Swinton vs A-Plan – Making the most of the high street

Another year, another wave of branch closures and job cuts at Swinton.

Swinton is to cut another 40 branches and put 268 jobs at risk. The once great high street broking giant is now down to just 59 branches, betting big that online is its future.

Meanwhile, rival A-Plan, is backing the high street.

With booming profits and revenue, it has 72 branches and is plotting another 85.

So why, in recent years, has Swinton struggled so badly with the high street and its competitor A-Plan succeeded? And can Swinton succeed in its online mission?

One big difference between the two brokers is that Swinton’s current management, led by Gilles Normand since 2014, inherited a company that was over-stretched for the internet age.

Five years ago, Swinton had 446 branches. The firm has been back-pedaling for years, slashing branches and jobs, with revenues and profits sliding dramatically.

A-Plan, comparatively, has been growing slowly, but surely.

“A-plan has followed largely an organic strategy, which has been pursued for the last 30 years,” explains IMAS partner Olly Laughton-Scott.

“In a sense, you don’t have to be available for every customer. You just have to be in a strong position for the customers that want to use you.”

For those people who want face-to-face interaction, A-Plan is “well placed” to offer it, says Laughton-Scott.

Historically, a majority of A-Plan’s branches have been located within an hour’s drive of its Oxford headquarters.

Conversely, even when profits slid 25% in 2010, then-chief executive Peter Halpin continued on the acquisition trail. When his successor Christophe Bardett took on the role in 2011, he was forced to wrestle with branch numbers that had spiralled out of control.

Bardett undertook a strategic review in 2012, leading him to pledge to cut 25 of more than 500 branches. More cuts have followed, and Swinton’s branch network is just over a tenth what it was at its peak.

Brokerbility chairman Ashwin Mistry says A-Plan has strong management and customer service.

The trick is to treat the customers very well upon first interaction and then they stay for years.

Taken for granted

On A-Plan chief executive Carl Shuker, Mistry says: “Carl has absolutely nailed the relationship with the customer, even though there is a massive onslaught of direct writers. The relationship, whether it is by phone, online, or smoke signals is managed so well. I have to take my hat off. He has invested into the customer journey.

“Swinton is actually is the opposite, in that they have had these customers, and taken them for granted slightly.”

Swinton’s customer offences include a fine from the FSA in 2009 for PPI mis-selling that was so widespread, 350,000 customers needed refunding.

In 2013, the newly-formed FCA fined Swinton £7.38m for mis-selling monthly add-on insurance policies.

In between those years, parent Covéa sacked the Swinton management in a row over performance-related pay and claims they had harmed the company by focusing on short-term interests. Those rocky years coincided with three different management teams.

Against this backdrop, competitors like Hastings have emerged, nailing data to weed out poor customers and offer competitive prices to the best risks.

But Swinton’s management understand data and digital is now king, knowing that just 10% of their revenue now comes from footfall through branches.

They aim to be the largest digital broker within two years. They have committed £45m to invest in new technology at the firm’s Manchester head office.

Swinton has installed software from personal lines specialist CDL and invested in machine learning to improve customer interaction and understanding.

Meanwhile, it’s launching new products, such as its Munich Re-underwritten SME cyber policy.

It’s a tough market, but one that is possible to crack for digital brokers, says Consumer Intelligence founder Ian Hughes.

“Brokers have to work even harder to remain relevant, and must focus on becoming businesses – and brands – with whom customers want to do business. It’s not just a product question. It’s a marketing one, too.”

These haven’t been easy years for Swinton, but with a more manageable 59 branches and a promising digital proposition, the downsizing might be over at last and real growth begin.