Iconoclasts are forecasting the end of the retail bank branch. Simple and Moven have gone so far as to delete the word “bank” from their names, and make the rounds at industry events heralding the brave new branch-free landscape.
But US consumers and small businesses are channel omnivores. Give them mobile, online, ATM, phone and branch—all will be used by some, and some will be used by all. The cost of channel choice is great, and retail margins are on a diet, so reinvention is an economic necessity. Channel R&D is accelerating as banks large and small find the unique branch blueprint.
Look at these strategic innovators:
Forget the movies, head to the branch. Small but mighty Umpqua Bank, with 200 “neighborhood stores” in the Pacific Northwest, is starting a “slow banking” revolution. Giant plasma touchscreens are used as “Discover Walls” to showcase neighborhood events, local merchants and podcasts. Wii bowling nights and Food Truck Tuesdays are big draws. Umpqua’s strategies add up to fast growth in key demographics: young, upscale families and small businesses.
No longer solo, the branch is now the fulcrum of an omnichannel world.TD Bank lives their tagline—“America’s Most Convenient Bank”—legacy of the 2008 Commerce acquisition. TD’s 7-day, evening hours branch access has long been a differentiator. Now, omnichannel integration is sophisticated. Local branch manager videos and banner ads are served up in real-time by recognizing customer IP addresses. No surprise TD’s 2013 ad campaign abandons Regis and Kelly for “Bank human, again” featuring their branches as the headline act.
Tellers are out, specialists are in.Chase, with 5600 branches, has got the yin and yang of their branch future figured out. Service costs are being squeezed through self-service kiosks: ATMs on steroids that can handle 90% of all teller transactions. At the same time, Chase is ramping sales horsepower with a six-fold increase in Private Bank branch presence , delivering 5x growth in the number of Private Bank clients since 2010. Other Sales Specialists in branch have grown 20%. And Chase’s net branch count is increasing, with new builds that are smaller and specialist-rich.
Going virtual and mobile: PNC is working towards a vision of less physical density and more multi-channel options, reducing their branch count from today’s 2850 selectively. Going well beyond the now-familiar mobile deposit and digital/social contact center options, PNC is rapidly expanding mobile stores, street teams, community brand ambassadors and segment-specific “thin branches” that match the needs of their micromarket. Watch for the famous “PNC Conversation” to get even smarter and better.
Cut the ad budget and buy or build branches: Since 2008, M&T has doubled in size to 725+ branches, but its footprint radius has grown a mere 27 miles. Branch density is a strategy M&T uses effectively to build brand awareness and bank profitability, and acknowledges it enables a lower advertising budget. M&T’s invested in activating branches through clever and comprehensive management of their Baltimore Ravens and Buffalo Bills partnerships, ranging from in-branch promotions with players and shared community service programs to management of the franchise like a mega-branch, complete with sales goals. Banking Built for Baltimore demonstrates M&T’s smart leverage of branch penetration and sponsorship potential.
The answer to branch strategy isn’t as simple as develop or dismantle, reinforce or reduce. Like most strategy and marketing wins, it’s about defining a course that magnifies strengths, mitigates disadvantage and sets a course that fits your franchise, and your future.
Sometimes marketing inspiration and confirmation of instincts comes from places you wouldn’t normally look. This recent blog post on getelastic.com is case in point: http://www.getelastic.com/the-easiest-way-to-increase-conversion-by-20/. On the face of it, this post would seem to be quite far afield from the world of customer retention in B2B software, or any of the other B2B industries in which EMI works for that matter. And indeed there isn’t much that links lip gloss and software; but there is a link in the approach to solving marketing challenges.
The getelastic blog post starts off with a research-based data point: ecommerce customers are 20% more likely to purchase a product that has at least one customer review. Then, based on that data point, it presents several reasonable ways to obtain that key *first* review. The ways to do this are only important if you’re interested in driving web purchases. What’s important outside that context – and especially in a B2B context like CSM strategy for SaaS – is the way in which marketing research and analytics have identified an operational measure which becomes the strategic focus. Increasing web sales is obviously the business goal, but it’s so broad and influenced by so many factors that it’s unwieldy as an operational focus. By isolating one key factor that has a significant impact on the objective, exploration and testing of tactical options becomes significantly easier. In mathematical terms, you solve for “reviews” because you know that it will drive conversions.
Take this approach out of the world of online sales of lip gloss and into the world of B2B software customer retention and it is still just as effective. Retention is impacted by a multitude of factors –satisfaction, perceived value, switching costs, depth and breadth of utilization – each of which can be affected by a set of strategies and tactics. To optimize retention, you must first sift through all the potential factors to identify those that actually have the greatest impact. Once you have effectively ranked the factors based on their likely impact, then you can develop retention marketing strategies – new communications approaches, new messaging, testing – that specifically and precisely aim to drive improvement in that factor.
A survey of SaaS business executives recently published by Pacific Crest (results available free here) reveals some interesting information about the profiles of higher-growth companies.
In their graph below, we can see that while the greatest number of SaaS companies use a field-based sales strategy, those that use inside sales that are actually growing the fastest—on average, almost 75% faster than the field sales companies. (Growth is defined as year-over-year change in revenue.)
The complement to this graph is the one below, which shows that the Fast Growers (>45% growth) have lower customer acquisition costs. This differentiation is undoubtedly driven in part by the use of an inside sales force.
The final piece of the puzzle is revealed in the following graph. This slice of the survey data shows that Slower Growers are much more focused on Enterprise customers. Fast Growers, on the hand, balance their Enterprise sales with a healthy dose of SMB sales.
Of course, this data shouldn’t be read as an indictment of SaaS businesses that use field sales to sell mostly to the Enterprise; there are highly successful examples of such businesses. Instead, the data serves to highlight the achievement of those Fast Growers, and I hypothesize that effective marketing has played a key role in their success. It isn’t easy selling through an inside sales force to SMB; relationships are difficult to build over the phone and SMB management is often difficult to reach. Success, then, becomes a numbers game: Maximize leads (with a focus on inbound), and optimize conversions by creating tools to move prospects through the funnel. Without a highly capable marketing function, the numbers don’t add up and growth is elusive.