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What Makes New Branches Successful?
While there are many factors contributing to the success of new branches, there are a few 5 key strategies and tactics that have the greatest impact. Here's where to focus:
- It’s all about location. Research has clearly
demonstrated that location factors -- density of
potential customers, number of competitors, and specific
site characteristics – are the dominant predictors of
future branch growth. Simply put, in some locations you
have more wind at your back: there are more potential
customers who are likely to buy your products and fewer
potential competitors than other locations. Measuring
the potential of all the prospective trade areas before
investing in new branch locations is essential to insure
the highest return on investment.
- Detailed market planning is essential. We have great
respect for local market knowledge, but the only way to
truly tell whether one area has higher potential than
another is to do the analysis. The number of customers
that can be attracted to a branch in any given location,
and the types of financial products they use, can be
accurately measured. After all, the entire purpose of
building a branch is to attract consumers and businesses
that live, work or shop in the immediate area – if they
were willing to drive across town to get to your
existing branches, you wouldn’t need new ones. Measuring
market potential, and calculating branch growth based on
reasonable estimates of market share, is a critical
first step in determining the optimal areas for
expansion.
- It’s worth waiting for the right site. Over the long
term, the additional cost of building in a high
visibility location where your customers have easy
access will pay off in ROI. Alternatively, getting
second best (because it’s less expensive?), will
ultimately sub-optimize your investment. If it’s the
right market, make sure you get the right site.
- Jump start success with focused sales and marketing
plans. Many banks act as if they believe “build it and
they will come”. It takes more than a Grand Opening and
joining the Chamber to build market share. The most
successful financial institutions start marketing to
potential consumers and businesses about 6 months in
advance of the branch opening, and they have a
structured plan for promotion and growth through the
first year of operation.
- Pay attention to your existing branches. New
branches take time to come on-line and today’s growth
depends on increasing same-store sales. Have you
measured the market potential around your existing
branches and built local-market based sales goals and
marketing plans? Do you have a rigorous, branch based
sales process? Have you reallocated resources so you're
growing where there's growth while maintaining or
disinvesting where you've already maximized potential?