Barclaycard prepares for its ‘biggest moment of transformation’

The credit card brand is preparing for major changes to its business model and marketing strategy as regulation, competition and economic turmoil hit the financial services industry.

Barclaycard is preparing for one of the biggest transformations in its history as regulatory change, fintech competition and economic turmoil combine to disrupt the financial services industry.

Speaking to Marketing Week, Barclaycard’s UK marketing director Alex Naylor, says: “There’s going to be a reinvention of the business model, there needs to be a refreshing of the brand to connect with what people want now and marketing is going through an enormous moment of transformation. It feels like probably the biggest moment of transformation since I joined.”

Naylor joined Barclaycard seven years ago, coming over from agency Rapier just as the credit card brand embarked on a “big growth mission”. It wanted to build in strategic marketing capability, and Naylor was brought in to help build out the marketing communications team, step-change its performance marketing more and drive customer engagement.

“The thing with client roles is they are much more about leadership, team building and team creation, and strategy,” explains Naylor, speaking ahead of an event held by Creativebrief. “A lot of thought leadership into the business about what marketing can do – it’s a very accountancy-led, rational organisation so it’s an interesting test of your ability to influence. We built out a strategy and planning function that hadn’t been there, brought in more creative talent. It’s been a very exciting journey.”

We are at a point where the ways we have been successful won’t be the ways we will be successful.

Alex Naylor, Barclaycard

That growth mission has paid off. Barclaycard’s profitability has trebled, and it has cemented its position as the number one credit card brand in the UK, with 27% market share compared to nearest competitor Lloyds, which has around 15%. Naylor says marketing has been a “big part” of that growth.

While this all required a lot of work, Naylor says Barclaycard is now having to transform itself “all over again”. The firm underwent “quite a significant” restructure last year to ring fence its consumer business, meaning its consumer cards business (which Naylor is responsible for) was split into the Barclays UK retail bank, while its B2B operation went into Barclays International.

As part of the restructure, former CMO Katherine Whitton left and Naylor took on the top UK marketing role. And while it hasn’t changed the span of marketing or the team structure, it has meant more opportunities to integrate into Barclays and its customer base.

Transforming ‘all over again’

Naylor believes Barclaycard will now have to transform “all over again”, in part due to the restructure, but also because of changes in the financial services market. Regulatory change from the Financial Conduct Authority (FCA) means the way lending businesses operate and the degree of transparency is changing, leading to a shift in the way businesses make money.

There is also growing competition, particularly from fintech businesses, which Naylor says are “quite radically changing customer expectations in terms of customer experience and the type of emotional connection financial services brands can have”. He points to companies like Monzo, which he describes as doing a “Fitbit on finance” and getting young people talking about finance.

Combine those factors with economic turmoil, and Naylor believes disruption in the credit card market is not far away.

“Put all those things together and we are in a point where the ways we have been successful won’t be the ways we will be successful,” says Naylor. “We need to effectively build a better business, get out and be the pioneering lending business that shows what genuine customer centricity and transparency look like. Partly because it’s the right thing to do, but also because we’ve always been a market leader and if we lead the market like that it’ll be difficult for people to follow us.”

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For Naylor, the first job was to define Barclaycard’s core purpose. It did that almost a year ago with its ‘Start Today’ messaging, which aims to balance the functional elements of its service with emotional brand advertising.

“We’ve got a fantastic articulation of our core purpose and what we’re trying to achieve – this idea of helping people move forwards every day. And everyday is very important because cards are not about lofty grand ambitions, they are about everyday wins,” says Naylor.

“We’ve also got a fantastic set of brand experience principles which are genuinely working across all the touchpoints in the business and it’s helping us to build out a really different type of customer experience.”

READ MORE: Barclaycard to adopt new strategic approach with ‘Start Today’ branding

The latest example of its differentiated customer experience is the launch of Barclaycard Entertainment. It introduces benefits that are available exclusively to card holders such as 5% off the ticket price for 3,500 live events every year and 10% of exclusive pre-sale tickets, as well as a 5% saving on food and drink at O2 Academy venues.

The launch looks to build on the brand’s heritage in entertainment – it has sponsored British Summer Time Hyde Park for a number of years. And it taps into the growing experience economy, with data from Barclaycard showing that spending on entertainment, particularly for big ticket releases, increased 10.1% year on year in 2017.

The brand has has partnered with The Muppets to launch the loyalty offer, which includes TV, video-on-demand, out of home, print and cinema, alongside a series of videos to run on social channels.

muppets barclaycard

Marketing’s influence across the business

It is not just in marketing and customer experience where marketing has an influence, it is also increasingly playing a role in proposition and product development, as well as policy decisions around areas such as fees and interest rates.

“I am sitting in finance meetings where the experience principles are being used as a lens for making decisions about fees. This never happens in financial services businesses,” he exclaims.

“It’s happening across all the touchpoints, including the difficult ones; the messages where we need to tell you your credit limit has been decreased or your transaction has been declined. Putting brand personality into those moments, which are usually the bit brands don’t reach and are left to the operational team, even though they are the things that have the biggest impact on people.”

READ MORE: How marketing is working with finance to shake off the ‘us versus them’ attitude

Key to that is making use of data and leveraging it to offer a more personalised experience. Naylor says Barclaycard now has the tech stack in place to be able to do automation and personalisation, and is allowing teams to work in more agile and dynamic ways to rethink creative.

But achieving mass personalisation is not without its challenges. There are thousands of examples of badly targeted ads that have failed to understand context or follow users around the web. But Naylor believes there are two ways personalisation can be helpful.

So much marketing philosophy is driven off FMCG and 1960s product thinking.

Alex Naylor, Barclaycard

The first is through a better understanding of customer journeys and the second by better understanding consumers. That means if someone drops out mid-application Barclaycard better understands how to follow up, or to tailor an offer based on people’s circumstances.

“As long as you are not ‘Big Brothery’ and you’re using actual information rather than modelling guessed information then it is possible to be more relevant to people,” he says.

The focus on data and digital has meant Barclaycard needs to change the skillset of its marketers to deal with the “rapid evolution” of areas like social media. However, Naylor believes the idea that you can “hire people with set knowledge that will stand fixed doesn’t really work anymore”, so instead it tries to bring in people with a growth mindset that can develop and self-learn. “Increasingly you look at attitude and potential as much as anything else.”

To do that, financial services needs to be seen as an interesting place to work. Naylor admits that at the start of his career he would have seen financial services as a “backwater for marketing”, and that while innovation and disruption have made it more interesting there is still more to do to ensure it appeals.

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“So much marketing philosophy is driven off FMCG and 1960s product thinking. Service businesses are harder to control and it’s harder to build brand perception. I can’t just run an ad saying ‘this product is going to make you look sexy’ and know the product is going to be the same all the time. I might have to write you a letter saying you can’t have this and you’re declined and still need you to care about the brand.”

“I want to help young marketers realise what exciting stuff is going on and that they have the opportunity to be a part of something exciting that is grappling with challenges around evaluation, proposition, customer experience, and the investment and impact opportunity.”