CHAPTER 1
About 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...