The Centre for Integrated Marketing has been funded to research best practice and develop intellectual and other tools on behalf of leading marketers and their agencies.
The Automobile
Association
How a big idea put the AA back
together
Angus Jenkinson
Professor of Integrated Marketing Luton Business School
[email protected] Branko Sain
Research Fellow Luton Business School [email protected]
Contents
Background 3
The 4th emergency service 4
Fragmentation 6
Belonging together 7
Re-branding 9
Reorganising and looking new 11
Results and metrics 13
Learning 16
Notes 16
Integrated Marketing is a holistic discipline that involves the whole organisation in developing congruent, sustainable and high-value brand experience for all stakeholders.
Permission is given for this paper to be copied, forwarded, distributed or quoted from provided that the authorship is acknowledged.
For further information and case studies, visit the Centre website on www.IntegratedMarketing.org.uk
The Automobile Association is recognised as one of Britain’s great brands. Founded in 1905 to serve the needs of the new automobile owners, it operated as a mutual
organisation on behalf of its members until Centrica purchased it in 1999. In addition to roadside services, it developed a wide range of additional support services on behalf of its members, including advice and information to support their touring, such as maps, signs and hotel information; it progressively added other services such as insurance, driving tuition and car inspection. Car insurance also led into property insurance and touring information evolved into full travel agency services selling holidays. AA Services: Accident helpline B&B services Breakdown cover Car loan Credit cards Data checks Driving school Road tests European breakdown General purpose loan Guide books Holiday loans Holidays Home insurance Hotels and B&Bs IFA
Maps
MOT insurance Motor insurance Parts and labour cover Petrol busters Roadwatch Route planner Servicing Travel insurance Travelwatch Valuations Vehicle inspection Warranty In 1993 the AA launched an advertising campaign based on the strapline: the 4th
emergency service. This campaign achieved considerable recognition, but it also proved to be dysfunctional in one key respect: it was not true to the whole organisation. Recognising this led to a re-branding exercise and an Integrated Marketing project.
How could great advertising be dysfunctional? How could a phrase that became a catchword work against the AA? And how does a new advertising campaign align an organisation?
Background
The Automobile Association has 12.9 million members (2002), making it one of the largest membership organisations in the UK. Until its purchase by Centrica in 1999, it operated with two parallel organisations: a mutual society owned by the members for the benefit of the members and a commercial organisation that sold services to the members. Members of the company mention the tension that this sometimes generated.
It was also part of the culture of the organisation that membership service and membership policy took priority. For example, the AA was a pioneer in the development of advanced database marketing techniques in the 1980’s, when it developed a sophisticated system for prioritising communication of its many different potential offers to members (see caption) reducing the amount and enhancing the relevance of mail that any individual would receive.
It was felt by some people that the culture of a mutual society restricted the ability of the AA to develop.
Centrica was a company set up in 1997 to hold the principal assets of British Gas after industry deregulation with a strategy of acquiring a suite of service businesses. The aim was that each would support a key part of a consumer’s life: home, car insurance, finance and other services. Centrica would add value by enhancing the intellectual and technical infrastructure for customer service and through sharing of data between the companies to build deeper knowledge of customers. The AA fitted this strategy
perfectly: it had an admired heritage of customer service and a substantial 12.9 million pool of loyal customers.
Since the 1980’s, the AA was also a leader in database marketing and had a wide portfolio of complementary services that fitted the Centrica strategy. Both the AA, an ex-mutual, and British Gas, an ex-nationalised industry were trusted companies with a strong heritage of community service. Both companies are primarily positioned as
revenues; for example the AA sells contracts to automobile brands that are bundled into their car sales.
Freeserve Nat West Sainsbury's British Airways BT AA
AA is a trusted brand Source: AA/MORI
Immediately after the purchase, Centrica initiated a reorganisation designed to cut costs, improve efficiency and increase “commercialism”. This was also designed to resolve the ‘dual culture’ that was part of the AA heritage.
