Rather than being divided, online shopping and branch sales fulfillment are joined at the hip for new household acquisition — one cannot succeed without the other.
As consumers conduct more of their banking via online and mobile, there is a widespread perception that the concurrent decline in branch traffic is having a direct effect on branch sales. This has fostered a divided sales system, wherein the digital team strives to close more business online and the branch team tries to optimize “what’s left.”
These divided objectives are a major contributing factor in the collapse of new-to-bank sales productivity at many banks. Why? While Novantas research indicates that about two-thirds of consumers prefer to shop for a new checking relationship online, in practice, 85% to 95% continue to open their new accounts in the branch.
In other words, as consumers rely more and more on digital to manage their bank accounts, branch service relevance is falling much faster than branch sales relevance. Rather than being separate, unrelated channels for acquiring new households, online shopping and branch sales fulfillment are joined at the hip — today one cannot succeed without the other.
From a larger perspective, retail banking has joined a multi-industry group of companies that increasingly rely on the web to generate business that likely will be closed in person or over the phone. Examples include real estate brokerage, automobiles, large appliances, life insurance, overseas travel agencies and even cruise lines.
Yet most banks, ranging from national to community in size, are not measuring the day-to-day effectiveness of digital in driving shoppers into the store. Because they cannot measure this type of cross-channel success, they cannot methodically improve digital-to-branch sales results. Nor can they determine the right level of investment in digital marketing, technology and analytics.
The situation presents a clear call to action for 2014–2015. With most new household acquisition taking the form of digitally-influenced branch sales, defending and growing market share requires formal metrics and programs, backed by a visible management commitment and strong collaboration among the retail silos.
Still Getting It Wrong
The persistence of online checking account shoppers filling out account applications in the store cannot be explained away by pointing to the lack of suitable options for applying online. For more than 15 years, consumers have been able to open and fund checking accounts online at large banks without walking into a branch. Regulatory changes and technological improvements have further simplified online account opening and minimized follow-up effort. Today, online applicants can readily select debit card art, set up online banking credentials and get on their way.
Yet with all of these improvements, and with the industry now abuzz over the migration in online account opening from laptops and desktops to tablets and smart phones, most checking switchers still prefer in-branch purchase.
The problem is that banks do not specifically understand how digital shopping drives branch sales — or what to fix when results fall short — because digital channels and branches have separate metrics and goals. At best, some banks can measure multi-channel results from one-off digital campaigns. But for the most part, banks manage branch sales productivity and the digital shopping funnel as separate phenomena.
Reacting to the single-channel metrics they collect today, some banks believe that they simply need to further refine online checking account opening. And indeed some banks should. In one recent Novantas survey, 30% of surveyed checking shoppers reported that they preferred to both shop online and open online — from five to 10 times the proportion that actually shop then open online today, suggesting something is broken.
Illustrating the ground that can be gained, online account-opening at a few traditional banks, such as Bank of America, and at Internet-centric providers, such as Moven, set the benchmark for online experiences. But for most banks with substantial branch networks, the most productive path to new household acquisition — and thus the biggest near-term opportunity — is in optimizing the digital-to-branch purchase.
Clickstream Stats Fall Short
It is critical to consciously map and specifically improve the major components of the sales funnel. Key factors include marketing awareness; the favorability of provider and product impressions; and the drivers of purchase consideration and, ultimately, sales — combined with channel preferences and behaviors (Figure 1: Mapping the Purchase Funnel).
This is a much larger set of questions than what can be addressed by the likes of clickstream analytics. These programs track the progress of individual web site visitors as they click their way through pages and dialog boxes.
While the information can help in tracking the digital sales funnel, it provides only partial answers and can actually pose a distraction. Even for digital sales, but especially for sales completed in the branch, heavy reliance on clickstream analysis leaves out too many components that drive sales success.
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 sales transactions are fulfilled in the branch.
Omni-Channel Account Opening Isn’t the Solution
Some banks indeed are awakening to the cross-channel purchase behavior of new-to-bank customers, but end up targeting the wrong purchase experience.
The opportunity for using digital lies in optimizing the path from online shopping to in-store fulfillment, and Novantas research does not support the notion that customers want to start the application online and then complete it elsewhere. Yet some banks have concluded that they should facilitate omni-channel account opening so consumers can start an application in any channel and continue it in any other.
While possibly a critical capability for a segment of customers in the longer term, cross-channel account opening is not the most urgent priority in responding to consumer preference today. Even for the minority of new-to-bank households that prefer to apply online, the issue is the ease of the online process itself, not the assurance that interim deskwork on a product application can be reloaded in another channel for subsequent completion.
If a would-be online applicant abandons the online process and considers heading to the branch, the gating factor usually will be the time and effort required to walk or drive to the store and sit down with a banker (for which online appointment-setting might be a more productive investment). The decision likely will not be affected by the banker’s potential ability to spool up an in-progress online application, versus the inconvenience of having to provide an address a second time. And to be sure, the branch is the likely destination — the rate of applying by phone is low and trending downwards.
It is time to step back and look at the big picture. Any senior banker looking to improve branch sales productivity in the age of digital shopping must be able to answer four questions:
- What is the productivity of our sales channels today, relative to each other and also to our competitors?
- How much do the dollars we spend on digital truly contribute to sales growth, especially in the branches?
- How does our digital spend and effectiveness compare with competitors?
- Which elements of our digital presence make the most difference to the branch sales process?
Banks that lack solid answer to these questions likely are neither getting the right return on investment from their digital spend, nor are they devoting enough attention and resources to the channel overall. New approaches to understanding customers, sales data and digital marketing effectiveness are needed, and a serious push will be required to put all of the pieces together.
What to Do?
To identify and improve branch sales to digital shoppers, retail banks must take a reverse journey of investigation. This starts with completed sales transactions in the branch and traces backward. The goal is to explicitly link branch sales with their online origins and influences, and also understand the various reasons why some online shoppers drop off on their way to the branch, representing lost business.
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 themselves 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, as it pertains to new-to-bank prospects, the digital sales and marketing landscape broadly divides into owned media (notably the bank’s public web site); paid media (including display and search ads); and earned media, such as positive mentions in social media and direct communication.
Owned, earned or paid media alternatively may have shaken loose a customer who was not planning to switch; swayed a customer in motion; validated the bank; or merely served as a branch locator. Understanding which elements of the digital experience make the most difference to the most desirable customers gets easier once these relationships are better understood.
The bank can then identify combinations of activities across these media that matter most in each market. In a dominant market, for instance, the web site 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.
Chris Musto is a Managing Director in the Boston office and Kevin Travis is a Managing Director in the New York headquarters of Novantas, Inc., a management consultancy. They can be reached respectively at firstname.lastname@example.org and email@example.com.