Tescos Has It Sainsbury S Has Been Losing It, Virgin Has Alsways Had It, HSBC Transformed

Article published in Professional Marketing Magazine April 2005

Unlocking Brand Energy in Professional Services Firms

Peter Hutton

Tesco’s has it; Sainsbury’s has been losing it. Halifax has it, Abbey National lost it. Virgin Atlantic has always had it. BA had it in the 80s, lost it in the 90s and is regaining it in the 2000’s. RBS were able to take over Natwest because they understood it. HSBC transformed Midland Bank with it. What is ‘it’? Brand energy!

Brand energy has been defined as:

‘ The energy that flows throughout the system that links businesses and all their stakeholders and which is manifested in the way these stakeholders think, feel and behave towards the business and its products or services’1 Every organisation has it but some are just far better than others at creating it. On the one level it is extraordinarily complex - thousands of people working together doing millions of things exchanging trillions of messages in order to achieve a range of broad objectives. On another level it is extraordinarily simple – making people feel valued, self-confident and important so that they want to do the things that make an organisation successful.

Businesses that create extraordinary brand energy generally have a clear understanding of their purpose or mission, a bold vision of where they want to go, and explicit and easily understood values of what they stand for that define their culture.

For service organisations the internal culture is critical. Staff are the main vehicle for delivering the brand promise. What they do and how they do it defines how the business and its products and services are experienced. For these organisations the experience is the brand. How that experience is managed is the key to how successful the organisation is at creating value. The Tescos, HSBCs and RBSs of this world recognise this.

If marketing is to be really effective in service organisations it has to embrace the internal as well as the external brand. Perhaps as much as 98% or more of communications about the brand comes through what the business does and how it does it. If the bank messes up your direct debits, Tescos consistently has only 90% of the items you want in stock or your train arrives late 20% of the time, this communicates what the brand really stands for far more than any marketing campaign. The equivalent in professional services is if the audit is delivered late, the barrister is clearly not in command of your brief or the corporate tax advice turns out to be completely wrong.

Those organisations that create exceptional brand energy, and therefore value, are the ones that set their markers that much higher then go on to inspire their staff to deliver.

1 Peter Hutton, April 2003 Tescos first set its sights on overtaking Sainsbury’s; then on being as successful as Marks & Spencer; now it aims to be more successful than Wal-Mart.

But you don’t produce exceptional performance simply by setting a target and telling your staff they have to work harder to meet it. Success comes from energizing everyone so they really want the organisation to success and to be part of that success. Tescos’ ‘every little helps’ is not just about competitive lower prices. It is the core value that is embraced by everyone and which defines its approach to continuous improvement in every facet of its business.

Thus the powerhouse behind successful professional firms is the internal culture: what your people think and feel about the business and what it stands for and how they behave as a consequence. This is as true for the client-serving fee earners as it is for the ‘unsung heroes’ whose ‘clients’ are internal.

To be really effective, marketing has to work with and through the internal culture. External marketing communications is important to enhance the core messages of the business, to bring them to the fore and reinforce them in the minds of the firm’s different stakeholders. However, it is no good their sending out one set of messages if the way the business operates is sending out a contradictory set of messages.

Internal communication is critical. How people within businesses communicate with each other defines how they feel about themselves, each other and the business. This in turn determines how willing they are to take responsibility for making the business successful, their willingness to put themselves out, their effectiveness in making the processes of the business work, and their propensity to talk the businesses up to people inside and outside of the business.

Sam Walton, co-founder of Wal-Mart, had a simple view: You should listen to everyone in the organisation and figure out ways to get them talking. You tell your staff everything because the more they know about the business, the more they will care; the more they care the more they will act as if they care and the more successful the organisation will be.

Sam Walton may be dead but his spirit lives on in the largest retailer the world has ever known.

Internal communication is about far more than just channels and messages. It is about defining and reinforcing the values of the organisation. The difference between organisations that perform outstandingly and those that do not is very often to do with their ability to utilize the full potential of their staff. Staff who feel respected, valued, empowered and supported are far more likely to work harder, be more loyal, take personal responsibility for the success of the firm and take the initiative to make things work better.

Tesco’s approach echoes Sam Walton’s. In Sir Terry Leahy’s words: ‘Our aim is to instil a culture where everyone’s first thought is to take responsibility rather than cover their back’ where we want everyone to be leaders’2

2 Quoted in The Times October 19 2004 A study for the Institute of Public Relations last year provided powerful empirical evidence that effective internal communications drove organisational performance.3 The heads of communication in 145 large organisations were asked to rate the effectiveness of their internal communications. They were then asked to select the statements that characterized the communications culture of their organisation.

Overall 55% said their communications culture ‘works effectively to improve the performance of the organisation’. But this ranged from 75% of those who rated there internal communications as ‘very effective’ down to just 13% who rated their internal communications as ‘ineffective’.

Rating of internal communications All Very Fairly Neither Very/fairly effective effective effective ineffective nor ineffective Base: (145) (24) (74) (22) (23) % % % % % The internal communications culture 55 75 64 45 13 works effectively to improve the performance of the organisation

Those organisations with the most effective internal communications were particularly characterized as ‘encouraging people to express their views’ (87% of those with ‘very effective internal communications’ but only 26% with ‘ineffective’ internal communications) and having ‘internal corporate communications that are well integrated with other organisational functions such as marketing, line management, HR, marketing and finance’ (92% vs. 4%!).

The survey also illustrated how effective internal communications was also highly correlated with staff motivation, self esteem and how staff feel about the organisation and their role in it.

3 IPR/BER survey on EU Communications & Information Directive, conducted among 145 senior in-house communications managers, June 2004 Q. Which of these describe the culture for communications within your organisation? Internal Communications Rating:

Total Very Ineffective effective (145) (24) (23) % % %

Encourages people to express their views 63 87 26 Internal corporate communications are well 52 92 4 integrated with other organisational functions (line management, HR, marketing, finance etc)

Works effectively to improve employee morale 29 63 4

Makes employees feel good about the 34 63 9 organisation

Makes employees feel good about themselves & 36 67 0 their role in the organisation

Brand energy can be measured, internally and externally. Advocacy – the propensity of staff, customers and other stakeholders to talk up or talk down the firm – is a particularly powerful measure. Willingness to spontaneously recommend a the firm to others implies a personal commitment at an emotional and behavioural level which is critical to driving organisations forward and building their underlying brand equity.

The drivers of brand energy can also be identified. They vary by organisation and they evolve over time, but understanding them is the key to outstanding performance in the professional services as it is in other service sectors.

Peter Hutton is founder and managing director of BrandEnergy Research and Research Director of the Managing Partners Forum/PM Forum. He has designed the internal communications benchmarking survey shortly to be accessible via the Managing Partners Forum web site [email protected]