In the Membership part of the business everything was service focused and the checkpoint against anything you did was: what will the members think about it? And if anything was risky in any way, then it generally didn’t happen because we were working for the member’s benefit and not the shareholder benefit at all. Whereas in the Insurance and Financial Services part of the business – it was co-owned by Eagle Star at the time, so it was on the way to being a much more business-like business, and so the communications needed to be different – sharper and much more direct response driven.”
—AA Manager
However, the first exercise in change, which was led by Centrica, was exploratory and of limited effectiveness. This case explores a new and more powerful reorganisation based on the power of a big idea.
The 4th emergency service
In 1992, agency HHCL & Partners developed an advertising and communication campaign based on positioning the Automobile Association as the 4th
emergency service. Showing strong images of the AA rescuing people, it aimed to place the AA alongside police, fire and ambulance services.
During the 1990’s the Automobile Association wanted to be recognised as the “4th emergency
service” alongside police, fire and ambulance services.
This was effective in getting ad awareness and recognition, as this chart from a 1996 IPA Effectiveness Award submission shows:
'4th Emergency Service'
campaign creates a step change in advertising awareness: sourceMcKerr, R. and Leach, J. of HHCL (1996)
Over the following three years, there was a reversal in the previous decline in new member acquisition and retention as a result of budget competitors (McKerr and Leach, 1996). The advertising was also effective in creating satisfaction. According to HHCL/AA research perception of ‘fix rate' rose by 12% while AA internal data showed that, in reality, this had remained constant (McKerr and Leach, 1996). It also generated positive attitudes amongst patrol officers:
It’s in the public's perception and recognition of what they do that the patrols have noticed a big change. They've seen the public's expectations raised by the change from being ‘very nice men' [Note: a previous advertising theme] to being patrols from the ‘4th
Emergency Service'. The public now see them as more modern and professional, respecting them more as figures with a certain amount of authority. —Tim Shallcross, Manager Front-line Training (McKerr and Leach, 1996)
Fragmentation
However, the problem with this positioning is that it privileged one, admittedly important element, within the AA overall other parts. It is clearly difficult to sell insurance, a map, driving tuition or a holiday using the strapline: the 4th emergency
service.
“When the “4th
emergency service” was first unveiled everybody who worked in the other businesses was horrified because it’s not transferable. Brilliant concept for one part of the business but everyone else spent a lot of time and effort trying to mutate it into something that would work for them”
—AA Manager
Discussion by McKerr and Leach in their IPA Effectiveness Award submission (1996) clearly focuses on the objectives to arrest membership loss and address roadside perception and issues, with limited proven overall profit effect. In a sense, this
positioning strengthened the mutuality versus commercial division that was part of the AA history.
“It was a mutual organisation focused on the breakdown activity and the members who were breakdown customers. It was dominant market leader, despite being complacent and arrogant. The breakdown was also seen as the be all and end all, and research suggested that it was seen as this too, despite being the largest insurance intermediary in the country!”
— AA Marketing Manager
As a result the AA ended up with a fragmented image, multiple communication messages and a variety of different positioning statements:
“We've been 'the 4th
emergency service' for a long time but that's no longer enough to do justice to the full range of our products. It's time for us to communicate a more coherent image to our customers.” — Clare Salmon, AA Marketing Director
“The structure and planning of the AA reinforced these problems. Marketers queried the need to be integrated, since they believed they were targeting different
customers with different products and needs, as long as they were conforming to overall brand guidelines. A common perception was the way in which the business was organised, was very much in silos, so the Breakdown people didn’t talk to the Insurance people and they didn’t talk to the Financial Services people.”
— AA Manager
“The first thing that happened, going back onto the transition [after the acquisition by Centrica], was to try and re-engineer the business into more customer facing units but these business/product areas were still operating centrally, so Insurance was still doing the same thing, since that was what the business was really telling them to do. We were still hampered by our own targets.”
