Need a new strategy? Identify the one thing you shouldn’t do

It is rare for brave ideas to make it to market. Rejection of them is a common experience for many people trying to do new things in established firms. Many businesses talk about embracing failure — right up until the moment they are faced with the prospect, at which point they become good at embracing blame. The tangible pain of lost time and money often beats the intangible promise of future success.

But what might happen if you do decide to embrace a brave strategy — one that flies in the face of all received wisdom?

Habito is an online mortgage provider that started just over 4 years ago — and over that short time has raised nearly $40 million in growth funding, as well as becoming increasingly well-known in the UK marketplace. Mortgages are a notoriously difficult market to penetrate: regulation is tight, major banks invest heavily in marketing, consumers are nervous about new providers, and acquisition costs are high.

For Dan Hegarty, Habito’s CEO, breakthrough business performance was dependent on finding a cost-effective method of driving awareness and consideration. This started with advertising. 

“We realised we were going to have to do something far more effective than being the best at Google AdWords. And financial services is all about trust, so everybody tries to do trust-inducing advertising. Blue and white colourways, families around kitchen tables, and whatever else,” he says. “My fear — and I guess a fear that other founders face — is that we needed to be taken seriously. We’re asking people to trust us with their mortgages.”

Despite these fears, Hegarty decided to take a radically different tack to the rest of the market. “I brought a new CMO in, and my brief to her was, ‘I want you to make me feel deeply uncomfortable about our advertising and our advertising strategy.’” As he acknowledges, this was easy in principle but far more challenging in practice. “They came back with the bones of a new campaign and I remember thinking, ‘This is just ridiculous showing off, and we’re going to win a bunch of awards but sell no mortgages if we run it.’ I pushed back on them quite hard,” he says.

The new campaign, entitled Hell or Habito, depicted the often-brutalising experience of trying to obtain a mortgage in hyper-real, comic style. “I didn’t expect that our advertising would involve us disembowelling people on the TV,” says Hegarty.

The process of getting comfortable with such a radical strategy required interrogating their own motives at source. “The thing that actually got me over the line was the recognition that the execution didn’t really matter because at the core of the strategy was an empathetic acknowledgement of the customer,” he says. “Getting a mortgage does feel like you’re getting robbed or killed or whatever else. Once I got comfortable with that, I didn’t feel like we were just showing off and making cool ads. I got behind it in its entirety.”

The impact on brand recognition and cost per acquisition were remarkable: spontaneous brand awareness has doubled, customer volumes are up by a factor of 3.5, and acquisition costs have reduced by 75%.

For Hegarty, being willing to take a leap into the unknown was possible because of his level of trust in those around him — a process that, he believes, starts and ends with hiring. “It’s not just a question of hiring people who are cleverer than you, although that helps, and it’s not just hiring people who have more experience than you, although that definitely helps,” he says. “It’s hiring people who you can imagine experiencing real admiration for on a daily basis.”

Then, when big decisions are called for, the foundation of trust is already there. “When I saw the campaign, I said: ‘This thing is going to be a disaster, are you sure? Are you sure? Are you sure?’ And our people, with zero hesitation, were like, ‘This is the right thing. We should do this,’ so we did it. Leadership is trust. I was fortunate to have people for whom I was willing to step aside.”

Habito CEO Dan Hegarty’s three tips for leaders:

1. Don’t let your personal insecurities exert influence on your decision-making
2. Only hire people that you are tremendously excited to have as part of your extended family for the rest of your life
3. Get comfortable with the fact that the journey of growth will involve getting, and staying, uncomfortable.

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