We hear many people in the financial industry saying that they don't know their individual branch contributions or that they only measure sales! Both of these comments trouble us as we wonder if they really understand the customer-centric role of branches and how they inter-related to the other delivery channels.
First, it is easy to estimate a financial contribution if you have branch assets, liabilities,other revenue, non-interest expenses and an estimate of Head Office overhead (e.g. 30%). Take your total assets and liabilities and use a 1% spread which you add to the other revenue. Deduct non-interest expenses and Head Office overhead and the net is the proxy for branch contribution. Additionally you want to evaluate if revenues are growing faster than costs and that your net sales are positive.
Second, consider the role that branches play for customers and the organization in an integrated set of multiple choices:- online, mobile, contact centre, mobile representatives, ATM's, partners and others. Approximately 15% of customers visit a branch monthly but how is the branch rated in terms of sales, advice, or service dependence by key segments- consumers and businesses. Also if you have a strong sales culture, your branch staff are key sales lead generators supporting all channels. To ensure that branches continue an overall positive contribution, they have to evolve in their design and multi-facet, proactive and reactive roles. For example, a small branch or start-up can use the "universal employee" concept effectively.
The bottomline is you need to know the total value contributions of your stores and evolve their dynamics as market trading areas dictate.
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