A number of badly timed acquisitions left package holiday company Thomas Cook with an unsustainable debt burden that finally caught up with it, but even without that it was struggling to maintain relevance in a changed marketplace.
The world’s oldest travel company has been here before: back in 2011 it avoided collapse when it arranged a deal with lenders that it couldn’t manage this time as they balked at servicing £1.7bn of debt.
Now in compulsory liquidation, thousands of holidaymakers are in limbo, suppliers and holidaymakers are feeling the effects but online competitors and high-street rivals stand to benefit.
“Thomas Cook is one of the best-loved brands in travel,” said chief executive Peter Fankhauser shortly before it became evident that there would no refinancing package, but it is arguably a failure to market the brand effectively that has also helped bring about its demise.
Compare the approach of rival TUI, the rebranded Thomson and Falcon holiday travel brands, which carried out internal campaigns to prepare staff for the change to the new name while externally using customer experience – everything from the planes to the hotels to the points in between – to differentiate, personalise and make things easy – like holiday concepts that meet certain needs, with hotels designed around, for example, family, clubbers, couples or luxury.
That led to better NPS scores, better retention and better profit as these experiences proved effective at driving better customer engagement.
According to Kantar (more below), Thomas Cook may have been well known but it lacked differentiation and lagged behind industry trends; ultimately, “it lacked relevance in a competitive marketplace”.
Jane Bloomfield, Chief Growth Officer at Kantar UK, offers some marketing advice in the wake of Thomas Cook’s collapse.
Thomas Cook is an iconic brand, with a long heritage and a great deal of ‘fame’, which it has used to great effect in its advertising over the years. Its name became synonymous with the idea of quality, yet affordable, travel – everyone remembers ‘don’t just book it, Thomas Cook it’. Its decline is a great loss to the travel industry, and to the UK as a whole.
But no brand – however long-lived and well-known – can survive and succeed on its fame alone. Data from Kantar’s BrandZ research shows that Thomas Cook was a well-known name, but had no real competitive edge – consumers saw little difference between the brand and its competitors, and did not feel it had set any trends. The brand therefore lacked relevance in a competitive marketplace.
For other big name UK brands, today’s news will serve as a wake-up call: even the biggest of brands can topple. As a collective, the UK’s most well-known and valuable brands have ‘stalled’ in the last few years, under-performing in comparison with both the global economy and the most valuable brands in the world. Clearly at present there are some powerful factors at play – austerity, political uncertainty, reduced marketing budgets and more price-driven consumers – but there are lessons they can learn from Thomas Cook’s decline.
Consumers’ needs and expectations have evolved in the last few years: they’ve become more price sensitive, while expecting more, particularly from the customer experience.
Brands that don’t adapt will lose relevance, and eventually get left behind. Monitoring changing needs is more important than ever. Brands must ensure behavioural and attitudinal insights about their customers reach decision makers within the organisation quickly. They must then be flexible, and take action fast.
Today, delivering a great brand experience with relevant innovation is critical – balancing online and offline to deliver consistency is increasingly important, while emphasising and continually re-iterating a true point of difference.
The current climate in the UK is challenging – but brand building is still entirely possible. Brands must:
- Innovate – and build perceptions to retain relevance in a changing environment.
- Maintain consumer dialogue to land these innovations and achieve a pay-off.
- Remember that, ultimately, difference is the critical factor to securing an advantageous emotional connection with consumers – and that’s possible in any sector with the right strategy