Invisible Brand

Lucian Camp suggests there may be trouble at t’mill for companies who don’t champion their mutuality.

Who were the Rochdale Pioneers?
A sixties band, like Fairport Convention? A rugby team, like the Wigan Warriors? A first world war army unit, like the Bradford Pals?

If you don’t know, I bet a pound to a penny you don’t work for a mutual organisation. And if you do, I bet the same amount that you do.

Way back in 1843, they were, of course, the founding fathers and in one or two cases mothers of the Co-operative movement. As I recall, they set up a small supermarket in a Rochdale backstreet selling 99 Tea and a surprisingly good range of new world wines, and with an advertising campaign featuring the slogan “Your caring sharing Rochdale Pioneers” (later amended following the rebranding) and a new loyalty scheme called the Divvi, they went from strength to strength.

Their business formula – at least the mutual-ownership part of it – was widely copied, and perhaps most of all in the field of financial services. Over the next hundred years or so, mutual insurance companies and building societies became the dominant forces in the UK financial services landscape.

One step forwards, two steps…
True, over the last twenty years or so it would be fair to say that the trend has gone into reverse. And as in the old joke about the Italian tank, it seems that this particular trend goes a lot faster in reverse than it did in its forward gears.

But even if there aren’t many very large mutual financial services organisations these days – well, let’s face it, there’s just one, our esteemed clients at Nationwide – there’s still a surprisingly large number of medium-sized and smaller ones.

I know this because a large handful are also clients of ours at cchm:ping. In alphabetical order, we’re currently involved with HSA, The Derbyshire Building Society, Family Investments, the Principality Building Society, Liverpool Victoria, Royal Liver and Scottish Life, as well as the aforementioned Nationwide. And there are quite a few
more – the direct descendants of the Rochdale Pioneers at what is now Co-operative Financial Services, the healthcare giant BUPA, specialist savings provider The Children’s Mutual, the countryside-centric life company NFU Mutual and some very strong regional building societies like the Skipton and the Norwich & Peterborough, as well as some less-strong ones.

Who cares?
Some of these organisations try, with varying levels of commitment and consistency, to make something of their mutuality in their marketing and their brand positioning. Again Nationwide is in a class of its own, not only because it spends more on advertising and marketing than everyone else put together but also because its TV and radio campaign featuring the great Mark Benton as an unusually charming and friendly bank manager (which, I should say, we don’t produce) is a) a great campaign by any standards and b) about mutuality.

At the other extreme, some mutual organisations have made a positive decision not to make mutuality an integral part of their brand positioning. You’d have to look pretty closely at Scottish Life’s IFA-facing marketing activity, for example, to notice their mutual status. And in the IFA market that makes good sense: IFAs being towards the red-in-tooth-and-claw capitalist end of the spectrum, mutuality isn’t a concept which they are sure to respond well to.       

But in between the extremes, you can’t help detecting some signs of a certain amount of internal ambivalence to the concept of mutuality – a sort of sense that it’s an important and positive idea that ought to be a real marketing asset, but somehow in practice it’s awfully difficult to make consumers care about it much.

(I appreciate that in some cases the ambivalence may be a sign that a fair proportion of Board members are holding secret talks with smooth young men from Goldman Sachs with a very different plan for their organisations’ future in mind, but let’s set them aside.)

If this broader kind of ambivalence does exist – and I think it does – then I think there’s a reason for it.

What seems to have happened in the 160-odd years since the Rochdale Pioneers is that the PLCs seem to have stolen most of their clothes (metaphorically, obviously, not their top hats and frock coats). Tesco’s Clubcard works a lot better than the Co-op’s divvi. Waitrose (actually strictly speaking a kind of mutual) is better on organic foods and Fairtrade. Asda offers the working man and woman lower prices on everyday items. And everyone makes the shopping experience brighter, easier and less unenjoyable than the dingy, dilapidated Co-op.

The same seemed to be more or less true in financial services. Equitable Life and in a less spectacularly troublesome way Standard Life were mutuals, and look what happened there: First Direct, Direct Line, Egg and Virgin are all PLCs, and consumers feel pretty good about them. Somewhere along the line, it almost started to seem as if mutuals were badly-managed, second-rate organisations that you did business with out of sympathy, while a good PLC was the place to get a good deal.

The short straw
And yet the fact is that in many ways, the consumer climate is just as favourable for mutual organisations in UK financial services in the year 2006 as it was for mutual organisations in groceries in Rochdale in 1843.

My 19th century social history of Lancashire isn’t brilliant, but my suspicion is that the Pioneers felt they were getting the short straw from the bloated capitalists, mill-owners and suchlike who ruled the roost in those days. Those early Co-ops were first and foremost, I reckon, a place where ordinary people could be sure of a fair deal.

In today’s financial services market there are few bloated capitalists and no mill-owners, but most consumers feel that the straw that’s offered to them looks very short indeed. There are a handful of examples of companies with customers that actually like and trust them – First Direct being by far the best-known example – but in general the only thing which keeps customers loyal is a very strong feeling that they’re all as bad as each other. (It reminds me of that 60s hippy button-badge that said “It doesn’t matter who you vote for, the Government always gets in.”)

Mutual organisations, owned by their customers, have the underpinnings for really strong and powerful differentiation. In plain English, why would we rip you off? You own the business.

Trouble is, of course, mere sloganising isn’t going to do much good if the business’s actual behaviour towards its customers is more or less indistinguishable from its competitors. Nationwide felt strongly enough about the whole issue, in both commercial and philosophical terms, that they were willing to re-engineer some of the industry’s most dubious practices (notably the discrimination against existing customers) in order to build a proposition that they could stand behind. Although some other organisations have taken some positive steps, few have gone anything like as far.

The result, I think, is that fairly large number of organisations who, in terms of their marketing emphasis, stand currently half-in and half-out of the mutual tent. That’s an uncomfortable place to be. Go further in, that’s my advice. It’s too late to start reversing out now.