How important has the development of the brand been in your success, and is it intentionally provocative?
Both myself and the CEO, Dan, are huge advocates of brand, particularly for a market like this. After all, we compete with non-brands and banks so we knew that if we wanted to be the aggregator of demand then we would need to build a great brand ourselves.
To do so would not only require a great customer experience, but an ambitious communications strategy that shone a light on everything wrong with the status quo.
Like most founder stories, Dan started Habito as he had a terrible personal experience and believed there had to be a better way. Mortgages are right up there with the things consumers hate most; it’s one of the two biggest payments to leave their account every month and they have nothing good to say about the experience. Worst of all, this pain is largely intended, as companies know that by making the process unbearable people have no incentive to switch and subject themselves to the trauma again.
These companies set out to build apathy and stasis, and have been remarkably successful in doing so. 60% of the market is on the wrong mortgage and £15.5 billion is being overpaid to the banks every year.
So yes, we are being intentionally provocative, but only because it’s what the market needs.
Is there one thing above all else that you think explains your success?
I believe we’ve done a lot of things well but if I had to highlight one trait that most defines and distinguishes the brand, it would be our focus on simplicity.
As explained, buying a mortgage is one of the worst experiences any consumer will have, and much of that is down to the baffling complexity. Traditional providers do not want you to understand the process. We have therefore made it our mission to replace confusion with clarity.
This goal extends to every stage of the user experience. We are ruthless with acronyms and have a team of copywriters that train our experts in avoiding jargon. Our current aim is to ensure that the terms and conditions – the pinnacle of complexity during the traditional mortgage experience – are understandable by an 11 year old child. We have a young boy coming into the office tomorrow to put it to the test. If there is anything he doesn’t understand then we’ll know we’re not yet there.
This is why our live chat facility is so important, as people feel liberated by the screen to ask questions that they may otherwise have kept to themselves. There is a simplicity and immediacy to live chat that encourages people to engage, and the fact that all past chats are recorded is hugely reassuring.
It’s all about stripping away the barriers, friction and frustration. When we get to the stage that someone can get a mortgage on the bus, we’ll know we’ve cracked it.
Most competitors will view you as a tech company, but everything we’ve spoken about is regarding brand and customer experience. Do you consider yourself a tech business?
One of our investors describes us as ‘tech-light’. We’re not trying to solve the world’s thorniest issues, but relative to our market we’re definitely breaking new ground and technology is central to that.
One of our big successes has been in building our development team. Facebook and Google are always going to price you out of the general market so we picked a specific language, Haskell, and set about becoming a beacon for anyone with a particular interest in that. We even host Haskell meet-ups. It’s been a fantastic way of attracting world-class talent in a hugely competitive space.
Has your growth been entirely brand driven, or have you had a more direct acquisition strategy running parallel to this?
It’s a mix of both, but what has made the paid strategy viable is the performance of the brand. Take PPC, for example; you can be paying around £15 per click in this market, so without a recognised brand you haven’t got a hope.
This was what sparked the Hell or Habito campaign which went on to reduce our cost per acquisition by 75%, making every channel far more scalable.
What have been some of your most successful channels?
From an engagement and conversion perspective, it’s all about live chat. If you start a live chat with one of our experts then you’re probably going to become a customer.
From an awareness point of view, we use all the obvious digital platforms but probably have a greater emphasis on traditional media than you might expect. That’s because we know how effective it can be. While I was a Non Exec at Lumen we used our eye tracking software to monitor how people engaged with brands. It showed that only 14% of online ads are actually seen, and only 3% are looked at for more than 1 second. Conversely, about 75% of print ads are seen, but best of all are tube ads where people have an average dwell time of 8 minutes. We were one of the first fintech companies to advertise on the tube and now everyone’s doing it.
To achieve the scale we were after, however, we knew we would need to use TV. Initially our TV ads weren’t particularly successful, but then we launched the Hell or Habito campaign and that all changed.
What inspired the Hell or Habito campaign?
We have always had this idea of presenting the negative to highlight the positive. It follows the Peak End Rule – your brain remembers the very best or very worst of an experience (its peak), and also how you felt at the end, rather than the average of the experience. It’s the reason people go on roller coasters.
Anyone that’s been through the mortgage process will remember their experience based on the worst moments, so we wanted to bring those extremes to life. By presenting the negative of our competitors we could then present the positive of Habito.
All of our ads, no matter how gory, came from a piece of customer insight. Someone might say “Every time I tried to make sense of the terms and conditions, I felt like my head was going to explode”, or “I became so stressed that I thought I might drown in my own sweat”, so we would simply bring those descriptions to life.
We felt such extreme language warranted extreme ads, so we involved the illustrators of Rick & Morty. We always envisioned something like Itchy & Scratchy, and kept asking ourselves – is it funny or scary, because it had to be the former.
As mentioned earlier, the campaign has been such a success that our cost per acquisition has dropped by 75%, which has made every channel, whether digital or traditional, much more scalable. Last night we advertised on Love Island and live chat went crazy.
Are you finding the digital nature of the brand draws in a naturally younger audience?
We’re certainly not “mortgages for millennials”. In fact, our average customer age is 42. It’s a misconception that the older generations aren’t comfortable with technology. The vast majority of people nowadays are happy sending emails, text messages and even using social media, so live chat is perfectly intuitive.
I think the typical marketer’s perspective on age and the different stages of life is becoming outdated. Someone born today will probably live to 100, which means their working life will likely be from 20-80, so if we only design ads to appeal to a younger audience then we’re neglecting a huge part of the market.
It also means we’re going to have to think differently about our products – do we need to introduce longer term or even intergenerational mortgages, for example? It all comes back to focusing on customer needs, rather than selling products that suit the industry. There is so much more that needs to be done to make this market fit for purpose. There are 5 million people in the gig economy, for example, and yet the industry’s insistence on deposits makes it almost impossible for them to get a mortgage. Why couldn’t we remove the deposit and instead allow them to overpay for the first couple of years?
There are so many ways the market as it stands today is broken. Our mission to fix it, no matter how impressive the initial growth of the company, has only just begun.