Our Success

Abbey National: A Return to Profits

Introduction

In the latter part of 2001, Abbey National’s share price showed a sudden decline.  The company’s overall profitability was also down year-on-year and there was a lot of concern from Abbey Nationals shareholders, as to just how exactly the company’s senior management team were going to improve results. 

In conjunction with the marketing team at Abbey National and key personnel from Tri-Direct, a feasibility study was conducted to establish whether the customer current account statements were a viable vehicle to carry advertising material from third party advertisers without causing any detrimental effect on the company’s relationship with its customers.

Abbey National had 2.1 million customers receiving current account statements every month.  Because of the regularity of these mailings, they were judged to be the most useful vehicle in which to carry advertising material.  Other customer mailings such as annual mortgage statements were considered, but the monthly volumes were not significant and would have made fulfilment troublesome.

The study also revealed a requirement for Abbey National to retain the ability to insert internal promotions into the statements, cross selling material highlighting other Abbey National products such as loans, credit cards etc.  It was clear that if Abbey National were going to achieve its financial objectives, it had to keep momentum in its cross selling efforts.  However, it was also clear that there would be enough free weight in the statement mailings - even after the cross promotional items were inserted - to carry two pieces of third party advertising weighing up to ten grams each without increasing postage costs.

Research                                                               

Tri-Direct researched the advertising community and came up with a list of potential advertisers (the prospect list) and this contained over 1500 companies that did not compete directly with Abbey National or its affiliates. The prospect list was approved by Abbey National and, indeed, Abbey were able to add to it, by including some past affinity relationships with third party companies who could be interested in potential new routes to Abbey customers.

Due to some concerns that Abbey’s customers may not like to see advertising material included with their statements, it was decided to test the concept with 50,000 customers over a three month period, September, October and November, after which time customer focus groups were to be organised and, dependent on their feedback, Tri-Direct could then roll out the concept across the remaining customer base.

The Trial

Tri-Direct were able to approach and book six separate advertisers for the trial and each was given an attractive test rate to encourage early commitment.  The trial period was then set in motion and early feedback from the advertisers’ responses were very encouraging, with the majority showing above average results and all six advertisers indicating a wish to option the forward potential volume, should it be made available post-trial. 

Once the trial had been completed, a representative sample of 250 customers was contacted and surveyed about their experiences and how they felt about the inclusion of third party advertising inside their statements.  The outcome was very positive.  In addition to the feedback, the test had yielded £12,000 of net income after costs which further demonstrated that the statements were indeed a vehicle which could be commercialised to raise significant revenues.

It was decided that advertisers would not be allowed to utilise the Abbey National brand in their promotional material so as not to confuse the customers, albeit that Tri-Direct had advised that a premium could be charged for allowing advertisers to co-brand by using the Abbey National Brand in their promotional offers.

What happened?

In January 2002, Tri-Direct was given permission to roll out the project for 12 months and open up the entire 2.1 million statements to carry third party advertisers.  Take up was initially slow.  This was due to the very broad in demographic of the customer base and thus advertisers who were trying to target a particular demographic cell were concerned that they were going to suffer a lot of wastage.  Tri-Direct undertook a wide and communicative campaign to advertisers who were used to a less targeted approach in attracting new customers, such as car manufacturers and the FMCG sector.  The campaign was very successful and soon the monthly volume was over subscribed.  In March of 2002, Tri-Direct increased the rate card to a non-negotiable £50 per thousand inserts.

Tri-Direct was responsible for all day-to-day sales activity, administration, invoicing, logistics and reporting, providing a seamless end-to-end service to Abbey National, the statement vendor and indeed the advertisers. This meant that no additional internal resource was required from Abbey National and that those who assisted on the project provided minimal input, usually only at monthly status meetings.

Conclusion

At the outset of the feasibility study, Tri-Direct was asked to submit a forecast of likely revenues.  As this was an unproven vehicle for third party advertising, Tri-Direct made assumptions that it be able to achieve an average fill rate of 60% per month and a £28 nett per thousand to Abbey National.  This meant that a budget post test campaign was established at £564,480. 

Chart showing actual revenue v projected revenue

Tri-Direct actually achieved in excess of £1 million nett to Abbey National which clearly went some way to restore the company’s fortunes.  Today the owners of Abbey, Banco Santander, have a policy of not allowing third party advertisers access to Abbey customers via statements so this insert channel is no longer available.

Tri-Direct’s heritage is well established in launching new carrying vehicles via a wide array of customer communications or, indeed, taking over the management and improvement of established carrying vehicles.

Tri-Direct has utilised its 17 years experience in operating in the insert advertising sector to help some of the major carriers achieve very lucrative revenue streams. Our clients have included, Capital One, Citi Financial, GE Capital and Domestic & General Insurance. We feel that we are an obvious choice of partner for discerning clients wishing to create a sustainable vehicle to generate substantial revenues. 

For more information, please contact Steve Reid at Tri-Direct on 01256 810656 or

07711 509259.  Alternatively email Steve at sreid@tri-direct.co.uk