Avoiding the brand graveyard: evolve to survive
Jo Farquhar, Director in the Services team at Incite, explores how two very different brands, Monzo and AA, have proactively dealt with change by adapting how they showed up for their consumers.
The recent Barbie hype reminded me of how Mattel has successfully adapted Barbie multiple times to stay relevant. It led us to a discussion about brands in some of the sectors we work across in the Services Practice that have successfully done the same, often during times of real change and uncertainty. Below I have explored two of these.
Monzo launched as a prepaid card in 2015 with an easy to use app-based experience, at a time when traditional banks were struggling with their iterations of online and mobile banking. It felt different from the start – from receiving that dazzling coral card in a stiff black envelope, to receiving real-time spending notifications on your phone (back then, immediately seeing how much that drinks round in Euros would cost you in pounds was something new, albeit rather scary). There was even a waitlist for their prepaid card – creating a buzz that is rare in mainstream consumer banking, especially without headline-grabbing rates.
Monzo later transitioned to a fully licenced bank, with regular debit cards and a wide range of products. Its mission, to ‘make money work for everyone’, and transparent tone clearly resonated with customers. Alongside this, the user-friendly app with genuinely useful money management tools like spend categories succeeded in making customers more interested in their finances.
But they weren’t profitable, with many customers only using them as a secondary account, and when Covid hit, their revenue suffered further. They drew on their customer understanding, using research and experiments to iterate their ideas, and to successfully launch new products like Monzo Flex and scale their small business offer. The blogs in which they share their collaborative product development process really highlight the level of customer focus throughout. Already known for tools like their savings pots, in the cost of living crisis Monzo’s budgeting tips for customers have been especially relevant. The credibility they’ve built in this space has driven growth in their expanding portfolio of lending products. They hit record growth in 2022, and are on track to achieve profitability in 2023.
Monzo’s success has undoubtedly leveraged strong technology that helped them to be agile compared to their traditional banking peers. But it’s their deep understanding of their target audience’s evolving needs and attitudes that has enabled them to earn their customers’ trust, adapt and stay relevant to them throughout difficult times.
The AA: Around five years ago, the AA were in the headlines for the wrong reasons. Profits were down, as were their membership levels and share of the roadside assistance market. They had an ageing and shrinking customer base, so conducted some research to understand their long term prospects. This highlighted the brand’s challenge, namely a combination of reduced relevance and increased price sensitivity.
They were also aware that the upcoming transition to electric vehicles (EVs) would have severe implications for them, exacerbating the threat to their position as an expert in the market. They launched a program of initiatives in 2018 to reverse their decline but initially failed to make real in-roads.
When people were thinking about getting back on the roads after Covid, they used consumer insights to inform ‘Love that feeling?’, an emotive brand campaign which was a significant shift from their previous more rational efficiency-focused messaging. This was their first ad not to show a breakdown vehicle and succeeded in placing them front of mind at that point in time, connecting with a younger audience. Critically, it enabled them to increase prices, driving both revenue growth and profit.
Since then the AA has focused on building their EV expertise across all their services to ensure they can be seen as ahead of the curve in this space. They continue to face challenges with both breakdown and insurance becoming more commoditised, but they have used research to understand their role in people’s lives more effectively, and to help them build relevance.
As well as achieving strong growth in membership levels, the AA has been successful at increasing revenue across a broader portfolio of products and services for drivers – a key strategic objective. Their turnaround required a huge change in tack from their pre-pandemic style of communications.
It takes courage to do that, and the role of consumer insights shouldn’t be under-estimated. Beyond shining a light on changing mindsets and how best to build relevance with their audience, that understanding was also critical to enabling decision-making with confidence.
These two brands are very different: Monzo a relatively young, tech-driven business and the AA a well-established brand with waning relevance. Yet in both cases, responding to change meant being confident about what to retain, and where to focus to drive growth.
For Monzo that meant maintaining their customer closeness and distinct tone, while doubling down on the credibility they’d built to drive success in the lending space. For the AA it meant a fresher way to communicate their trusted brand and a plan to build out their portfolio, and increase their expertise in electric vehicles.
So, are you clear about which of your brand assets will help you to remain distinct and relevant in changing times?
With more change and uncertainty undoubtedly on the horizon, the one thing that is guaranteed today, is that brands can’t afford to stand still. We’re seeing categories that had been relatively stable for years facing real change (think energy, automotive).
Brands that have a deep understanding of their customers, their needs and changing mindsets will be best placed to navigate this change – and the confidence to use those insights to unlock new opportunities.
If you need help with a tricky business challenge, get in touch!