Every dog has his bank

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06/02/2017

Metro Bank spends less than £100,000 on advertising. Seriously.
The recent Annual Integrity Debate 2017: Challenger Banks vs Established Banks – which group can restore trust in banking? hosted by the Chartered Institute for Securities & Investment (CISI), threw up some interesting points.

Of course, the panel was filled with the great and the good and it made for a constructive discussion. Much focus was how much simpler life was for the challengers able to create their customer experiences from scratch as start-ups do. However, as Lady Susan Rice noted, Northern Rock was also in its day a “challenger” bank and we all know where that ended up. Being a challenger in itself is no guarantee of success.

During the debate, Lord Flight, a Non-Executive Director of Metro Bank commented that Metro spends less than £100,000 on advertising. Let’s assume they continue to acquire 300,000 new customers at the latest monthly run rate. That means they spend only 30p on advertising per new customer. RBS which owns NatWest recently advertised on ITV’s X-Factor where a spot costs between £110,000 – £200,000 and you still have to produce the ad.

Why can Metro get away with spending so little on advertising? It is very simple – they have a better business model that is built on a clearly differentiated and relevant proposition.

To quote Vernon Hill, the founder of Metro Bank, “Great businesses grow by creating a model that attracts loyal fans, not customers. At Metro Bank it is all about service, convenience and fun, not stupid bank rules. We see ourselves as a retailer more than a bank. We call branches “stores” to reinforce that belief. Why aren’t the banks open when customers want to use them? Why don’t they want your coins? Why can’t you take your dog to the bank?”

Imagine how much “marketing” investment is actually compensating for a weak business model. No wonder companies often consider marketing an expense.

Maybe you should call gigCMO for a discussion on how to reinvent your business model to wow your customers and make sure your investment isn’t going to the dogs…or maybe it should be.