July 20, 2010

CUES’ Credit Union Management’s online-only “Facility Solutions” column runs the third Tuesday of every month.

In the April installment of this column, we presented an outline of the findings from our recent branch network optimization survey of credit unions and banks across the nation. In May we focused on responses to the first three questions:

1. How important is maximizing branch network performance?

2. How efficient is your current branch network?

3. How often do you assess your entire branch network’s efficiency and productivity?

And in June we talked about the answers to these questions:

4. Will your branch network be larger or smaller in five years?

5. Do you plan to acquire additional branches or branch networks in the next 5 years?

The survey thus far in our series has told us that maximizing branch network performance is critical to nearly all credit unions’ future success in terms of growth and income generation. This month we’ll discuss the fact that individual branch performance contributes significantly to network productivity. Once the branches are properly placed to take advantage of specific market characteristics and interdependent market dynamics, each branch must be designed and operated to maximize return on investment.

The next two questions in the survey address individual branch performance with surprising results.

6. Do your branches provide the desired level of productivity?

Fifteen percent of responders said “yes,” their branches meet their expectations, while a whopping 85 percent said “no.” Over the past 20 years we have observed that many credit unions develop a well-thought-out strategic branching plan and then go about making the required location changes, but do little to enhance individual branch performance. This is a bit like organizing the perfect Tour de France team without checking how well their bikes function or ensuring the riders have the best equipment. The response to the next question gives us a clue to why branches may remain moderately productive for some of these credit unions.

7. Do your branches provide the desired image and member experience?

Fifty percent of those responding said their branches provide the desired member experience, while the other half said they do not. Members who visit a branch, about 44 percent of the full membership each month based on recent studies, are there because they desire a physical experience. We know from studies that the quality of a member’s experience has much to do with the level of their engagement and use of a credit union’s products and services.

If 50 percent of credit unions’ branches do not provide the desired experience, at least 50 percent are likely not productive. This is because the experience for both members and staff has not been properly engineered to strongly express the brand characteristics in relevant, meaningful and differentiating ways, and the physical environment and operations do not maximize engagement or service delivery. A strong and well-engineered branch experience is critical to getting the most out of each branch and every staff member as well.

To be fair, at the completion of a strategic branching plan, many credit unions update their branch design. A new and attractive branch that members and staff say looks wonderful can certainly increase satisfaction scores. It is relatively easy to create an attractive branch, but pretty is not enough when it comes to spending millions of dollars on new branches and remodels or to generating income. It costs the same amount of money to produce a branch that delivers a strong brand image and experience, increases products and services awareness, increases share of wallet, accelerates growth, and enhances member advocacy scores and ROI as it does to create a branch that is just attractive.

Developing a new branch business model and prototype—or even updating the existing branch design—should be preceded by gathering the answers to a number of questions:

• Do we have a strong brand and what are the specific and differentiating characteristics that must be communicated through the member and staff experience?
• Do we have a branch planning team that includes all stakeholders, and a process that will build consensus?
• What are our performance expectations at each branch and are these expectations realistic in terms of current and projected market characteristics?
• What are the specifics of the desired member experience and how will this experience enhance member development, satisfaction, share of wallet and profitability?
• What is the desired staff experience?
• Do we have just one business model to fit all market needs or are we developing a model composed of a kit of parts that can be applied equally successfully to a variety of opportunities?
• How might our branches change in the future in terms of products and services, technology or field of membership?
• Do we have a real estate strategy in place and how will it impact branch location and development decisions in terms of market area, site, size, brand expression and lease vs. own?
• Do we plan to extend the same branded branch experience to all delivery channels for consistency and brand critical mass? How will this be done?
• How will we apply the brand image and experience to existing branches in an impactful and affordable way?
• What is our budget and timing?
• Are our current performance measurement systems sufficient or must they be enhanced to provide an accurate on-going assessment that will result in actionable recommendations for improvement?

The perfect time to develop a new branded branch experience is when a new facility is being designed. At this point, the project cost has been approved and branding becomes part of the design process. But what about the existing branches? The new branch will likely outperform existing branches as it provides a strong brand expression and controlled experience while the existing branches remain unchanged. When a new brand expression is developed, it should also lift the performance of existing branches. The best way to do this at a reasonable cost is by developing a “brand wrap” that takes key brand elements from the new branch design and affordably applies them to existing facilities.

A brand wrap may be composed of many different elements depending on the desired level of change, budget and current condition of each branch. For example, when Chase Bank took over WaMu Chase removed all the “Occasio” teller pods and replaced them with traditional teller lines and bandit barriers. The pods were a well-known symbol of the failed bank. In many of the branches, Chase applied a brand vignette that consists of a blue carpet, four guest chairs and a logo art piece on the back wall to tell a new story and force consistency across the branch network.

One of the most impactful and productive ways to rebrand branches is by applying a strong merchandising program. The addition of new graphic messaging, video merchandising and kiosks can do a great deal to change the appearance of a branch and increase awareness of your products and services at a reasonable rollout cost. The proof is in the numbers. When surveys are conducted before and after the application of a brand-wrap, we find that product and service awareness increases 30 percent to 60 percent, which translates into increased use.

Earlier in this series we reported that 100 percent of those surveyed feel that maximizing branch network performance is critical to the success of their credit unions. If credit unions are willing to pursue a strong branding program and translate that program into productive branch business models and experiences for staff and members, they will be able to maintain high network productivity and maximize the potential of every market.

Paul Seibert, CMC, is VP/financial services for EHS Design, Seattle. To learn more about how to successfully develop and apply brand wraps, visit Weber Marketing.