Sir Keith Mills: Business and the bid

Sir Keith Mills is the brains behind Air Miles, the most famous worldwide loyalty scheme ever, and now he’s going one better with the global success of Nectar. And let’s not forget the small matter of staging the 2012 Olympic Games.

GrowthBusiness meets Sir Keith Mills.

Within two minutes of talking to Sir Keith Mills, you can’t help but be in awe of him. Not only is he a consummate businessman, entrepreneur, inventor and marketeer, he’s also incredibly likeable. Stories of how he invented Air Miles and latterly Nectar points are inspiring, and speaking with a commanding assertiveness, he still manages to come across as an easy-going guy – no mean feat considering the pressure he’s currently under. The eyes of the press and public are looking to him to make a national dream come true.

As chief executive of London 2012, he led the team that orchestrated the winning bid, which was a tough enough challenge for one lifetime. But now, as deputy chairman of the 2012 London Organising Committee for the Olympic Games (known as LOCOG), he and Lord Sebastian Coe have to make the Games a reality and fulfil all those promises. Surely the weight of that responsibility must give him sleepless nights?

‘Managing my diary is the biggest headache!’ he laughs. ‘There’s so much to do and not enough hours in the day to do it, but I’m confident we’ll make it work. I wouldn’t have taken the job on otherwise.’

So, how did he end up in the hot seat? ‘Well, American businesswoman Barbara Cassani was the chairman originally hired to run the 2012 bid. A mutual friend said to me she was tearing her hair out struggling to find a deputy and would I suggest some people she could consider for the role, which is a strange one to try and fill; incredibly high risk, very visible, with no certainty of outcome. There aren’t many people who would take that job on.

‘She and I spoke at length about the challenges and, to cut a long story short, the more I understood the project the more interested I became and eventually she said, “Look, why don’t you do it?”. It was a difficult decision, though. While I was flattered to be asked, I already had a lot of other things keeping me busy and I’d never been to an Olympics before. But it was a great opportunity and she’s a very persuasive lady!’

Team players

Sir Keith has just moved into impressive new Canary Wharf offices, which ironically look out over the Millennium Dome, a timely reminder of how not to run a national project. ‘I think governments need to learn not to micro-manage,’ he muses on that subject. ‘Provided you’ve put in place the right people to take ownership of a project and an infrastructure with joined-up thinking, then leave well alone!’

The new steel and glass ivory tower brings LOCOG and the Olympic Delivery Authority (ODA) under the same skyscraper roof to ease collaboration. LOCOG has responsibility for staging the games with a £2 billion budget, of which 97 per cent is from the private sector, while the ODA is charged with using public money to deliver the permanent venues and infrastructure.

‘Operationally, we need to be as one for the task ahead – it’s a mammoth, multibillion-pound venture and the world is watching. It’s on my mind seven days a week, but luckily I love challenges.’

Let’s not forget that while all this is going on, Sir Keith is also running his own company. Loyalty Management Group (LMG) operates the Nectar programme, the UK’s largest customer reward system, with 50 per cent of all households participating in the scheme.

How he finds the time for all this seems a miracle. ‘When I took on the bid I kept in regular contact with the business and made sure I never missed a board meeting. But Seb and I have hired a new chief executive for LOCOG, Paul Deighton, and when he joins us full-time I’ll become non-executive deputy chairman. This should take some of the pressure off, though balancing my time equally between LOCOG and LMG is one of my biggest challenges for the coming years. Hopefully, I’ll also be able to free up more time to spend with my wife and two children and do some sailing.

‘One of the things I learnt in business a long time ago,’ he continues, ‘which has stood me in good stead, is if you can surround yourself with people that are much better and smarter than you, it makes your life a whole lot easier! We built a fantastic team for the bid and now we’re going to fill this new building with a thousand really good people. We spent a long time finding Paul Deighton, who’s a top guy and incredibly experienced. He’s going to build a great organisation here.’

On the starting blocks

Sir Keith’s upbringing didn’t foretell an entrepreneurial future. ‘My father worked in a ball bearings factory for 35-odd years – to be honest, I can’t think of anyone less entrepreneurial! He came from the East End of London and my parents moved out to Brentwood in Essex, where I was then born and brought up.

‘I remember my history master, who doubled as a careers adviser, saying my two employment choices were to work in a factory or an office – so I chose office.’ Sir Keith left school at 15 with no qualifications whatsoever and went straight to work, starting at the bottom rung of the ladder in print production for Fleet Street newspapers.

‘Fleet Street was really buzzing in the late 60s and early 70s,’ he says. ‘It opened my eyes to the world. At 19, I moved into what was called ‘copy and make-up’ at the Economist, sitting down with editor Alastair Burnet to lay out magazine pages, and then I moved into marketing.’

