February, 2008

Text Box: Go to Home Page 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:  

 

  1. 1.   It’s all about location. Research has clearly demonstrated that locational 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.

  2.  

  3. 2.  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.

  4.  

  5. 3.  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.

  6.  

  7. 4.  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.

  8.  

  9. 5.  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?

 

Feedback, Information, Subscriptions, Etc.                                                    

If you are not a subscriber, we would be pleased to add you to our mailing list, please go to: Subscribe.

Peak Performance Consulting Group is one of the leading consulting firms specializing in financial services. For additional information pleasel email Peak Performance Consulting,call us or visit our web site.

Peak Performance Consulting Group®

 

616-454-9443

www.peakconsultinggroup.com

 

(c) Peak Performance Consulting Group, 2008