January 31, 2005
How Videotaping Customers Can Improve Bank Branches
http://www.brickstream.com/pdf/American%...
by Bonnie McGeer, American Banker
Claire Smith, who runs the "brandscaping" department at Citizens Financial Group Inc., tells people who join her unit to look up "physiognomy" in the dictionary.
"The definition will say something like this: 'conveying the character of something through its outward appearance.' And that's what we do in brandscaping," Ms. Smith said. "We're trying to convey who we are as a bank through physical things.
" As part of that effort, Ms. Smith is using sophisticated consumer behavior research - which includes videotaping customers - to figure out how to reengineer the branch experience at her Providence, R.I., banking company, the U.S. banking arm of Royal Bank of Scotland Group PLC.
She is among an increasing number of bankers who are supplementing the usual customer surveys with videotape technology. Others include Charlotte's Bank of America Corp. and Wells Fargo & Co. in San Francisco.
The goal is to do a better job of looking at the branch from the customer perspective, analyzing what they see and experience and how that affects their behavior.
Analysts say they expect such initiatives to become more widespread in banking as new retail-like branch designs gain popularity
Techniques for tracking visitors with video cameras were developed to get the most out of product placement in grocery and clothing stores, according to an October report from the Gartner Inc. research firm in Stamford, Conn. "But banks are rapidly becoming the most active users," the report said.
For Ms. Smith, the research kicked off a few years ago as Citizens started to develop a new branch model. It worked with Lippincott Mercer, a brand strategy consultant, and Envirosell Inc., a customer behavior research firm, both in New York.
Randall Stone, a senior partner at Lippincott Mercer, said the videotaping helped in learning whether customers noticed marketing messages and how long they looked at each one.
The research prompted Citizens to display one-third fewer messages but place them in more strategic locations. "We found out we had customers look at more marketing messages longer," Mr. Stone said.
Tom Moseman, a senior vice president at Envirosell, said effective branch design could have a significant impact on consumer behavior. For example, he said many banks still build their teller stations too high, in effect, letting security concerns outweigh customer service. The comfort of the workstation itself frequently influences how long a transaction will take a teller to perform, which impacts overall wait time in a teller line and, consequently, customer satisfaction.
"All of our studies have shown the key influence in terms of customer satisfaction in branches is bound up in wait time," Mr. Moseman said. "So understanding how the physical design of a branch impacts that level of service is an important part of what we do."
Sometimes a dramatic improvement in service can result from a simple fix.
Mr. Moseman cited a credit union in Canada where two tellers shared a cash dispenser mounted on a wall behind them. "The tellers had to turn their back to the customer in order to get cash," Mr. Moseman said. "Of course, in financial services, we know that face-to-face time is really important.
" Envirosell suggested moving the device between the tellers, which decreased transaction times and improved the quality of teller interactions with the customers, he said.
The company suggests the best positioning for brochure kiosks is not at the head of the teller line, but oriented to where the third person would be waiting in line. That's because the first and second customers are too intent on watching for the next available teller to peruse brochures.
Brochures also tend to be more effective as customers exit a branch, rather than as they enter. That's because the mindset of incoming customers is task-oriented, according to Mr. Moseman. Once their transaction is complete, then they're more "psychologically prepared to receive new stimuli," he said.
Another common merchandising mistake is to orient all signs toward the entrance, without having messages on the back of the signs for exiting customers. That is another easy fix, he noted.
Frank McIntyre, who headed an effort to improve service at the former FleetBoston Financial Corp., agreed that many powerful ideas to emerge from customer behavior research - or "the eurekas," as he called them - sometimes seem to be obvious in hindsight.
Mr. McIntyre worked as the director of branch staffing, capacity planning and wait time metrics for Boston-based Fleet, which was purchased by Bank of America last June. Mr. McIntyre, who left the company shortly after the deal closed, is now a managing director at Transcend International LLC, a Cortlant Manor, N.Y., consulting firm that specializes in branch staffing and wait times.
He said Fleet, which had grown through acquisitions, decided to focus more on organic growth several years ago. And that required improving the customer experience.
"Consumer Reports had rated Fleet the worst among large banks in customer service," Mr. McIntyre said. "We were ready to change our stripes, and we were willing to make multimillion-dollar investments."
Mr. McIntyre said Fleet added several hundred tellers to cover peak periods.
Thirty-five Fleet branches also installed technology from Brickstream Corp. in Atlanta - a video surveillance system tracks customers through the branch, measuring the number in the teller line, how long they wait, even how many leave without bothering to get in line.
"Our goal was to make sure customers were being served in five minutes or less," Mr. McIntyre said.
One of the most important findings, he said, is how important that five-minute target is.
"The extraordinary is more memorable than the ordinary," Mr. McIntyre said. "Nineteen out of 20 times the customer might go to the branch and get service in less than five minutes; but on the 20th time, if they wait seven minutes, right away they say, 'The bank is bad. Nobody cares about us.'
Another finding was that compressed queue areas make customers uncomfortable, so even the five-minute standard may have to be adjusted in particular branches.
Fleet also discovered that senior citizens are as sensitive to wait times - and about as profitable - as small-business owners and urban professionals. "I think there is a belief out there that because senior citizens are retired they have more tolerance for wait times," Mr. McIntyre said.
