“Stretching” a brand into new products and services is a well known strategy for generating new revenues. The idea is to exploit customer brand loyalty with new offerings while retaining or even enhancing the original brand values. However it’s not always quite this straightforward, as illustrated with this cautionary Tale from a British Post Office counter …
The Tale
My wife goes to the local post office to send a letter. She wants to make sure this particular letter reaches its destination promptly, so she asked that it be sent Signed For™ First Class (a £1.70 Royal Mail service which “aims to deliver your letter or parcel the next working day” and provides “proof of delivery including a signature from the receiver” amongst other benefits). The nice lady at the counter however tells her that she should instead send it with Royal Mail’s Special Delivery Guaranteed™ service (which guarantees next day delivery, significant insurance cover and online tracking and proof of signature amongst other benefits, but at a much higher price of £6.22). Having asked the counter lady the difference between the two, my frugal wife sensibly decides that since this letter contains a replaceable document, her original choice is sufficient. But the counter lady persists … “what if the letter gets lost? And you do realise that 1st Class only guarantees delivery in 2 or 3 days, not overnight”. At this point, my wife becomes perturbed. She has grown up in Britain believing that 1st Class Mail means delivery next day and 2nd Class Mail means delivery in 2 or 3 days, this being a key tenet of the British Post Office’s brand promise for decades. So she now asks “well if 1st Class is now 2 to 3 days and not tomorrow, what does 2nd Class promise?”, to which she is told “oh, 2nd Class is now 5 to 10 days”. At this point, her faith in the Post Office somewhat shaken, my wife insists she wants her original choice and the counter lady relunctantly agrees.
As my wife collects her receipt, the Post Office counter lady, completely unprompted, asks her “Do you have life insurance?”. My wife is somewhat taken aback, but nevertheless manages to blurt out “yes we’re fine”. But the counter lady continues “Are you sure what you have is right for your needs? Have you looked at your policy lately? You know it only costs £7 a month”. This is too much for my wife, who has a low opinion anyway of cold calling sales people of any persuasion, and so she leaves in a huff, her faith in the Post Office brand completely broken, while the counter lady continues “And what about your travel insurance …”.
Commentary
When I heard her story later that day, I was also perturbed as I too had grown up with the same decades-long understanding of 1st versus 2nd Class Mail in Britain. So I checked Royal Mail’s website which clearly states that for 1st Class, they are “committed to making sure that your letters and parcels reach their destinations the next working day”. And for 2nd Class, it says they “will deliver your letters and parcels in two or three working days”. So I can only surmise that in the Post Office counter lady’s haste to up-sell my wife a much higher priced service, she got somewhat over-enthusiastic and in effect down-graded Royal Mail’s brand promise.
You might also well ask why is the British Post Office even selling insurance? So I did some quick research and discovered that the Post Office and Royal Mail are now completely separated entities as of 1st April 2012. While Royal Mail has found a new growth platform as a delivery channel for internet shopping, the Post Office is under increasing revenue pressure as fewer and fewer individuals send letters and parcels. The Post Office has turned itself into a retail distribution channel for all kinds of consumer products and services – foreign exchange, insurance, broadband, phone, etc.
I can only presume that when developing the revenue generation strategy for the Post Office, their management decided to build on the strength of its brand as a trusted service provider to the British consumer. But in stretching this brand to other products and services, especially if this is not executed thoughtfully “on the ground”, one runs the risk of destroying that very same brand value. The Post Office was never associated with “hard sell” – pushing their new products and services in this manner doesn’t help their brand in the long run, in my opinion. And while Royal Mail is no longer the same as the Post Office, in the minds of many consumers, they are one and the same and the actions of one can have significant impact on the other’s brand.
This article was first published in the Unleash: The Movement blog
Robert Thong 