Static membership, falling profits, aggressive rivals and an outdated image have forced the RAC to rethink its position. Gone is the crown but more importantly so has its heritage as a breakdown service.

There can be few, if any, brands which have to ask the reigning monarch for permission to change their corporate identity. But the RAC did. And in that lies the biggest problem the 100-year-old organisation faces: it is seen as outdated and “privileged” in contrast to the Automobile Association.

But the RAC is changing its identity. It has introduced new products, new ideas and wants to be seen as the champion of all forms of transport, rather than a distress purchase when you break down by the side of the road. The leather-clad Knights of the Road have been consigned to history.

The challenge is to make the RAC relevant again. When it launched in 1897 the car was in its infancy and the RAC must have seemed a forward-looking organisation. It has failed to maintain that early promise, and despite increasing its membership from 2.4 million in 1989 to 5.8 million by 1992 its membership has remained virtually static for the past four years. In contrast, the AA has increased its membership from 7.5 million to 9 million in the past three years.

The RAC is expected to return to profit when it reveals its 1996 results in May, having made losses of 12.4m in 1995.

Before the RAC could demonstrate that it has changed it needed to persuade its patron, the Queen, that the identity had to be transformed from one which had more in common with London-to-Brighton rallies, into one which looks more like a NASA space mission circa 1972 – the crown had to go.

RAC chief executive Neil Johnson and group strategic director Jan Smith travelled to Buckingham Palace clutching the new identity, and met the Queen’s private secretary. He gave the go-ahead for the crown to be axed but if he hadn’t, the RAC would have been stuck with it.

Suggestions that the move is evidence of a Republican streak at the RAC, that the company no longer wants to be associated with a discredited royal family, or even that the RAC does not believe the House of Windsor will survive into the next century, are all denied.

“It (the crown) is no longer appropriate to promote a business,” says Johnson.

The relaunch of the RAC complete with new identity, new orange livery, new no-claims policy, new vehicle, new 649 foldaway town bike, a new insurance package for cyclists and a stronger commitment to public transport, comes almost two years after it was announced that Smith was joining the organisation in a role that few understood. Most presumed it would lead to the exit of other senior marketers including marketing director Tony Williams. But Williams is still there.

Smith, the former First Direct and Mazda Cars marketing director, has a reputation for shaking things up. At Mazda she clashed with some of the company’s dealers, who complained that the advertising she commissioned was too brand-based and not designed to “shift the metal”.

Combined with investment in new computer database systems, a restructure at its Bristol headquarters and a decision to put all the RAC’s 1996 marketing effort into retaining, rather than recruiting, new members, the final bill, for what is seen as the first stage of the company’s rebirth, will come to 12m.

Most importantly, the relaunch signals the RAC’s gradual marginalising of roadside breakdown. It will still service its almost 6 million members, but the new positioning, supported by 4m worth of “documercial-style” advertising – similar to the non-product-specific ads Smith bought for Mazda – is not as a breakdown service but as a transport provider. Those featured in the documercials include scientists, environmentalists and economists – a million miles from its previous image. And the imagery is all state-of-the-art focusing on buildings like the Wrigley Building in Chicago, the State of Illinois building and Tokyo’s Telecom building.

It is an attempt to place the RAC at the forefront of technology, mobility and “added value” services.

“Sensible use of the car, alongside other forms of transport, is our way forward,” claims Johnson.

The three documercials, developed by BDDH executive creative directors Simon Dean and John Green, carry the strapline: “Welcome to the future in motion”. These will give way later in the year to new product advertising.

The no-call out discount is potentially the most significant new product – and there will be TV advertising for it next month. The RAC tested the scheme in January and February, but some observers believed it was too expensive to roll out nationally.

It offers a 25 discount on a policy renewal for the RAC’s standard cover if the member does not use the call out service in the previous 12 months. In theory, within five years some members could be receiving free cover. If just 1 million RAC members annually qualify for the 25 discount, the RAC will lose 25m in revenue – its revenue grew by just 36m between 1992 and 1995.

And unlike insurance companies, which offer no-claims bonuses but have little infrastructure, the RAC will still have to maintain its rescue service on the road. It has previously relied on its members not using the service to subsidise those who do.

“The cost of an average breakdown is 60 and we believe we will start to see people more reluctant to call us out for minor problems,” says RAC spokesman Peter Brill. “We are not releasing our projections for the cost of the scheme, but we anticipate increased revenue from renewals of contracts. Members have been asking for this for some time.”

Dean and Green form part of the “virtual agency” Smith pulled together to co-ordinate the relaunch. Paul Jarvis, the former Wolff Olins consultant who worked with Smith on the launch of First Direct, acted as brand consultant.

“It’s a repositioning for the RAC. It is not about us just being a breakdown vehicle by the side of the road,” says Smith. “The focus will still be on recruitment to the recovery service but over time that will change.

“People are asking the RAC for different things – it is more about how you look after people and target their needs. It is part of the vision for the future. It is about asking where the world is going and whether we can position the RAC to be part of that. Because cars break down less the RAC has had to look more closely at its core business. There are a number of products and services which will be rolled out over the next 12 to 18 months.”

The RAC is seeking to sell its added-value services to existing members, not necessarily to challenge its competitors for new recruits. But Smith denies the RAC is surrendering its roadside position to the AA and others like Green Flag, formerly National Breakdown. “We are looking to retain what we have and to sell added-value services into that heartland and drive income from that area.”

But one AA source is less convinced: “The AA and RAC have always been membership bodies. If you deny your roots as a motoring organisation then you end up unrooted – the RAC seems to be moving away from its roots.”

The RAC is trying to position itself as the voice of the traveller. It claims it’s not turning its back on its car driving members, but reflecting more their changing transport needs and environmental concerns. Some were surprised to see the RAC add its name to the Shell Smartcard consortium trial in Scotland (MW March 14). Most commentators saw it as simply an attempt to give consumers discount points through Shell and other consortium partners as a reward for RAC membership.

But the RAC is planning something more. It has opened talks with London Underground, Railtrack, taxi firms and other transport companies to develop a transport smartcard. It would be co-ordinated by the RAC and used to pay for journeys by train, plane and automobile.

It is also tendering for a Highways Agency contract to manage motorway traffic flow and is developing information systems that give advice on all travel plans, not just traffic jams.

An RAC source says: “The Highways Agency brief is a little vague, but it is looking for a system that can offer on-the-spot information about alternative routes or free parking – something more than just having a flashing speed limit sign saying 40mph. And with rail deregulation there is demand for a system that makes it easier to find the quickest, cheapest route.”

The RAC already offers travel insurance, runs call centres for manufacturers including Audi, and plans to extend its cycle range. Inside sources say it is also considering a clothing range – hard-wearing workwear.

So while the AA has gone into offering plumbing and other household insurance services, the RAC has at least stuck to motoring related schemes.

Four years ago the RAC’s then advertising agency Woollams Moira Gaskin O’Malley, which developed the “Knights of the Road”, produced a brochure expounding on how it had successfully “helped reposition and rebuild” the RAC’s image. It spoke of an “internal Renaissance” at the organisation and said the problem for the RAC was that perception was lagging behind the reality of its services.

All of which sounds remarkably similar to what the RAC is saying today. On the surface the RAC revamp looks like a respray, new logo and the launch of a bicycle. If that is all it is, then the RAC could be “repositioning” again in about five years. But if it is serious about repositioning itself as a transport provider, that could give it the edge it has been seeking.


    Leave a comment