When Prudential launched Egg in 1998, it felt like a ground-breaking finance brand. Based on the new medium of the internet, its communications were fresh and loaded with attitude. Since then, many other banks have recognised the operational and customer benefits of online banking, providing ever-more flexible products for borrowing, and marketing them under their own funky brands.
Earlier this year the effects became clear as Egg attempted to float.
Cracks in its reputation appeared as majority stakeholder Prudential failed to receive an attractive bid and withdrew the company from sale. And fruitless attempts by Egg to win over the French market, in which it had invested a significant amount of money, did little to help.
Back home, Egg's total number of credit card customers in 2003 exceeded 2.5m. However, this year's first-half results revealed that net new customers had fallen to 292,000, compared with 340,000 in the first half of 2003.
Its rivals have been making significant inroads. Newcomer Mint, from Royal Bank of Scotland, already has a 3% share of the UK credit card market, outstripping Egg's 2.8% share, according to Mintel. And that bastion of traditional banking, Barclays, has overhauled its credit card, expanding its range of borrowing options. So where does this leave Egg?
Its most recent ad campaign, created by Mother, urged consumers to seize control of their finances. But is this enough to give it the standout it once had? Some viewed the failed bids for Egg as a blessing. They pointed out that the favourite to purchase the brand was US credit card giant MBNA, notorious for its blitz mailings based on price - an approach at odds with Egg's position as a consumer champion.
We consulted RAC commercial director David Lewis, who was formerly customer segmentation director at Lloyds TSB, and Natalie Cummins, group account director at Starcom Motive, who has worked for M&S Money and HBOS.
DIAGNOSIS 1 - DAVID LEWIS COMMERCIAL DIRECTOR, RAC
My girlfriend, who admits to being a snob, is too embarrassed to use her Egg card in public. Instead, she pays her expensive restaurant bills with a platinum card, then transfers the balance to Egg in the privacy of her own home.
On the principle that a focused brand positioning is as much about adverse reaction as positive, Egg has been pretty successful since its launch.
Driven by competitive and innovative offers and the early adoption of the internet, Egg now boasts more than 3.2m customers.
More recently, however, there have been signs of drift. This has perhaps been caused by a loss of focus on the UK business due to the debacle in France and the on/off sale by Prudential.
Six years since its launch and the market has moved on. Even high-street bank chairmen now speak 'internet' and the credit card and savings markets have become far more competitive.
Egg is beginning to look like a follower, rather than a leader, and is in danger of losing its footloose, financially savvy customer base. Inconsistent advertising has done little to help.
REMEDY
- Make simple, innovative, competitive offers to the financially literate across a broader range of financial products than it currently offers.
- Develop a consistent brand message to appeal to the financially aware, rather than simply youth.
- Deliver communications that elevate the short-term advantages of products to statements about its core values. This will enable Egg to become a powerful consumer brand.
DIAGNOSIS 2 - NATALIE CUMMINS GROUP ACCOUNT DIRECTOR, STARCOM MOTIVE
Egg revolutionised finance in 1998 with its double-edged mantra 'individual money matters'. Fast-forward six years, and it's clear the individual still matters. Its representatives come across as frank and understanding, and even ask permission to use customers' first names.
The brand has stuck to its pledge to revolutionise consumers' experience of financial services, remaining at the forefront of internet banking since bringing us the first online credit card in 1999 and pioneering 0% on balance transfers.
Unfortunately, great product innovations tend to be adopted by competitors: in this case by a plethora of similarly positioned online banking brands.
Despite Egg's leadership in the market, consumers could be forgiven for thinking that they're all the same.
Egg clearly needs to innovate fast if it is to mirror the success of its credit card in other product areas. But product and service innovations do not yield sustainable advantage. What is different about Egg is the experience of banking with it; it is straightforward and customers are treated like individuals.
REMEDY
- Focus communications on core strengths, such as high levels of customer service.
- Concentrate on product innovation, while ensuring that cross-selling remains focused on what products would best suit the individual.
- Use advertising to communicate the breadth of its products and services and highlight ways in which it can tailor mortgages, savings and insurance to individuals' needs.