BREAKDOWN recovery firm Green Flag is undergoing a multi-million pound investment programme which is seeing its Leeds headquarters refurbished and a new marketing campaign launched.
The business, which has been based in Pudsey for more than 40 years and employs more than 500 people in the region, is to consolidate its operations into the revamped building.
Green Flag is the UK’s third largest roadside recovery organisation, with the AA and RAC dominating the rest of the market.
Mike Bowman, a director of Green Flag, told the Yorkshire Post: “We’ve been in Pudsey for many, many years, but there are two buildings on the site as a whole and what we’re doing is consolidating everyone into one of those buildings.
“It allows us to put all the Green Flag people in Leeds into one building.”
Mr Bowman said “significant expenditure” has been required to refurbish the building, adding: “It is part and parcel of the ambitions that Green Flag has as a business.
“We want to grow the business and one aspect of that is consolidating, I’d say people work better together as they are physically together, so clearly that’s an advantage of moving people into one building.” He added that the firm had been under-utilising the space previously.
The investment in the refurbishment is “close to seven figures”, said Mr Bowman, and the building is set to be handed over by the contractors in mid-March.
Green Flag also recently pushed out a multi-million pound new advertising campaign, launched with television adverts, to “challenge the position of the AA and RAC in the marketplace for breakdown assistance”.
According to a report by market research firm Mintel, Green Flag had 16.6 per cent of the UK’s vehicle recovery market share in 2012, with the AA holding 51.7 per cent and RAC with 24.1 per cent.
Mintel says that Green Flag has seen a fall in membership to 4.8 million in 2012 from 5 million in 2006.
The UK vehicle recovery market as a whole is thought to be worth around £1,485m.
Meanwhile, Green Flag has also consolidated its service provider network so that it now has five covering most of England and Wales. The service providers have invested in new Green Flag branding on behalf of the business, added Mr Bowman. “It’s a new business model but at the same time we think it throws out massive advantages for the customer. There’s much greater control both for ourselves as well as the top five over the service we are able to deliver.”
Around a decade ago, there would have been around 300 service providers.
Green Flag was founded as National Breakdown in 1971 in Bradford, before moving to its Pudsey headquarters, which were opened by Princess Diana in 1989.
It changed its name to Green Flag in 1994 and was sold to insurer Direct Line, also headquartered in Leeds, in 1999. Direct Line was floated on the stock exchange last year, a move forced upon its parent Royal Bank of Scotland as a condition of taking state aid.
Demand was helped by the strength of Direct Line’s brands, which also include Churchill, Privilege and the Green Flag.
RBS has to sell all of Direct Line as a condition of a government bailout during the 2008 financial crisis that left it 82 per cent state-owned. It will sell more shares this year and in 2014.
Mr Bowman said: “Green Flag has been a very profitable part of Direct Line Group over the last few years.
“The direct business, so if you come to us direct, has been growing in double figures this year and last year.” But he said that the indirect side, so whereby sales are made via partnerships and other parts of the group, has “been in slight decline” due to “a couple of big partners moving away from Green Flag”.
Mr Bowman declined to give figures in relation to Green Flag’s performance due to its parent Direct Line now being a quoted business.
Miranda Schunke, a spokeswoman for Green Flag, said the brand “forms an important part of the group as a whole and it has a promising future ahead with the plans in place”.
She added: “We are also very happy to have our headquarters in Yorkshire and we’re here to stay, particularly moving into our brand new office building next month.”
On Green Flag’s new advertising campaign, Mr Bowman said: “We’re trying to get to the heart of what breakdown is all about as a customer.
“Fundamentally, no-one intends when they set off in the car to break down.
“So it can in some cases create a family emergency and that’s the positioning we are taking, that we understand it’s an emergency for you and therefore we’ll get to you quickly.”
As part of the marketing campaign, Green Flag is now pledging to guarantee to be with customers within an hour of their breakdown call and if not they will receive 50 per cent off the next year’s renewal.
Mr Bowman joined Green Flag in March last year from MORE TH<N Business, the brand’s commercial arm, which he launched and led across operations, pricing, underwriting and marketing.
Previously, he was marketing director at Towry Law Group for eight years, specialising in life, pensions and investments.
Direct Line premiums fall
IN its first results as a listed company, Green Flag owner Direct Line Group saw its gross written premiums dip 5 per cent to £1bn in the three months to September 30 after the number of in-force motor policies fell to 4,094 from 4,135.
Rival Admiral said its group turnover, or written premiums, fell by 2 per cent to £570m in the quarter to September 30, as premium rates fell and UK car insurance turnover dropped 5 per cent to £502m.
The figures added to recent evidence from the AA that car insurance premiums are coming down, with Admiral blaming the downturn on cyclical trends as it slows its rate of growth.
But, after a miserable summer of storms and floods, Direct Line Group saw £100m worth of home claims related to adverse weather in the first nine months of the year, which is more than twice the £50m expected.
Direct Line, carrying out a £100m cost-cutting exercise including job losses, reported a slight dip in operating profits for the quarter to £123.7m, from £128.3m a year earlier. The number of in-force policies were up to 20,066 from 20,033. Within motor, Direct Line said it did see lower-than-expected claim costs for small claims on bodily injuries.