Four years at the Economist gave him an understanding of sales promotion and direct marketing that has underpinned everything he’s subsequently achieved. ‘It also opened my eyes to my own potential.’

He went on to the FT and Investors Chronicle, and while still in employment and only 22 years old, ‘I set up my own little advertising business, against all the rules,’ he recalls.

His first entrepreneurial venture went well – until his largest client went bust! Then the opportunity arose to buy the London office of a New York agency, Nadler & Larimer, so in 1981 Sir Keith and the current creative director led a management buyout. ‘You could call it my first serious, full-time business.’

During the 80s, he built the firm up, merged it with another, sold it, bought another, and began the cycle again with several companies. ‘I was basically in the business of buying, running and selling medium-sized advertising agencies.’

Inspired ideas

In 1987, he had a ‘eureka’ moment that was to change his life forever – he came up with the idea for Air Miles. It became the most well-known loyalty scheme in the world and, at its height, had UK sales of more than £220 million.

‘I was on the train looking over some briefs from our clients British Caledonian (BC) airlines and Shell. BC was looking for ways to offload unsold seats – in the days before low-cost airlines, most carriers operated at 65 to 70 per cent capacity. Cut-price sales promotions did fill seats but dramatically reduced yield, whereas if they could sell those unsold seats without affecting the core business, the extra would go straight on the bottom line.

‘Shell, on the other hand, wanted to differentiate themselves from their competitors and increase customer retention. So I came up with a solution that would solve both

Shell customers could collect a currency called Air Miles and exchange points for flights with BC. ‘Shell would buy the Miles from me and when enough were accrued I would buy the flights at a discount from BC.’

A credit card company, a supermarket and other firms soon joined the scheme, benefiting from exclusivity deals as the only partner in their sector. BC was then bought by British Airways, who liked the Air Miles idea and agreed to fund 50 per cent of the UK firm. Sir Keith, however, retained the global rights to Air Miles and set up a series of companies around the world for the next 15 years, building them up and selling the equity while keeping hold of the intellectual property rights. BA eventually bought the remaining 50 per cent of the UK company, but Sir Keith retains the global IP for Air Miles today.

Sprinting ahead

Sir Keith is now concentrating on Nectar, the scheme he launched in 2000. He recalls, ‘In the 12 years since setting up Air Miles, there’d been an explosion of stand-alone loyalty programmes in the UK and overseas, so I decided there was an opportunity to consolidate the market by drawing on my experiences with Air Miles.’

Nectar was launched with four sponsor companies and now there are 17. Half the households in the UK are using Nectar on a weekly basis. ‘We have information on the spending habits of millions of people,’ states Sir Keith. ‘The value of the business is essentially in the data it collects. When one of our clients, BP or Sainbury’s, wants to target a particular offer we can identify customers whose spending habits indicate they would be receptive to that. It becomes a very efficient marketing tool.’

LMG made an impressive £25 million profit last year, and Sir Keith believes it’s starting to mature, now ready to develop in new directions through acquisitions and overseas expansion. LMG comprises three companies: Loyalty Management UK, which runs Nectar in the UK; Loyalty Management Services, which provides specialist data management services; and Loyalty Management International, providing expertise overseas.

The home straight

Sir Keith’s business experience has without doubt played a major part in London winning the Olympic bid. When he arrived at London 2012, he says it was like starting a business. ‘Here were a handful of people with an idea of what they wanted to achieve, but no business plan and not a lot of money. So, I approached it in the same way that I’d built a dozen or so businesses in the previous 20 years – creating a product, financing it, building a team and then selling it, both domestically and internationally. I knew we wouldn’t stand a chance without a great product and a fantastic marketing campaign.’

As the project moved into the international phase, Cassani decided she wasn’t the right person for the task in hand. After her high-profile departure, Lord Coe was persuaded to take over her role and together he and Sir Keith set about achieving a victory for Britain in the bidding war for the 30th Olympiad.

As we now know, it was worth all the effort. Fighting off stiff competition from Paris, New York, Moscow and Madrid, London eventually triumphed. Not only that, the bid came in £1.4 million under budget. Sir Keith was, of course, in Singapore to witness the victory first-hand. ‘I don’t think it gets much better standing on stage in that atmosphere and hearing that you’ve done it,’ he smiles.

‘It’s been an incredible time. I remember my first Cabinet meeting, sitting in Downing Street with the Prime Minister and thinking to myself, “Blimey, I didn’t think I’d be doing this when I started out in Fleet Street, that’s for sure!”’

Leslie Copeland

Leslie Copeland

Leslie was made Editor for Growth Company Investor magazine in 2000, then headed up the launch of Business XL magazine, and then became Editorial Director in 2007 for the online and print publication portfolio...

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