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24 January 2015

Building Valuable Brands

Tag(s): Business, Marketing
This week Andrew Marsden was installed as Master of the Worshipful Company of Marketors while I was invested as its Senior Warden. This means that, subject to election, I will be installed as Master in a year’s time. Andrew has a formidable track record in FMCG marketing and is well known for his successful stint as Marketing Director of Britvic with such famous campaigns as “You’ve been Tangoed.” He is a former Chairman of the ISBA Executive and a President of the Marketing Society. He has chosen as his theme for the year “Building Valuable Brands” and to help him launch this he invited Dame Dianne Thompson, recently retired Chief Executive of Camelot, the company that runs the National Lottery, to speak to the theme at his Installation Banquet at Goldsmiths’ Hall.

I had the pleasure of introducing Dame Dianne and said: “The Master has chosen as the theme for his year “Building Valuable Brands” and he could not have chosen a better speaker to launch his theme.  There can’t be many people who can claim to have achieved a penetration of 70% of the adult population with just one product. Or to have built a brand over 14 years to the point where it turns over £7 billion per year and has a guaranteed license to maintain that franchise until 2023 having fought off the ultimate predator in Sir Richard Branson. Or to have made some 3,700 people in this country into millionaires. Or to have raised countless funds for good causes that otherwise would probably just not happen.

Dianne has achieved all this in her stint as CEO of Camelot, the company that runs the National Lottery, one of Sir John Major’s better innovations. But like all overnight successes Dianne had a long period of preparation in tough hardworking senior marketing roles with ICI, the Co-op, Woolworths and Signet (formerly Ratners).

She has recently retired from the Camelot role and with typical Yorkshire guts has dived off the deep end into what looks equally challenging. She has bought a hotel in the Isle of Wight. She fell in love with the 17th–century George Hotel in Yarmouth when she first visited 23 years ago. She admits to knowing nothing about running hotels but her first move looks pretty shrewd- she’s installed Michelin-starred Robert Thompson (no relation) to open a restaurant. I would not mind betting that she will make just as big a success of this. And talking about bets - while working for Camelot she was banned from playing the lottery. Is she now planning to start? “Too right I am”, she said.” It could be me”.

Ladies and Gentlemen, Dianne Thompson received the DBE in the recent New Year Honours List. It seems word must have got to the Palace that she had agreed to speak at the Marketors’ Installation Dinner. She has politely declined all other speaking requests but has kindly agreed to share her thoughts on “Building Valuable Brands”."

She responded by saying that while she felt honoured to have received the DBE in the recent New Year’s Honours List it was really an honour for all the people at Camelot. They really make the brand, and she was proud to have worked with them all and to have achieved what they had together. Marketing had always been her passion, but although she had enjoyed a very varied career, the one thing all her jobs involved were all real, tangible things that people wanted or needed in their daily lives. Things that she could understand how to market.

While technology continues to gather apace and the opportunities for communication with customers are now vast and diverse, the essence of the job remains the same. You have to engage your audience and tell them why the product matters to them, why it’s relevant in their lives. And to do that you have to understand what you are marketing. At Camelot they worked very hard to understand their customers through extensive research. However, Dianne had learnt that you don’t just listen to what your customers say, you must also watch what they do. People often say one thing and do another. In the National Lottery research people say they want smaller prizes and more of them to increase their chances of winning. But there are massive sales spikes when jackpots roll over and soar above £75m. Indeed at that point the top twenty outlets in  the country for sales of tickets change and are all found in the City and Canary Wharf as the ‘boys’ come out to play! It doesn’t mean that you don’t pay very close attention to research – and it’s absolutely at the heart of every commercial decision they made at Camelot - but you have to balance it with how your customers act, and then take an informed decision on all available evidence.

Her next insight was to have integrity. Do right by your customers. It helps you make the right decisions for the long-term health of your brands, so that when you hit bumps in the road, you have a much more resilient business with a more protected place in the perceptions of its customers, compared with one that has only focused on profit or its own needs.

She then emphasized the role of innovation in building valuable brands. She did not subscribe to the motto “If it ain’t broke, don’t fix it’, but rather the need for continuous improvement. She had spent much of her formative career in retail and noted that many retailers, including some she worked with, had not continued to innovate and had now paid the ultimate price and fallen by the wayside. She told the story of Reed Hastings, who had the idea of founding Netflix when he was forced by Blockbuster to pay $40 in overdue fines after returning a DVD of Apollo 13 well past its due date. Netflix now provides on demand internet streaming services to subscribers in over 40 countries and has revenues of over $4bn while Blockbuster is no more.

Her last insight was that when right is on your side keep fighting. Camelot battles to ensure that all lotteries deliver as much as possible for their beneficiaries, not the people running them. Camelot operates the most cost-efficient lottery in Europe with only around 4% of total revenue spent on operating costs. Combined with the Lottery Duty it pays to the Government, it returns one of the highest amounts in the world back to society. This overarching commitment to good causes, rather than profit, is something she believes all lotteries, irrespective of size, should share.

And has it built valuable brands? Well, four of its products are in the top ten FMCG products in the UK by revenue. To date National Lottery players have raised over £32 billion for Good Cause projects, with more than 450,000 individual awards made across the UK – an average of 144 lottery grants for every post code district. Over its 20 years it has paid out over £53 billion in prizes to players and created more than 3,700 millionaires. And some of them have created even more millionaires as they have shared their winnings. I don’t know what the values of these brands are if they were valued on the balance sheet, but their value to society at large is huge.

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