Harnessing Digital for Branch Sales

What is the fastest-growing influence on household acquisition and deposit sales in the branch? Without a doubt it is the online experience for web-oriented shoppers. Yet few banks have formal programs to harness digital banking for branch sales.

Most players assume the online space is a separate sales domain. Online teams are measured by success in completing account originations online; meanwhile branches are left to struggle on their own as traditional local marketing and sales tactics erode.

Bridging these two worlds is imperative, as underscored by Novantas research showing that while two-thirds of consumers prefer to shop for a new checking relationship online, roughly 90% still open checking and other deposit accounts in the branch. Solving this problem begins with a recognition that in the important realm of new-to-bank household acquisition, online shopping and branch sales fulfillment are now joined at the hip – one cannot succeed without the other. From there, the race is on to investigate and optimize the digital-to-branch funnel.

Most banks are not yet measuring the day-to-day effectiveness of digital in driving shoppers into the store. This creates some serious management gaps, both in pinpointing issues and opportunities, and in determining the right level of investment in digital marketing, technology and analytics. The situation presents a clear call to action. Defending and growing market share will require formal metrics and programs that bridge the digital and branch channels, backed by a visible management commitment and strong collaboration among the retail silos.

Partial Solutions

At most banks today, branches and digital channels have separate performance metrics and goals. At best, some banks can measure multi-channel results from one-off digital campaigns. But for the most part, branch sales productivity and the digital shopping funnel are managed as separate phenomena.

This has fostered partial solutions based on partial views of the situation. One example is a narrow focus on sales fulfillment online. Quite properly, banks are mindful of the customer online migration and want to make sure they can win their fair share of the growing online purchase stream.

Indeed, in one recent Novantas survey, 30% of surveyed checking shoppers reported that they preferred to both shop online and open accounts online. But in reality, even at national and large regional banks, rarely do more than 5% of customers actually shop then open online today, suggesting something is broken.

Online refinements can take on a life of their own, however. Lacking metrics that tie customer online shopping activity with account originations that later are completed in the branch, banks tend to measure their digital teams strictly by sales completed online. This actively discourages efforts to optimize cross-channel sales flowing to the branch.

Clickstream analytics can pose a further distraction. While this technique provides insights into the progress of online shoppers as they arrive at a web site and click their way through, taken alone it leaves out too many components that drive sales success, particularly cross-channel.

The bank should be seeking to understand online customer intentions, particularly as they relate to potential offline actions. For example, a shopper may query checking accounts online as a research exercise, trying to find out more about a product and what it takes to set things up. This shopper is likely then to abandon the online process, only to show up some time later at a branch, ready to open an account.

Ironically, clickstream analytics will tend to interpret this scenario as a defeat, seeing only that the application process may have started online but was never fulfilled online. And many bankers are tempted to buy into this type of interpretation, swayed by the impressive clickstream software statistics and ignoring the fact that most online-influenced deposit account sales are fulfilled in the branch.

Key Questions

To methodically improve branch sales to digital shoppers, retail banks should start with completed sales in the branch and trace backward. The goal is to explicitly link branch sales with their online origins and influences. Banks also need to identify the hang-ups that cause some interested online shoppers to drop off prior to purchase.

Chart for Musto and Travis

Direct shopper research is critical to this investigation, not just descriptions of profiles and activity, but also the drivers of decisions and behaviors from the customer point of view. What is going on in the minds of online shoppers as they proactively navigate to the branch to fulfill transactions?

A further requirement of this research is that it should be market-based, given that the nature of the opportunities for digital-to-branch sales will vary by geographical market within the bank’s network footprint.

Finally, there is work to be done in understanding which elements of the digital experience make the most difference to the most desirable customers.

As it pertains to new-to-bank prospects, the digital sales and marketing landscape broadly divides into: 1) owned media (notably the bank’s public website); 2) paid media (including display and search ads); and 3) earned media, such as positive mentions in social media and direct communication.

Alternatively, owned, earned or paid media may have shaken loose a customer who otherwise was not planning to switch; swayed a shopper already in motion; validated the bank; or simply served as a branch locator. As these influences are better understood, the bank can more precisely identify the particular combinations of cross-media activities that will be most effective in each market.

In a dominant market, for instance, the website may play a critical role in validating the bank. In an underpenetrated market, by contrast, a lack of brand awareness may increase the relevance of paid and earned media and the need for a compelling product offering.

Such investigations will help the bank understand the specific activities, influences and processes that drive completed sales transactions, leading to a gap analysis that identifies critical factors in need of improvement, and the likely upside. Ultimately, the bank needs to know what it stands to gain from improved digital effectiveness and how that will show up in improved sales productivity.

Banks that crack the code on understanding the value of digital to their overall sales funnel will begin to optimize their acquisition rates faster than their peers and likely reap outsized growth. Getting this right will also inform the mix of channels that will be needed in the future to sell more, and will start the cultural shift banks are going to have to make to build multi-channel marketing and sales capabilities.

Banks already possess most of the needed data but have not yet assembled it correctly. As banks navigate their way through a digital world with a surprisingly strong and persistent interdependence with their physical networks, understanding digital effectiveness in driving branch sales is an important first step.

Mr. Musto is a managing director in the Boston office and Mr. Travis is a managing director in the New York headquarters of Novantas Inc., a management consultancy. They can be reached respectively at [email protected] and [email protected].