— AA Manager
Not surprisingly, at the time of purchase, according to the AA Marketing Director, “Centrica inherited a much loved UK institution with a large existing customer base, but with very low cross-product holdings, a traditional structure and decision-making processes, poor profitability and an incoherent customer proposition.” — Clare Salmon, AA Marketing Director
There is important learning to be derived from this. The positioning was not only commercially unhelpful; it was also frustrating to many co-workers in the company (not patrol service staff, obviously). It exacerbated a sense of them and us and acted against the sense of one aligned business. Instead of all parts of the AA belonging together in appearance and reality, these were fragmented.
The positioning of the company and its communication mattered not only to sales and customer perception, but also to organisational alignment. Marketing communication clearly has a function not only in generating customer demand but also in pulling the organisation together. Positioning is a design tool: it represents a key organising idea for alignment. As the fundamental strategic statement, when effective and used well, it facilitates employee alignment and satisfaction (as ‘4th emergency service’ did for some
staff), development of co-ordinated value propositions and harmonised communication with customers.
Initial attempts to correct things needed a more fundamental approach:
“The AA was a bit slow and fuddy-duddy, in the nicest possible way". "We thought things would change when Centrica took over, given its shit-hot reputation. But the reverse has been true.”
— John Tylee, Campaign 11-01-2002
Belonging together
In 2001, a new agency was appointed, M&C Saatchi. M&C Saatchi in their pitch proposed a new positioning, to represent the whole of the AA, to support a new organisational structure that could focus more effectively on customers and achieve synergy within the AA:
“We are engaged in a major restructuring designed to put brand and customer at the heart of the proposition. For the first time the AA will be one business.” — Clare Salmon, AA Marketing Director
M&C’s Saatchi’s research into what the AA meant to its customers through its various value propositions led to an emerging understanding of what they all really had in common.
“It was a very difficult brief because we've had to come up with an idea covering a huge range of products.”
—Nick Hurrell, M&C Saatchi's joint Chief Executive, Campaign 11/1/02
M&C Saatchi’s conclusion, agreed by the AA Board, was that in each and every case, what the AA did was “rescue people from uncertainty.” Uncertainty was the common element: • • • • • •
What if my car breaks down? What if there is a fire in my house? How can I become a safe driver?
How do I get from Birmingham to Manchester in the best way? Where shall I go on holiday?
How shall I pay for this?
This positioning also took AA back to its roots and core identify, when it was founded by members to ensure that they were not caught speeding, left stranded on the side of the road, lost (an important service, particularly in the early days, was putting up road signs) or unsure where to eat or stay overnight.
Factoring in the idea of the AA as a rescue service, which is clearly an important aspect of its positioning and services, the unifying idea that emerged was:
The AA rescues you from uncertainty
In a series of presentations over the course of 2 days, teams, each including a director and a marketer, briefed every single individual in the AA about the new vision. In the presentation, the AA followed M&C Saatchi’s lead in describing, “The AA rescues you from uncertainty”, as their ‘noble purpose’. In doing so, they compared their vision of value with British Airways and Disney:
“British Airways: doesn’t exist to fly people across the world in metal tubes, serve them food and drink in plastic cartons or if you’re well off, from china and glass – it exists to bring people together. In the same way Disney aren’t there to make funny films and build theme parks – although that’s what they do, they are there to make people happy. “These are two strong thoughts that explain the deeper benefit customers get from using those organisations and experiencing the brands. So, what is our noble purpose? To get to that point, we have looked at what we’re fundamentally good at doing.”
—AA internal briefing, by permission
This phrase, fundamentally good at doing, is we believe a useful one to Integrated Marketing – pointing at the core identity of a firm.
The AA example reinforces our research findings that the presence of a noble or profound purpose, or service ideal proves to be a vital success in achieving creative alignment across the organisation and a high degree of customer loyalty (Jenkinson, 2000; Jenkinson and Sain, 2003).
