Today's story is a classic case study for tax season about how serendipity, advertising, marketing and innovation helped build H&R Block into an iconic brand and how the lessons are applicable to us today.
First a little interesting history.
1946: Two brothers in their 20's, Henry and Richard Bloch, opened a small business bookkeeping company called United Business Company with a $5,000 loan. They focused on bookkeeping and offered tax preparation services as a value-added courtesy to their customers and friends in the building. They struggled for 8 years and were about to give up when...
1955: At the beginning of that year the brothers decided to discontinue their tax preparation services which they felt were distracting and provided little revenue to the company.
Serendipitously, two things happened:
- The IRS which had been offering free tax preparation services to the public had decided to discontinue that service.
- One of their individual clients, a man named John White, worked in advertising sales at the Kansas City Star. John encouraged the brothers to run a couple of ads in the newspaper promoting their tax preparation services and after much discussion the brothers ran their first ad in late January, 1955.
After the first ad ran Henry, who was out visiting a customer, received an urgent call from his brother who exclaimed, "Hank, get back here as quick as you can we've got an office full of people!"
The ad had appeared at just the right time. People were receiving their W-2 forms and the IRS had informed the public that they would be discontinuing free tax preparation services.
The tax preparation side of their business took off and took over.
They sold their accounting business to their employees and set up their new tax preparation service. Since their family name Bloch, was difficult for people to pronounce and spell they went with the simpler, phonetic, Block and named their new company, H&R Block.
Within weeks they had grossed $20,000., more than a third of the annual volume that their original company had taken years to develop.
What had they discovered?
- That there would be a scarcity of tax preparers.
- That people were uncomfortable doing their own tax returns.
1956: With that encouragement, the brothers decided to open an office in NYC; the next city chosen by the IRS for discontinuation of tax preparation services. They opened seven offices that year, all near IRS offices and tripled their revenue to $65,000.
FRANCHISING: The brothers shared the responsibility of managing the NY offices but neither of them wanted to relocate with their family, so the decision was made to sell the operations there. Two CPA's wanted to buy the NY business but could not meet the asking price. Instead they offered to pay $10,000., along with royalties and the H&R Block franchise network was born!
1962-67: The company went public in 1962 and by 1967 had nearly 1,700 offices in 1,000 cities in 44 states.
The price of preparing a return had remained $5. for 12 years!
1970's: The company now had 8,600 tax offices nationwide providing professional services for the mass market and began building a national brand. They began by using what we would call spokesperson or influencer marketing today.
Influencer and Founder Marketing:
In 1971 the company employed an influencer, trusted American news commentator John Cameron Swayze, to be in their television commercials.
In 1972 Henry Bloch began appearing in television commercials that established H&R Block as a brand you could trust. His midwestern demeanor projected confidence and Henry Bloch appeared in the company's commercials for years.
1978: The company began selling the idea that their expertise could save you money with the line, "What they know could save you dough."
That same year they had to come to terms with the fact that their rapid expansion required an army of trained tax professionals. To address this the company set up its own H&R Block income tax schools which exist today.
In the 80's H&R Block began using computers to complete tax returns. In 1980 the company acquired CompuServe, a move that helped H&R Block grow and keep its 8,676 offices connected.
1986: Working with the IRS and Sears, the company took a leadership role in electronic filing. The test was a success. Electronic filing decreased filing errors and the consumer received their refund more quickly.
1980's TV ads:
People will always have fears that they are paying too much or too little income tax but by 1985 they were selling the idea of bigger tax refunds if you used H&R Block. Henry Bloch is still in the commercials.
Sweeping tax changes drove the "Don't face the new tax laws alone" ads. Relevant to today's circumstances.
1999: That year the company tripled its ad budget from $30M to $100M to finance a new campaign which employed TV, radio, print and outdoor advertising. The campaign won Best of Show and Gold Medal awards but more importantly, helped H&R Block boost its 2000 sales 38% over the previous year!
The "Worried about Bill" campaign from advertising agency Y&R/Chicago debuted on Jan. 12, 2000.
2015: The company once again sold the idea of getting bigger refunds. The television ad for this campaign delivers a very compelling demonstration.
The DIY audience: By the mid-90's the company enabled DIYers a way to file their taxes using their software and by 2004 they added a DIY service with a tax pro review.
2018: Virtual tax prep gives taxpayers tax office support without the office visit. H&R Block Tax Pro Go enables clients to get their taxes prepared and filed by a tax professional based on the information they provide online.
H&R Block and IBM Watson: "H&R Block with Watson turns our 600 million data points and 60 years of tax expertise into a personalized tax preparation experience that is accessible and understandable - an experience you won't get anywhere else." Meg Sutton, director of client experience.
2018: "Get your taxes won." starring Jon Hamm
"The H&R Block mission is simple. We look at your life through tax and we find ways to help."
What are the lessons for us today?
- While you may be starting with a new idea, innovation or brand extension, be open to unexpected opportunities that may present themselves.
- Do your research. Are market conditions creating an unexpected opportunity? Is there an unmet need?
- Be customer centric. Position your offering in a way that matters to your audience.
- Give serious consideration to what you name your brand.
- Build a brand voice that is recognizable.
- Test your idea by advertising or promoting it to gain exposure, validation and feedback.
- Brands choose audiences, but audiences choose brands. Pay attention to who responds to your offering and why.
- Be open to redirection and agile enough to accomplish it.
- Work to hit a nerve with your audience. Deliver benefits that connect emotionally as well as rationally.
- Keep it simple.
- Execute advertising with smart creative approaches that resonate.
- Align media channels to objectives and your audience's lives. People live in the world, use a variety of media channels to reach them efficiently and effectively.
- Monitor what works, adjust and grow with those insights.
- Innovate, advertise, analyze, repeat
- Remain customer centric
And above all persevere!
The Bloch brothers listened to the advice of a newspaper display advertising man back in 1955 to test the market with advertising, the rest is history.
Message delivery systems may evolve and change but advertising works, always has and always will. Smart advertising built from powerful, overarching ideas, creatively executed works even better.
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H&R Block website: https://www.hrblock.com
Reference for Business, H&R Block, Inc.
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