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This article was originally published in The Financial Brand on March 6, 2014 and was co-authored by David Kerstein, President of Peak Performance Consulting Group, and Nancy Radermecher, President of JohnRyan

 

Here’s how to make use of sophisticated branch data analysis in the creation of targeted marketing messages, and why this is important in adapting the branch for the future.

 

The Branch Transformation Imperative

Consumers are changing the way they bank. Research by the Philadelphia Federal Reserve Bank and others indicates check-writing activity has been declining at a rate of 5-7% annually, creating less demand for branch monetary transactions. Meanwhile, routine transactions that had been branch-centric are being disintermediated by the Internet, mobile and call centers.

 

According to a report by FMSI, branches process roughly half the transactions they did 20 years ago, with branch transaction volumes declining by 45.3% since 1992. This figure is likely to be considerably higher for banks that have aggressively implemented alternative channel delivery strategies.

 

Although consumers are using branches less, they still place a high value on bank branch convenience. Local branch presence is a primary reason consumers choose a bank, while customers consider easy access to branches and ATMs one of the features they value most.

 

Financial institutions face a basic conundrum: consumers want branches, but declining usage is reducing sales opportunities and revenue growth. As routine servicing and monetary transactions continue to migrate out of the retail branch, the fundamental nature of bank branches must undergo a dramatic transformation.

 

Branches will still be the primary vehicle for customer acquisition and consultative sales, but they must adapt to focus less on teller transactions and more on more complex advisory services. Successful financial institutions will implement more robust front line tools to enable staff to deliver better customer service, stronger profitable cross-sell, and achieve greater share of wallet.

 

The bottom line is that, with fewer teller transactions, branches must become more efficient as sales centers. This can be achieved through greater micro-market targeting of marketing messages in order to maximize the sales opportunity from limited branch traffic and to optimize trade area sales penetration.

 

Improve Revenue With Targeted Strategies

Up to now, many financial institutions have employed a one-size-fits-all strategy. Branches are often similar in size and style with limited differentiation. More importantly, marketing strategies are frequently implemented uniformly across the network with limited variation of messaging based on unique branch or trade area characteristics.

 

Usually, messaging is two-dimensional (for example, Spanish language signage in selected locations). But “best practice” institutions are improving revenue by tailoring messaging in a more efficient and impactful ways.

 

Moving forward, financial institutions need to adopt a more sophisticated “Rubik’s Cube” approach where messages are specific to the trade area market opportunity. This should form part of a comprehensive system that uses both market and internal data to create a sales and marketing protocols.

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I’m very pleased to be moderating a panel discussion at the BAI Retail Delivery Conference on the very timely and important topic: Winning Strategies for Community Banks. Here are the details — hope to see you there.

 

Moderator:

David Kerstein, President, Peak Performance Consulting

 

Panelists:

Will Hileman, CEO, Farm Bureau Bank

Chuck Sulerzyski, CEO, Peoples Bank

Dwight Utz, CEO, East Carolina Bancorp

 

As the industry continues to face extraordinary challenges, how do community banks thrive, not just survive? Learn from CEOs of three leading community/super-community banks as they discuss strategies for growing revenue, competing in a consolidating market, dealing with the new deposit product economics and managing product and service delivery.

  • Moving beyond cost cutting: revenue opportunities for community banks today
  • Competing with the Big Dogs: Leveraging the competitive advantage of community knowledge in markets dominated by Top 10 banks
  • Managing distribution cost, especially in rural markets. Is technology the answer?
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This article was originally published in BAI Banking Strategies on June 5, 2012

 

As customers gradually migrate from branch transactions, branch employees need to do a better job of cross-selling those that remain.

 

The traditional branch sales model was based on cross-selling to customers who used the branch for transactions. In a typical scenario, a customer comes in to deposit a check or make a payment on a loan and the teller points them to a ready personal banker who might cross-sell a money market account or a home equity line of credit.

 

But transaction activity is moving out of the branches – fast. Between the ready availability of direct deposit, online and mobile banking, remote deposit capture and advanced function ATMs, many customers are finding that they hardly need to enter a branch at all. Check transaction activity has been declining an average of 7.1% per year and 39% of consumers expect to decrease the number of checks they write, according to the 2010 Federal Reserve Payments Study. Consumers still use branches – according to JP Morgan Chase & Co.’s 2012 Investor Day presentation branch preference remains strong across all wealth segments. But declines in check transactions means that consumers – the primary source of branch traffic – have fewer checks to deposit or cash at the teller line.

 

Since most banks built their staffing models to support transaction handling, reduced traffic means cuts in branch staff. Managers are finding they must do more with less in order to grow sales in this difficult environment. Where to start?

 

The first and most obvious opportunity is to better serve the customers who do enter your branch. Unfortunately, most banks do a poor job of capturing overall customer potential, as we recently discovered by monitoring and measuring the sales process at over 1,000 branches. Our research revealed that 65% of sales interactions involved the prospective customer sitting through a monologue of simple checking account features. In 79% of those occasions, the sales person did not ask questions or gauge the customer’s interest in products outside of a demand deposit account (DDA). When a banker did ask about non-DDA products, 92% of the time the inquiry came because the banker was completing a profile of the customer.

 

These are lost opportunities that bankers can ill afford. So, what can bankers do to coach their branch sales teams to greater success?

 

  • Build the right team. Successful managers recognize that the cornerstone to performance is developing the right team. Simply put, not everyone has a high aptitude for financial services sales. We believe that standardized strengths-based assessment profiles are a valuable tool to improve the effectiveness of the recruiting process, and to target focused skills training for existing teams. As with any scoring tool, these widely used measurement techniques constitute just one piece of the puzzle. But without them, managers can be handicapped in their hiring and team development process.

 

  • Create the right sales process. Banks that train employees in a well-defined sales interaction, with a narrow scope of variability around the process, typically do a much better job at both discovering and meeting the needs of their customers and building loyalty and relationship “stickiness.” If the process discipline is not there, branch employees will fill in the gaps with their own language and goals, which can lack consistency, impair the sale, and significantly reduce effectiveness.

 

  • Use relationship profiles to unlock customer needs. Encouraging a customer to complete a relationship profile is the only way to consistently guaranty that employees are moving the discussion beyond the basic DDA. As noted above, our surveys and branch shops revealed that when branch staff probed for relationship needs, it was almost always because they were using a profile to assist them with the process.

 

  • Coach for success. While the ultimate result is sales success, managers need to maintain process discipline by regularly reviewing required activities on a daily, weekly, and monthly basis. Banks must consider whether their goal setting, process metrics, and financial measures are well focused and in line with industry benchmarks, or whether they need tweaking to provide their expected results.

 

The typical branch only sells about one new product per personal banker per day. With transaction traffic declining and continued pressure on staffing, it is critical that branch managers establish and maintain disciplined sales and service processes. Cross-selling is the key to creating deep, profitable and long lasting banking relationships. Having a well-defined sales process will give branch staff the tools and discipline to be successful and deliver the service consistency that customers expect.

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