The idea, ‘rescues you from uncertainty’, is therefore based on the core identity and competencies of the AA and defines its “core value proposition”. Notice that what is for employees a “noble purpose” is for customers a core value proposition. This congruence between internal inspiration and external promise of value is core to the development of Integrated Marketing and to the effectiveness of the idea for the AA. Our own independently commissioned research by Identity firm Corpus Angeli confirmed this positioning’s close affinity with the AA’s core identity:
The AA core value proposition is currently moving towards 'security in a dangerous world' ('securing, protecting, preventing, anticipating').
—Richard Leachman, Research Director, Corpus Angeli
This big idea serves as an organising or unifying idea for the AA. It provides cohesion for all parts of the business and motive energy for the development of culture, products and services for the sense of ‘belonging together’, and for brand communication. Focusing on this new positioning provided the basis for a new value proposition, a tool considered vital to success by Salmon:
Progressively cutting costs without addressing the problem of what the proposition is the classic example of latching on to the wrong metrics. Eventually, one day, the horse cannot get out of the stable, because it does not have any legs left.
—Salmon
For Salmon, such a positioning has power to unite staff and communication and optimise the business:
“The debate is how to integrate around [13] million customers achieving synergies, scale, economies and a singular proposition absolutely at the centre.”
—Salmon
Re-branding
The idea still has to be expressed to customers. Marketing communication needs to capture the essence of the idea in an extremely simple, memorable and emotive way. As Clare Salmon put it:
“Marketing must set the agenda for the business. It must be clear: simple propositions take a lot of thought”
—Salmon
M&C Saatchi’s solution to this problem was:
This expression of the AA logo acts as an endline and creative guide.
This did not replace the AA logo: it is an iconic end line to the advertising that at the same time expresses the spirit of the whole ad. M&C Saatchi developed a series of advertisements across a variety of media emphasising value for money but in each case involving the AA rescuing someone from uncertainty. The TV executions included: • • • • •
A 90 second spot that features a range of different services, from roadside rescue to travel in Paris, buying a car to insuring a house, with the recurring theme: How do I?
A woman delighted that she is rescued from a lecherous young man who has claimed a broken car
Rescuing a sleepless couple from worry about the growing damp patch in the roof Avoiding the cowboy car salesperson
A car loan that comes with an assured car
Press ads M&C Saatchi
AA services from the web site
As these indicate, the AA demonstrates the relevance of its brand to a variety of different customer communities and with a variety of different products and services, demonstrating the real meaning of the AA brand. But the idea serves not only as a unifying principle with consumers but also supports internal development within the organisation.
The effect, as an M&C Saatchi planner described it, was that:
Every part of the AA has one campaign that works for it and one consistent voice.”
Reorganising and looking new
An extensive makeover, still in progress, was initiated to transform the AA’s livery, literature, stationery, website, culture, practices and everything else that affects the brand experience. This obviously means more than putting the logo on things. It means putting the spirit of the logo on things, in people and in practices.
Videos, documents and other internal marketing tools produced by M&C Saatchi capture leadership goals and intentions. In organisational development terms, this represents a marriage between marketers’ efforts at communicating the brand and HR professionals’ communication of corporate values and, we believe, signals future best practice (Jenkinson and Sain, 2003). In this, the CMO, Clare Salmon took a leading role, reflecting her conviction of the importance of leadership:
“You need three components to work in harmony: metrics, structure and leadership.”
— Clare Salmon, AA Marketing Director
An agency commentary reflected on Salmon’s ability to ensure changes happen based on the minimum of significant, creative activities, designed with empathy to get
The speed, commitment and effectiveness of the AA’s take-up of their internal commitments (to balance outside communication) was an important success factor.
“I was really impressed with the way the AA picked up and organised the internal changes – workshops information to staff, consultation and so on. What they achieved in two months was incredibly impressive.”
