In the red corner, Virgin Money. In the blue corner, the money saving expert

With the announcement of Virgin taking over the Northern Rock retail banking business I, along with many others, have been fizzy with anticipation about what that could mean to the face of banking. Especially as the existing business had landed but arguably not quite yet arrived (although their customer base and product range looks very healthy thank you very much).

So when I saw the ‘promise’ signage up at an old Northern Rock branch in Moorgate last week and heard about the two concept branches in Norwich and Edinburgh, I thought, as a fan of finding better outcomes, I should take a look.

We hear requests for better and different banking, especially in the retail environment. And others have tried before, with coffee seeming to be the common currency. This has taken the form of bolt on stores such as Costa at Abbey, or a pot of filter coffee as I seem to recall in some Alliance & Leicester branches. So I am expecting the coffee, but what else?

I asked Ajai, my fellow Director at Lexden (and former NatWest marketer) what he’d like to see. He simply said, whatever it takes to make the branch a place where he feels comfortable, wants to stay and is conducive to having a dialogue (about money should they want to).

So I drove up to Norwich on Saturday to take a look for myself (always good to walk the walk). I was greeted at the door and shown in, which made me instantly felt comfortable. It reminded me of in Italy in it’s clean modern design. And as I let my eyes explore the rooms in the branch, I spotted cakes, pianos, Playstations, portraits of Sir Richard Branson, snaps of Virgin Balloons and Virgin Coke art, trays of chocolate money, toilets, lounge chairs and dinner tables, more cake, newspapers, iPads, flowers, coat stands and more. Brilliant. The brief must have been, “Create an environment where customers want to come, and want to stay”. And then I spotted something I hadn’t seen for a while in a branch: lots of young families.

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I felt very comfortable in the environment and must have been there for ten minutes before it dawned , without seeing any sales literature or posters for products. Now this is a very unordinary approach to retail banking. And one that, I have to say, sat very comfortably with me given that it was my Saturday and I wasn’t looking for a product. It made me think: why can’t my banking be more enjoyable? And like when First Direct arrived I saw a smarter relationship, I am now thinking perhaps Virgin will provide an experience in a way I haven’t seen from other banks.

Retail networks are expensive to maintain, and sales targets need to be hit to do this. But, without a sale in sight and given the set up of this approach I am thinking the investment is more likely to be amortised across the lifetime value of a customer, rather than being recovered from incremental acquisition sales in 2012. And that different focus of customer value rather than product, enables the business to think more about the importance of experience and engagement than it does about acquisition. I may not be in the market for a new policy for some time but, when I am, Virgin Money has probably crept up my consideration list-especially if supported with products which provide sustainable rates rather than chasing best buy top spots for a week or two in the year. This would be consistent with the customer experience I enjoyed, so let’s hope that’s the direction.

Is it for everyone? Of course not-it’s not designed for everyone. In fact, there are certain customers hell bent on a cheap product from a bank that should stay away. If banking is to move in the direction of improved customer experience then this requires investment, time and customer commitment. These are currency the likes of Martin Lewis would dismiss as unimportant in a commoditised world of BUY CHEAP. It wouldn’t be his cup of tea or slice of rate tart at all.

And that presents the dilemma. Whilst some banking brands are looking to push banking into new directions, there are opposing market influences advising customers to steer clear of anything that isn’t the cheapest thing on the market.

The two just aren’t compatible.

It’s only when you re-frame what customers should be looking for to include an enjoyable customer experience, does it change the field of play. I wouldn’t choose a holiday regardless of location, accomodation or amenities because it was cheap and then suffer the inferior experience, content in the rational knowledge I have saved money! That has got to be counter productive for what’s good for me emotionally. When you bring experience into the equation for banking, you stop obsessing about getting the cheapest deal and start considering how important the engagement is to you in your more significant emotional drivers.

And when you think like that, Virgin Money becomes a very viable option for everyday folk looking for something fulfilling from their banking experience.

The brand is certainly creating a strong positioning quickly. And I loved the launch film held around the corner from us at Senate House . I’m looking forward to seeing how service, innovation and products follow this approach (expectations now set very high).

And maybe Virgin will help consumers appreciate it’s okay to enjoy your banking. As their campaign lines states, they intend making it better – and their flavour of better will be quality.

That’s a very different proposition to the comparison sites and money saving experts model of better-buy cheap. Consumers only interested in buying cheap do not need cake (or the warm and enjoyable experience) from Virgin Money. They can afford to buy their own cake with the difference they saved by buying cheap instead.

Is this a better model? It’s certainly unordinary. So let’s watch with interest and see how the new Virgin Money model unfolds.

Posted by Christopher Brooks

Lexden is a marketing strategy agency which creates unordinary propositions to motivate customers and deliver commercial advantage for brands.

For more information on how we can help you, contact or, or call us on T: +44 (0)20 7490 9123. And you can follow us on Twitter @consultingchris.

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