Halifax Case Study
Project: Additional Lending Home Cash Reserve Mail Pack
HBOS, the banking group formed by the merger of Halifax and Bank of Scotland, are passionate direct marketers. They know that to create mutually rewarding relationships with their customers it takes dedication, a detailed understanding of their target audience, an ability to remain focused on the objective and creative that inspires action. Here are two examples that combined all these elements to achieve outstanding success.
The names of Halifax and Bank of Scotland have become a byword for value. The strapline “Always giving you extra” is testament to their unwavering commitment to putting more money back in customers’ pockets.
So when, staying true to their word, Halifax developed a more affordable, more flexible way of borrowing at an irresistibly low rate for existing mortgage customers, it sounded really tempting.
A new approach to lending
The product, Home Cash Reserve, was unique in the field of secured lending. It worked by enabling Halifax mortgage customers to automatically access the equity tied up in their homes – a distinct advantage in light of the continuing property boom.
Customers could borrow up to 97 per cent of their property’s value, at a rate of just 5.75 per cent APR (6.00 per cent variable). Which was competitive at the time of the mailing, making it an opportunity not to be missed.
But the Home Cash Reserve promised something even sweeter: unlike other loans, once you had arranged your draw-down facility, you could spend your money all at once, or draw a little at a time, and only pay interest on the amount you actually used. In a nutshell, it made borrowing more affordable and easy.
HBOS head of direct marketing, Andy McLaughlin, said: “Research findings revealed that our customers were willing to increase their mortgage as a way of affording big-ticket items such as home improvements or a new car, and so were potentially ‘warm’ prospects.”
A split test was also proposed between a standard loan application and a Guaranteed Reserve (where the customer simply applied and acceptance was guaranteed). The latter would determine whether a Guaranteed Reserve would uplift response.
HBOS set its agency, JDA, the task of persuading 3 per cent of those customers to take a Guaranteed Reserve and to persuade 2 per cent of those customers who were offered a Reserve without a guarantee. The success of the campaign would be measured by the increase in the number of telephone enquiries and by the number of completed application forms received by Halifax.
But at initial concept stage there was one more important fact to bear in mind, as JDA’s managing director, Carl Hopkins, pointed out: “The research material Halifax supplied also showed that, although in the majority of cases the male of the household applied for the loan, it was the female who was the key influencer in the decision-making.”
So how could this affordable, flexible – let’s face it – truly innovative financial product be made to look and sound irresistible? It had to be something that would appeal to its target audience, something that communicated luxury, a special treat, and that could demonstrate the loan’s unique way of working.
It had to be a chocolate bar, perfect for its associations with indulgence, added to which is the fact that it’s made up of bite-sized chunks, just like the Home Cash Reserve. Chocolate seemed the most appropriate solution.
“Cleverly, the format of the pack, third A4 finished size in a DL outer, not only mimicked the shape of a chocolate bar but, being a standard ‘off-the-shelf’ size, was highly cost-effective,” explained Carl. The outer, designed as a chocolate bar wrapper, was visually appealing and would immediately create standout among the usual financial DM clutter on the doormat.
Chocolate and Home Cash Reserve proved to be a recipe for sweet success. To date, HBOS have noted a 15 per cent uplift in response against the best month’s results this year – and a 34% uplift on the average month’s results for the product. Results for the test splits are not currently available. Nevertheless, it’s caused a real stir within HBOS.
“The pack has become a real talking point within the company, appearing on Business TV and in two internal magazines,” said Liz Boardall, head of DM – Mortgages and Insurance. “What’s more, in a bid to raise the awareness of this mailing throughout the company, we have distributed chocolate bars to all our network colleagues.” It hardly needs stating that this was the Halifax’s most successful Home Cash Reserve Pack by a huge margin.
Project: Recruitment for an internal Direct Marketing Seminar
HBOS are strong advocates of direct marketing. Keen to explain the science of this discipline to colleagues within the group, the Direct Marketing Division planned to hold an internal seminar entitled “Getting up close to customers”. HBOS were looking for an interesting and exciting way to promote the event so turned to JDA for inspiration.
To recruit one hundred attendees from the HBOS marketing team. The invitation would be sent to both males and females, at all levels within the business.
Liz Boardall outlined the key requirements: “The brief stipulated that the solution should include some DM teaser activity. In short, the creative had to demonstrate the theory of DM in practice, include every aspect of it from targeting and profiling to creative and incentives.” Most importantly, it had to have maximum impact, as competition from other internal marketing teams was fierce.
Across the group, another eight seminars, running at around the same time, were bombarding staff with their own promotional material. This, together with the overriding objective of making DM the most appealing, called for a proposition that staff simply couldn’t refuse.
Using the seminar’s title as a starting point, JDA orchestrated a scheming plan of seduction. Sex sells and, since successful DM is based upon building customer relationships, it seemed the natural answer for an internal event such as this.
Eye-catching images were carefully chosen to stop marketing colleagues in their tracks. Each one propositioned the reader with salacious copy lines. This was quickly followed by references to getting close to customers and ending with a “personal” invitation to attend the seminar.
“Controversial, fun and highly memorable, the campaign certainly got people talking about the event,” said Carl Hopkins. “A DM seminar on getting up close to customers suddenly seemed far more interesting.”
The strategy was simple but effective. Initially, all HBOS marketing colleagues were sent a postcard, one specifically tailored to men, and one to women. In addition to these, special “one-off” postcards were created and sent to individuals to demonstrate how DM can target key groups with personalised messages.
The postcard featured a humorous relationship-based, multiple-choice quiz, together with the mandatory incentive: women could win a day at Champney’s Health Spa, and men a day driving a Ferrari 308QV at Goodwood Grand Prix Circuit – definitely something to get the testosterone racing.
After three days, non-responders were sent a seductive e-mail followed up by an SMS text message. Again, the messages were specifically targeted to men or women, reminding them of what they could be missing. The DM seminar was fast becoming the sell-out event organisers had dreamed of.
In a word: phenomenal. “Within days of releasing the promotional material, Halifax had not only filled their one hundred places, but the seminar was massively oversubscribed,” said Liz. “In fact, we had so many enquiries that we made the decision to increase the number of attendees at the two seminars from 20 to 30.”
Chocolate? Or sex? As JDA proved, when it comes to successful DM, one really is no substitute for the other.