One thing you learn very quickly is that if you have a decision makers spouse, or children, engaged in any purchase decision, they carry a disproportionately huge degree of influence. At Digital in 1984, Mike Tait (who previously ran Commodores PC operation in the UK) bought on John Mitchell to run Dealer Sales Incentives; besides a misspent youth serving beer in a Munich Hofbrauhaus, he’d run Sales Incentives for Olympia Typewriters. I think he’d largely given up on their attempt in the PC market (Olympia’s machine was called “the People”), and his last exercise at the previous company was offering a special green model to Irish dealers, which he told them (with a straight face) was to be called “the Little People”.
He concocted a “points make prizes” campaign, which we were to announce in a nationwide 5 minute slot on TV-AM, to be aired at 7:25am precisely. While we had many of the 120 PC Dealers bought their staff in early especially to watch that broadcast, TV-AM duly screened it 20 minutes early – and refused, despite my managements very fast and vocal protests, to repeat it at the agreed time. Having pee’d off the whole channel, John nevertheless ensured that the “PC sales make points make prizes” campaign gift catalogue got sent to every participants home address. We had plentiful (positive – for us) feedback that suggested salesfolks were getting impaled on questions on how many Digital PCs had been sold on their return home, be it from their spouses and (where present) kids.
Fast forward to my time at Demon, where I got several opportunities to follow my boss, Sales & Marketing Director David Furniss, into unfamiliar but mind changing meetings. One to meet some management in an office opposite Harrods to agree outline terms for Demon to be shirt sponsor for Fulham Football Club, which we then did for three years. Another was to meet a team of people in an office above shops at the intersection of Regents Street and Oxford Street, London, to fund a campaign to promote Demon Internet in secondary schools up and down the country.
The company we met were experts at taking a brand product family and building course curriculum material for school teachers to reuse in class. So, a Sun Cream supplier could sponsor a class on Skin Cancer, and folks would know how to protect themselves in summer months. An electric razor company could sponsor packaging design in Art (and found that 14-15 year olds were very loyal to their brand when they bought their first razors – normally as presents for whoever they were dating!). A Computer Supplier could do some ICT work and sponsor “Computers for Schools” (which is what they did for Asda – ahead of Tesco doing a similar effort). David told me that one of his friends had done such a campaign for Microsoft, and he had done one while he worked at Compaq – and the brand recognition of both had major jumps in familiarity as a result.
We did one for Demon (project led from start to end by one of my staff – Wendy Sidaway), focussing on ICT teachers and giving a professionally produced course curriculum around “The Internet”. Besides the Demon branding on all the posters, course materials, teaching guides and homework sheets, we paid for a competition open to all students – and to their schools. Students would build an idea for a web site and say what they’d promote. Prize has one of the new candy-coloured Apple iMacs plus software and printer for the three top entries, and 5 iMacs for the school of the eventual winner. The take-up of the (free to the schools) materials and participation in the competition was unbelievably high – well over 80% of all the secondary schools in the country took it up. Brand recognition for Demon went off the dial, and our new per-customer acquisition costs kept to around 16% of that of our benchmark competitors. Total cost (in 1998) was circa £50,000 for the work and around £10,000 in prizes.
Fast forward to 2014, and I hear various proposals from the Government to fund the provision of Independent Financial Advisors to ensure people are getting good deals out of the Pension Industry, variously for selection of pensions and for Annuity providers. In reality, the education needed to pick a pension fund to invest throughout your working career(s) should be a simple three box flowchart. It’s even explained in one paragraph in Scott Adams “The Dilbert Principle”. Paraphrased:
- Management charges for an “active” or “managed” fund do not give better rewards than a monkey picking your stocks despite their disproportionately large charges. If the choices include either of these terms, move on and disregard the allure of thinking the high charges will buy you any advantage; the opposite is true.
- History (and this includes all the stock market crashes along the way) says that the consistently best performance is to bet on all the horses, aka putting your funds in an Stock/Equities index tracker. The charges should not exceed 0.5% of your fund value. Highest returns normally come where the funds are accumulating (ie: any dividends paid are used to buy more units of the index tracker shares automatically).
- Once you get within 10 years of retirement, you may normally expect to step the mix of the fund you’ve built up from being 100% equities to be a mix of equities plus a more predictable (but much poorer returns) proportion of government debt (aka Bonds).
- Steps 1-3 will give you the biggest snowballed returns with which you can live, or at your option, to buy an annuity after your retirement. If you do choose to buy an annuity (a company will take your fund and agree to pay you a specific weekly/monthly pension for the remainder of your life – but swallow any money left at that point), it’s good business sense to shop around. Don’t just accept the first offer you get. And if your fund is healthy, you may have enough to live off without having to buy an annuity – and your dependents can get the funds left over, less capital gains tax, after you pass away.
So, with that, if the government ensures consistency in the way charges are published, annuities can be compared simply, and draw down options are presented, then the job is done, with no IFAs needing to be retained in order to explain how to navigate around companies giving poorer value.
However, what about children? That’s where “The Richest Man in Babylon” comes in. Originally prepared in the 1920’s as Insurance Industry Pamphlets to explain good financial practice, it got consolidated into a book. If a child makes it through to the end, they’ll learn all the core financial skills: budgeting, saving, avoiding scams, picking domain experts, structure of business models, the futility of games (read: lotteries) and above all, the art of snowballing. That of your money parenting interest, and the accumulating interest’s children, grandchildren, etc building up your personal wealth.
That said, it should be a simple job to spend around £100,000 to encode that into a modern version suitable for inclusion in every school curriculum. That would be a gift to all the children in the country unparalleled by any government in our history.