— Agency Planner
addition, investment in better CRM and a new restructuring to make the AA more al
e. “We mixed the people up a lot more in marketing. So the feeling now is that really
o put
“It feels much more like a team from the outside looking in.”
a much more coherent
Integration Manager
Internal
document: a card that shows what the AA stands for
In
customer-focused, bringing the AA together as a marketing-led organisation had already begun two months earlier. It was clear to the business that both the intern structure of the business and alongside that the external positioning needed to chang
is a very much out-looking AA brand-marketing unit. People are much less focused on their own particular product and there’s been much more effort t people into jobs where their skills are the best fit rather than: well you’ve always worked on membership so we’ll leave you there.”
— AA Manager
— Peter Woolston, Head of Centrica Group Marketing “It does, yes. It also means that the customer is getting
message. We’re thinking much more carefully about what we’re saying to whom and why and communication material we send out you would be able to tell that it came from the same company”
AA marketing people now work as a single group although still focused on major product grouping, but all within the same brand. There are two large operational service delivery areas, one of which is the roadside assistance and the other is insurance. These two operate as separate profit-oriented businesses, but the links between marketing and those operational units are now closer.
Salmon, the Marketing Director, is responsible for the whole range of AA products and services. The AA is then organised into customer propositions, so everything to do with buying, running the car, leisure and mobility is being linked together “into things that customers would link together”. Each proposition area has its own complement of staff, including product development, communication and other disciplines, with two agencies (EHS and Rapier) to focus on the more insurance-oriented or car/breakdown oriented areas.
“Their job is not just producing the marketing communication to sell Membership or Insurance etc, but it is to look at it from a much more innovative point of view and say: ‘Right, somebody is buying a car, what do they need?’ The first thing is information. We do the data checks, road tests, vehicle inspections
etc…Customers probably don’t know what we provide them and our job is to take them through that thought process positively.”
— AA Manager
Although PR reports to a different director (with responsibility also for HR
communication) there is a developing relationship between the communication groups. For each major development a project team is pulled together to include members from fiance, PR, employee communications, operations and marketing to take responsibility for successful implementation.
AA investment in better information and technology is also proceeding. Because of the historic structure with each business in a silo, membership and insurance were unable to sell each other’s products and there was little motivation to build seamless CRM links, such as the ability of membership to transfer a customer to someone who can sell an insurance product.
In pursuit of greater efficiency and integration in media planning, Salmon consolidated the AA’s £33 million media planning and buying account into one agency, Manning Gottlieb OMD. More recently Salmon also decided to seek three design and branding agencies to share a £1.5m budget across all AA areas including its driving school, travel products, vehicle checking and inspections, publishing andservice centres.
Results and metrics
As evidence of recognition from the marketing academy, Clare Salmon was nominated by the Marketing Society for Marketer of the Year 2003 as a result of the repositioning and re-branding of the AA and the AA won a 2003 Marketing Week Effectiveness Award.
Salmon believes in the importance of good metrics for sustainable success:
“When you think about marketing to the whole customer, the traditional metrics everybody uses, monitoring ‘How many calls did I get from this TV ad?’ and ‘Did it move my brand image dimension at all?’ become pretty irrelevant. Traditional metrics are typically very short term, and very focused on traditional marketing.”
Salmon is also convinced that to manage the customer successfully you need to manage the whole relationship integrating acquisition and retention, since the first is so influential on the second.
The goals for the re-launch are consistent with this point of view. They aim towards recruiting the right customers and managing relationships with them throughout the life cycle in order to maximise the number of profitable, value-creating relationships. This critically needs a unified AA platform and customer/market awareness of the AA’s product and service scope.
A CODAR™ analysis of the overall communication objectives of Just AAsk is shown in Figure 2. (CODAR™ is an integrated and fractal communications planning and
evaluation tool developed by Stepping Stones Consultancy Ltd that the Centre has evaluated. The CODAR™ model proposes that each and every marketing
communication contains a blend of five elements related to customer experience, with the significance or intensity of each element varying, and capable of being applied to any communication activity from macro to micro levels.)
