with a headline which said, say, just for the sake of argument, ‘Buy Danish Bacon’?”

My own mind is a lot less literal than that, but even so I cannot for the life of me understand how American Airlines can possibly benefit commercially from a full page article in The Week with a headline that reads “Holacracy and other flatter-earth theories.”  Or, for that matter, “The trouble with almonds.”

If I’m missing something here, please tell me.  I’d love to find someone who’d pay me for that strawberries piece.

The one service you’ll never get from a price comparison site

Price comparison sites are great.  Very consumer-friendly, very easy to use, very empowering.

Only thing is, they’re paid by the product providers, not by us consumers.  And the product providers want nice sticky business than doesn’t churn too often.

It wouldn’t be difficult for the Confuseds and Money Supermarkets to introduce an auto-rebroke service, which – for example with our motor insurance – had a look round the market shortly before our renewal date, and (having checked with us first) automatically switched us into whatever came up cheapest.

It would be a really good service from our point of view.  None of them offers it, though.  Funny, that.