This year marks the tenth anniversary of the “Prudence” logo. The familiar face with the red bandana was designed by Wally Olins to help move the company away from its old-fashioned, “Man from the Pru” image.
Ten years on, the Prudential looks like becoming a turnaround success story. The company has been transformed under chief executive, Peter Davis and his predecessor, Mick Newmarch.
Newmarch presided over a 50 per cent cut in the salesforce, closed down the estate agency business and completely rebranded the company with the now famous “I want to be” ad campaign.
Davis has scored further successes, the best of which was a PR coup in November, announcing that the Pru intended to launch a telephone banking operation this year.
The announcement blotted out interim results showing that individual pension sales have fallen by up to 60 per cent. In the past six months the Pru’s share price has climbed more than 30 per cent.
The City has been wooed with the promise of billions of pounds in unclaimed “orphan funds” – matured policies that have not been claimed – which can be released as a cash windfall for shareholders with Government approval. Huge successes on the investment side of the business have also managed to increase profitability.
But beneath the surface, a very different story is emerging. Underneath the smart spin doctoring, the marketing of Prudential UK – the company’s retail arm – is beset by management crisis and a lack of direction.
In the past two years it has had three advertising agencies – Abbott Mead Vickers.BBDO is the latest (MW January 5) – three heads of marketing (it is still searching for a fourth) and dozens of marketing departures. These include: Raoul Pinnell, Terry Shrimpton, Mark Goodman, Neville Farrington, Dominic Owens, David White, Keith Hicks and David Bloomfield.
According to inside sources, marketing and advertising has taken the rap for deeper structural problems and until they have been addressed, marketing will not have any impact.
In the same year that “Prudence” was born, the company appointed WCRS to publicise the new logo and devise a branding campaign to bury the Man from the Pru in favour of a more modern, aspirational image. The Prudential launched the “I want to be” TV campaign in November 1989.
Though the stylish ads were lauded by the advertising industry, the essentially corporate branding campaign could not adapt to selling the Pru’s products. With no retail presence – the estate agency business was dropped in 1991 – consumers did not know where to buy products.
The ads also bombed in research. The Pru achieved brand attribution levels as low as ten per cent, and internal research revealed that, in the six years since the campaign launched, the number of people “willing to deal” with the company dropped from 60 to about 30 per cent of the population, just above Direct Line.
WCRS was put on 12 months’ probation, and dropped a week after the Pru Home Services marketing director, Raoul Pinnell, left to join NatWest (MW July 8 1994), and Alan Smith was promoted to replace him. (Smith now runs product development at the Pru.)
Pinnell’s division – which represented the 6,500-strong door-to-door salesforce – was understood to have been divided on strategy. He is believed to have clashed on several occasions with corporate communications director Jeremy Wyatt.
Three months after Pinnell’s departure, Wyatt, Smith and head of advertising, Dominic Owens, appointed Mustoe Merriman Herring Levy.
Because the Pru no longer had a retail outlet, the advertising needed to give consumers more direct contact. It sought to do this by encouraging consumers to use the phone. For the first time the advertising carried an 0800 phone number. But it did not translate onto television. The adoption of the “Prudence” name in the advertising posed further problems.
According to one insider: “The Talk to Prudence campaign was a complete change of brand image that did not have the full backing of the company.”
The arrival of Davis last April and the merger of its door-to-door sales division, Home Services, with the division of independent financial advisors, Personal Financial Services, made an advertising review inevitable. Former PFS marketing chief Keith Bedell-Pearce took charge of marketing as managing director of the newly-merged Prudential UK.
He was excluded from the decision to appoint Mustoe Merriman. Bedell-Pearce, who last November referred to the previous marketing team as “well-intentioned amateurs”, as he announced he was hunting for a top-flight marketing director to take charge. He also brought one of his former colleagues from PFS – Mike Tyldesley – to help conduct the review.
J Walter Thompson, Ogilvy & Mather, BMP DDB Needham and M&C Saatchi all presented. However, following Davis’ intervention, non-contender AMV.BBDO was appointed. Davis worked with AMV when he was assistant managing director, buying and marketing at Sainsbury’s and is known to favour a return to the aspirational advertising associated with “I want to be”.
“The problem for any new marketing director will be that Bedell-Pearce and Davis both want to influence marketing decisions,” says a former marketing department employee.
Personal conflicts aside, the crucial problem for the company is that it cannot, or will not, solve the distribution problem. It has sought advertising and marketing solutions to try to get around the power and influence of the “Men from the Pru”. All have failed.
According to former employees, 60 per cent of Pru’s policy holders earn less than 10,000 a year. Unlike more upmarket rivals, this provides huge structural problems for the company. It relies on a substantial salesforce to service them, and they are a less profitable proposition than more upmarket consumers.
The Pru cannot compete against its younger, more competitive rivals, who do not have the baggage of a huge salesforce. “Every policy taken out through the Pru costs the consumer an additional 25 per cent to pay for the salesforce,” says one source. “Cheaper rivals, such as Direct Line, selling life policies over the phone and taking a one to three per cent cut poses huge problems,” he says.
According to former employees, this is one of the reasons the Pru’s own direct telesales arm, Pru Direct, has suffered from under-investment. Whereas Direct Line spends 12.3m (Register-MEAL) annually on advertising its products, Pru Direct is not even recorded in Register-MEAL.
The salesforce has also managed to maintain local control of market information. Astonishingly, the UK’s largest life company does not have a central database of information on its 6 million policyholders.
Though it has the names and addresses of a large number of consumers, it cannot tell those who hold three active policies from those who have a sleeping one. “Database marketing, telemarketing and customer loyalty schemes, are a bit of a joke, when you don’t know who your customers are,” says one frustrated Pru insider.
The company is unwilling to make difficult decisions about its salesforce and unwilling, or unable, to invest in direct technology. As a result of this, its marketing appears to be in a perpetual state of turmoil.
One option is to purchase a life company with more upmarket consumers and buy its policyholders. Alternatively, the Pru could buy a building society which would give it a high-street presence, and allow it to relocate its salesforce into the high street and sell products more competitively .
However, according to insiders, it is more likely that the Pru will use the money to buy investment houses, and sidestep the distribution issue altogether.
Ten years on, Prudence’s red bandana appears to have slipped over her eyes.