Brand-Building is a 'Marathon, Not a Sprint'
Building a brand takes more than money – just ask Alex Chesterman, the founder of ill-fated online used car retailer Cazoo, which collapsed into administration last month.
The outspoken entrepreneur, who previously founded property website Zoopla and co-founded online film distributor LoveFilm, has distanced himself from his latest failed enterprise and it’s not hard to see why.
Despite boasting it would transform the used car market and spending a rumoured £100 million per year on marketing including sponsoring the likes of Everton and Aston Villa, it has not posted a profit since its launch in 2019.
How did Chesterman, an experienced and successful businessman who the Sunday Times Rich List 2021 estimated to be worth £750 million, get it so wrong?
A (not so) unique proposition
To make an impact so quickly in such a crowded and well-established market requires a unique proposition. Cazoo’s claims of being a disruptor didn’t quite live up to the hype.
While it worked well at the start, this was largely down to its Covid-friendly model which allowed consumers to buy vehicles online and then have them delivered to their home within days.
Competitors soon caught up and, as the restrictions imposed during the pandemic were lifted, the reality dawned. Cars, like houses, are a significant purchase for most people and many still want to physically try before they buy – something Chesterman appears to have overlooked, but that those who had been around the block a few times in the automative industry already knew.
Cazoo did subsequently start to buy up physical locations around the country, but by then the rot had set in.
Too much, too soon
Building a recognised, reputable brand isn’t something that can be done overnight - even if money is no object. Spending is the easy part. I regularly receive “offers” such as advertising on the back of 125 lorries for two weeks for the bargain price of £25,000, or on 50 London taxis for a month for £50,000.
Brand awareness, particularly when you are new and your offering is not unique, is typically grown over time and depends on various factors such as quality and customer service. What’s critical, however, is to monitor your marketing activity to measure what’s working and what isn’t.
It is clear that this didn’t happen in the case of Cazoo which, as well as throwing money at marketing, also expanded quickly, launching in France, Spain, Portugal and Germany as well as the UK.
Making a negligible profit is not unusual for a new business, but few would or could have afforded to plunge quite so much money in with no ROI. In fact, a BBC article in May of this year reported Cazoo had actually posted huge losses of £544 million in 2021, £704 million in 2022 and restructuring debts of $630 million in December last year.
Striking the right balance
The best piece of advice I would give to anyone launching a new brand from scratch is to first pinpoint exactly who their audience is and where they are likely to find them.
When it comes to choosing channels, you don’t want to put all your eggs in one basket. Paid search, for example, has become increasingly popular in recent years, but search is only valuable if people know about you or your services in order to search for you in the first place.
Social media marketing has proven to be an increasingly valuable route to market, offering both ‘brandability’ and performance.
Businesses with a modest marketing spend or those just starting out may also consider more grassroots sponsorship opportunities such as community events or local sports teams of interest to their target market. For example, scorecards at our crown green bowling club are sponsored by a funeral director and you will often see sponsorship from care homes and law firms advertising will writing service, which tells you what the typical demographic of such a club looks like!
It’s a balancing act between spending enough to get seen, but not so much that it leaves you in the red, and on the right combination of marketing channels to achieve the desired results. With these channels evolving and emerging all the time, it’s also something you should keep under regular review if you want to continue to see a return on your investment.
