What to Measure to Gauge Your Branch Strategy Success

  • April, 2014

Understanding your customer base, understanding your products, and understanding your staff is not a qualitative exercise, it is a quantative one. Unfortunately this will mean quantifying some qualitative attributes of your institution: how much value does any particular action add to the overall value of the institution through sales, service and retention activities.

Regardless of how this is to be determined, the point is that it needs to be measured.

An understanding of who you are serving is essential to know how to service them. Without the facts and figures to back up your actions you will very easily go awry. Here are categories whose data needs to be understood.

Understand your Consumer

To be able to serve your customers better, you need to understand who they are. Generation X, Y, business etc. Being able to analyze your CRM data and break your consumers into different segmentation is critical to understanding where to offer services, what to offer, and how to offer them. A detailed breakdown of segment and the services that each consumer will use will focus the effort.

There are many ways to segment the consumer base: behavior, wealth, age, location, type. For any given organization any one of these or combination of these may be the way that works for their market.

There are many ways to segment the consumer base: behavior, wealth, age, location, type (business, retail, etc.). For any given organization any one of these or combination of these may be the way that works for their market.

Even without the implementation of a data warehouse, or heavyweight analytical tools, core systems or CRMs will host enough data to be mined to get a good breakdown of the consumers. Work with your providers or in-house teams to get to this valuable data.

Understanding the consumer will help to dictate:

  • Where to place branches (e.g. get the distribution of business customer by post code)
  • What services to offer within the branch network (e.g. what is the breakdown of customer type by post code or the type of customers using each branch)
  • What size branches should be (e.g. what is the distribution of transaction types per branch)
Understand your Business/Product Decisions

Each product being offered to the consumer base will have a bottom line cost, and this needs to be quantified. For each product, the institution needs to identify how much branch interaction is likely to be required for origination, servicing, and sales.

This will have an impact on branch:

  • Training (the more complex the product the longer it will take to train)
  • Staffing costs (how many specialist are required, training, churn)
  • Layout (e.g. more teller lines or private rooms)
  • Location (e.g. more business orientated branches in the shopping malls)

It is a good idea that the value of the product be assessed also, for example is it better to have a consumer to own a checking account or HSA account? What value does each product bring to the organization, both in terms of return and also in terms of stickiness (retention)? Value could be quantified in units, or utils. Although not the same as a dollar value, it does directly relate to the bottom line of the product or offering.

Understand your Staff/Performance Measurements

Before optimizing a branch, it is a good idea to know where you started from so you can measure if a particular strategy has improved its performance or not. Although the whole focus of the branch may change during optimization, understanding simple traditional metrics like the following will be critical:

  • The Full Time Employee requirements for a branch
  • The number of individual customers that visit a branch
  • The number and type of transactions that are performed in a branch
  • The number of sales leads generated
  • Service queries (opened, closed, escalated etc)
  • Operating costs

By measuring individuals, and the branch, they can be assessed in terms of their performance (eg simple score card output for employees and management). Although this is the basic and traditional manner in which staff have been measured, it serves as the starting point.

A more holistic view of the value of the branch can be determined by assigning value to each transaction for each product, where value is generated through for sales, service and retention. Comparing overall branch value generated to the FTE identifies the performance of the branch relative to others. Incentives can be given (financial, promotional, and emotional) for staff to improve their (and their branch) performance. This approach also allows the branch to be compared to other channels in the organization. See Crowe Horwarth.

Regardless of the approach taken, individual and branch performance can and must be tracked: staff may need to be replaced, office size may be reduced/increased, and market approach may be changed/tweaked. The goal is to optimize each branch and the overall service and value being offered and this is determined by hard fact. It is these metrics that will allow you to decide if your branch optimization approach is working.

If these metrics are not being captured already then new processes (automated where possible) need to be introduced. For example, create automated workflows to track sales opportunities, where the lead generator can get credit for their value add in the process. Opportunity to improve processes should be taken when optimizing the branch network.

A good teller system will be able to provide data on these statistics (apart from costs), and some may already render the information in a usable manner.


If you haven't got the figures already, then draw a line in the sand and gather as much data as you can. Identify what metrics you want to measure your organization by, and ensure that those metrics can be gathered as you move forward. Consider a value based system rather than a traditional counting actions metric. As you are optimizing the branch and any software that goes with that, then build these metrics in or add new processes, automating as much as possible.

As a financial institution moves forward with branch optimization there will be many approaches that will be tried and tested. You are not going to get a new branch strategy correct for every branch. Having the tools in place to see the performance of these new (prototypical) branches, will mean that a decision can be reached much more easily as to the performance of each branch. By defining the decision metrics before a branch optimization is undertaken means that there is an impartiality to the decision to continue with a branch, tweak it, or to close it. It is going to be an iterative a learning process supported by the facts.

Take Away
  • Understand your consumer base
  • Determine how you are going to measure how value is added
  • Try implement a value based metric system
  • Build in the metrics to the process
  • Use the facts not emotion to make decisions
  • Constantly revise the approach