The AA IMC CODAR Chart
0 1 2 3 4 5 6 7 Idea forming Relationship building Sales activation Help Product experience Fig. 2: The AA IMC CODAR™ Chart
In the second year after the initial launch, the results have already been considerable and broadly demonstrate considerable success against these criteria, with some ongoing need to work on relationship building and multi-product experience. AA turnover grew 10% and operating profit increased to £73m, not all attributed to the Just AAsk campaign, but there there have been some significant successes within the business units:
• Roadside services increased members by 6% and maintained margin despite significant activity and price-cutting by competitors.
• Motor and home insurance commissions grew by 9% and in an increasingly competitive market customer retention rates rose from 74% to 78% with the average cost of policies rising by 2%.
• The loan business, which had featured in a dedicated “Just AAsk” TV commercial, grew its business by 52% taking on 77,000 new personal loans, increasing the value of the loan book by over £230 million.
The campaign provided opportunities to contact the AA and stimulated over 30,000 telephone calls, approximately 2/3 on the ‘brand’ telephone number and the balance as product inquiry calls. Perhaps the most dramatic effect of the campaign was on-line traffic generation. Before Just AAsk in April 2002, the average number of visits per week to the site theAA.com was 250,000. Since the campaign launch this number has been
rising steadily and by week ending 6th April 2003 the site registered 547,236 hits. Total
visits in 2002 were 21m, up 53% on previous year. Membership sales from the site were up 55% on 2002.
Amongst general consumer-perception metrics, the AA gained the following benefits:
• 82% knew that the AA is not just for emergencies.
• 79% knew the AA is for more than breakdown.
• 74% knew they can ask for more things.
• Awareness of the AA range grew last year from 33% to 44%, contributing to record 12.9 million customers.
• There was a 6% increase in those agreeing that the AA is better than the competition.
• Belief that the AA offers a wide range of products and services increased from 79% of target market of motorists to 87% (strongly/slightly agree).
• The number of AA products spontaneously recollected remains below
objectives but increased by 15% (19% prompted) of those previously unaware of 2 or more products, 27% were now aware.
• 71% said that the AA’s advertising/communication brought new products to their attention. There were some significant and important shifts too. For example awareness of car loans increased 46%, with consideration up 22%.
• There was a 7% increase in the perception of the AA as a technically agile and modern firm ‘going places’.
• The re-launch led to a modest but significant increase in brand involvement score (up 1.2%). This measure, which is based on an affinity measure supported by attribute diagnostics, is typically related to market share and share of wallet.
• There was also an overall success in the ‘new look’ branding, with recognition up to 74% by the end of the initial test period and 83% appreciating the news. Additionally, an independent econometric modelling consultant, NINAH, has assessed the business impact of the brand campaign. This analysis showed that the £4.2m invested in the brand campaign during 2003 will generate £5m extra sales and further predicts that if investment continued at the same level (£4m) for a further 4 years, incremental sales would be £79m.
There has also been some significant internal effect. The Annual Employee Engagement Survey conducted each September has seen agreement with “I understand our Brand Values” rise from 56% to 67%.
Learning
We conclude that the AA demonstrates important principles for the development of brands in complex organisations with a many different products and services and/or multiple customer communities:
1. Marketing communications agencies and marketers have a significant role in leadership of the firm
2. If all of the parts of a company or brand do not belong together then they should not all be in the company or brand. If they do, then a coherent idea is needed to serve them.
3. Brand advertising and communication can be destructive of the unity of the organisation, not only with customers but also with employees. Alternatively they can help to unify the firm.
4. The core brand idea and the leadership vision need to be congruent and unifying for the whole organisation.
5. The brand idea needs to have motivational power for employees: it needs to be ‘noble’, in the sense of providing profound meaning and aspirational value for co-workers.
6. When these are achieved, marketing communication works more effectively.
Notes
1. Jenkinson, A. and Sain, B. (2003). SEEBOARD Energy, Integrated Marketing transforms the brand fortunes, Centre for Integrated Marketing.
2. Jenkinson, A. (2000). Leadership Creates Loyalty, Journal of Database Marketing, Vol. 7, number 4, June, Henry Stewart.
