ACCOUNTING FOR CHANGE

Two years ago National Westminster Bank chairman Lord Alexander was asked on television how the bank was differentiating itself as a brand. He appeared flummoxed by the question.

An individual from the marketing industry, who wishes to remain anonymous, wrote to Lord Alexander and pointed out that, really, marketing and branding were perhaps issues that shouldn’t have flummoxed him. The individual received a rather terse reply by return: NatWest was doing all right thank you. Branding and marketing were not hugely important issues.

It may have taken two years, but this weekend NatWest is finally addressing how marketing can be used to make it stand out from the pack.

On Sunday (June 4) it will launch a 7.5m campaign, marking the bank’s return to TV after a six-month break during which it carried out a total reassessment of its advertising.

The ads will be one of the most visible elements of change at NatWest, but the overhaul goes further. The bank has also revamped its marketing strategy. From now on it will concentrate more heavily on internal and below-the-line marketing than on glossy TV ads.

The changes go against the grain in an industry where the bulk of budgets are spent on image-building ads and the next few months will prove whether NatWest has got it right.

The bank’s initial move was to appoint its first director of marketing, Raoul Pinnell, previously marketing director of the Prudential, last August. Since his arrival, Pinnell has appeared determined to prove himself and justify his reputed 150,000 salary.

One of his first moves was to pull the bank’s TV advertising. Agency Bartle Bogle Hegarty was told to scrap its creative work and go back to the drawing board.

Media buying was centralised in January – CIA Medianetwork Direct lost 15m of press work and BBH took over the entire 24.5m account. In February the below-the-line agencies were rationalised, with 15 out of its 30 agencies cut from the roster.

Pinnell then proceeded to turn the marketing budget on its head, channelling the bulk of its spend below the line and into staff training. This year, NatWest will spend about 7.5m of its 100m marketing budget on TV advertising, compared with a 24.5m media spend last year.

The rest will be spent on below-the-line promotions and internal work such as training programmes, and a vast series of internal literature which covers everything from the correct margins on envelopes, to the tone bank staff should adopt with customers.

“Marketing is not just TV advertising,” says Pinnell. “It covers everything that touches the customers. It is about flying the flag for customers from within the business.”

Nothing is sacred. The bank has dropped its full name – National Westminister – in favour of NatWest in order to brand itself as a one-stop, multiservice shop.

Pinnell says: “NatWest offers a wider range of products and services than are traditionally available from a bank, such as insurance, mortgages, life cover and pensions.” The problem was, says Pinnell, that the bank had problems getting that message across to the customer.

He argues that NatWest branding makes the bank more approachable and the internal training will improve service. The new ads, with the catchline “more than just a bank” are intended to convey the message that NatWest offers a wide variety of banking services (see box).

The rationalisation of the below-the-line agencies is intended to help the bank work more closely with its agencies and integrate its communications more effectively. For example, in new monthly integrated campaigns which began in April, NatWest uses a common theme, such as an insurance offer, on all branch windows and displays, adshels and press advertising.

The changes are also intended to help change negative customer perceptions about the bank. NatWest, like most high street banks, is hardly the darling of its customers. In the annual Presswatch survey- which analyses national press coverage throughout the year – NatWest emerged as the company which had received the most negative press coverage of all the 1,602 companies surveyed. According to Presswatch, most of the coverage revolved around complaints received about the bank’s service levels.

This perception of poor service is not limited to NatWest. Dave Limbrick, head of marketing at customer relationship management specialists BEM, and a former customer service manager at Barclays Bank, says there are several problems with bank service.

These include lack of communication between bank and client, mistakes on accounts which are not corrected, and – at a time when redundancies are common – poor morale among bank staff leading to lacklustre service. “There is a big morale problem in the banking world which often manifests itself in poor service. Marketing involves staff too.”

NatWest appears to have recognised this. The new marketing strategy emphasises the need for it to put its house in order. “Much of marketing focuses on image-type advertising, but I believe what is more important is how people listen, speak, write, and respond to customers. The image of a bank is based on real experience,” says Pinnell.

Observers agree that the strategy is a welcome change. “The problem is advertising agencies try to build something over and above the brand and over the services offered,” says Mike Sommers, managing director of MGM Cinemas and former marketing director of TSB. “If the banks find it doesn’t work they just choose a more famous agency. Maybe they should concentrate their energies on adapting to customer demand,” he says.

NatWest has everything to play for. If it really can change, it will differentiate itself in the financial sector. Martin Binns, the editor of Presswatch surveys, says: “The survey showed that the four main high street banks had a huge number of negative stories about customer service. The first one that solves this problem is the one that will clean up. If NatWest is changing, that is good.”

In theory, at least, NatWest is doing some good. The messages coming out of the bank’s marketing department today are far more encouraging than the flummoxed silences of two years ago. Having said that, all NatWest has really proved to date is that it is capable of making the right noises and historically, financial companies have not excelled at converting sparkling rhetoric into sparkling performance.

The bank has yet to prove it will not turn out a repeat of its last big effort in 1989, when alongside Lloyds, Nationwide, Abbey National, Barclays and Midland it launched a new current account with assurances that it was really turning into Mr Nice Guy.

The new accounts fell short of consumer expectations, and according to observers, neither this sort of move, nor any subsequent marketing changes by the banks in general, have convinced customers that they were getting sterling customer service.

“People do not feel affection for their banks,” says John Murphy, chairman of branding specialists Interbrand. “Banks are not appealing. Either the service is not considered very good, or they are considered to be inefficient, or they are considered to be hostile to customers.”

Last August, Pinnell came armed with a reputation for professional courage. The sweeping changes at NatWest show his reputation is justified. The challenge now is to prove that NatWest will provide more than just empty marketing talk which the financial industry has delivered in the past.

The bank must deliver what it promises if it is to prove marketing really is a tool that can generate change in the heavily criticised financial sector.