Facing Difficult Choices, Banks? Do the Math
Posted in Customer Engagement
“If it were easy, everyone would be doing it.” Or, “If it was that easy, anyone could do it.”
We all want to keep our customers happy. And, we also want to protect our organization’s bottom line.
So what do you do when doing what your customers want is expensive? Take a step back and do the math. Removing emotion from the decision and relying on objective data is critical if you want to provide a high-quality customer experience but also remain profitable.
To that point, there’s quite a bit of consumer research data that suggests that consumers across demographic groups like to use branches—and still use them on a regular basis.
It would be tempting to use that data as justification for keeping all your branches open—or even growing the size of your network. Yet many customers also respond that they choose their bank at least partly because there’s a branch nearby. However, if you look at the actual data of your customers and their branch usage, many rarely, if ever, use it.
Here’s where the math comes in: It is expensive to maintain a branch. The cost goes beyond the physical brick and mortar, electricity and so on—you also need the right technology and the right people.
If you aren’t getting enough customer visits into your branches, you aren’t getting the revenue (and retention) you need to offset those expenses. And, in order to keep them open, you’ll have to cut back on expenses where you can—less technology (or fewer upgrades or updates) and fewer employees (or paying your employees less). These choices can result in a less satisfactory customer experience, fewer return visits and decreased loyalty.
So am I saying that we should close all branches? No. Branches are where some of the best customer engagement takes place—and where banks can really shine through the actions of their best employees. It’s the face-to-face interpersonal interaction that makes a real difference in showing your customers that you care.
But if your bank is seeing fewer branch visits—as the industry is experiencing overall—there are difficult choices ahead. It’s likely that you’ll need to close some branches over time to balance the expense while keeping select locations open to be available to customers.
To make the right decisions, analyze the data for each branch and compare it with that of nearby branches. And within each branch, manage the operations carefully, monitoring critical KPIs to help ensure that you continue to deliver a high-quality customer experience while using resources as efficiently as possible.
Review, revise and repeat—responding to the needs of your customers while balancing them against the costs of managing your bank.
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