Another surprising lesson, he said, was the impact of new employees on wait times. They often had to call over more experienced tellers for help, holding up two lines. "You have the new employee's customer waiting as well as the experienced employee's customer, so you have a double impact," Mr. McIntyre said.
When he started looking at transaction times, he said, the most experienced tellers seemed so slow that he thought someone had transposed the numbers.
To address the problem, Fleet lengthened the training for new tellers from two weeks to three. The bank also intensified its effort to attract good part-timers by offering benefits, and it developed a better screening process to identify those good in math and who reason well.
"Over time attrition rates dropped significantly," Mr. McIntyre said.
Like Fleet, Bank of America deploys Brickstream technology in selected branches - in some cases to measure customer service, in others to gather data as it tests innovations.
Such traffic analyses allow for a deeper understanding of how a branch is performing, said Amy Brady, a senior vice president in Bank of America's innovation and development group. For example, sales data might indicate that two branches are doing equally well, but the Brickstream data might show that one has several hundred more customers walking in.
Simon Angove, Brickstream's president, said banks using the technology generally discover that 5% to 15% of their customers walk out without being served. "One of the things that surprised us in the banking world in how high those branch abandonments are," said Mr. Angove, whose clients include retail companies as well. "If you think of every person who walks into a branch as a sales opportunity, the volume of walkouts is a massive sign of service failure."
To keep customers happy, Mr. Angove advises banks to "focus on five": Keep wait times under five minutes, make sure no more than five people are in the teller line, and complete transactions in less than five minutes.
He said Brickstream's research indicates that customer satisfaction starts to deteriorate dramatically if those standards are not met. "In fact, 30% of customers we interviewed wouldn't even join the teller line if it already had five people in it," Mr. Angove said. Perceived wait times are often worse than actual wait times, he said.
Brickstream's research also found a strong correlation between wait times and how likely customers are to stay with a bank. Likely defectors waited almost twice as long in line as those who said they would remain customers.
Banks tend to focus on service and the physical branch environment - including design elements, layout and amenities - when using Brickstream's technology. The service aspect often involves evaluating initiatives to shorten actual and perceived wait times, Mr. Angove said.
That includes distraction techniques, such as television screens at the teller line, and lobby managers who greet customers, help with some transactions, and send some customers elsewhere in the branch, Mr. Angove said. Adding lobby manager is expensive, but they can also save money by showing customers how to use lower-cost channels, he said.
Brickstream provides banks with comparison data to evaluate what investments are likely to pay off.
Many initiatives are not "one size fits all," Mr. Angove noted. For example, the vast majority of customers don't value amenities like coffee bars, Internet kiosks, and media walls with financial publications, but all three tend to do well in young, urban communities.
Stessa Cohen, a Gartner research analyst, said videotaping is helping banks improve layout, merchandising, and staffing as they adjust branch designs. It enables bank executives to base decisions on facts rather than anecdotal evidence, she said.
For example, Citizens' tellers often said their branches needed one, Ms. Smith said. But the research indicated that in general too few customers brought their children to justify allocating the space.
Citizens evaluated about 75 elements in the pilot test of its new branch design, weeding out those that did not work.
One idea that got nixed was a bulletin board with scrolling electronic announcements about community events, Ms. Smith said. The idea fit with trying to be seen as part of the community, but the bulletin board was hard to keep updated.
Also, "I thought customers would love it, but they just went, 'Oh, ho-hum,' " Ms. Smith said.
On the other hand, name tags with personal details that serve as conversation starters - "I'm going to be an aunt for the first time" - turned out to be a low-cost idea with huge benefits.
"Before we tested it, I thought, 'This could be corny,'" Ms. Smith said. But the name tags proved popular with customers and employees.
One employee had one that read, "I used to skate with Disney." "Everyone asked her, 'You did?' " Ms. Smith said.
"The messages change every 10 days," she said, "so now customers are looking for what the nametags are going to say next week."
Ms. Smith said she continues to use the same kind of research methods to test branch refinements.
The videotaping targets about eight areas of a branch, including the teller line, lobby, and ATMs. The research goes on before and after branch changes, so that the differences can be measured.
The process includes having researchers visit the selected branches to observe customer behavior and take notes. They also conduct exit surveys to determine, for example, which marketing messages customers can recall unaided after leaving the branch.
Even banks that are not using consumer behavior research are still working harder these days to improve the customer experience.
Old National Bancorp in Evansville, Ind., is starting to use staffing software in its 130 branches this month, said Lori Danielson, the director of marketing for the $9 billion-asset company.
She said the software, which is from Demos Solutions of Norwell, Mass., will give branch managers "the facts" about customer traffic patterns to help make sure there are enough tellers at peak periods and not too many at other times.
To prepare for the rollout the bank reviewed transaction volume at selected branches and service ratings from mystery shoppers. Ms. Danielson said the highest-volume stores often elicited the highest service scores. That insight was reassuring, she said. "Having excess staff doesn't always relate to high levels of customer service. We can staff appropriately without damaging or risking customer service."
Darryl Demos, the chairman and CEO of Demos Solutions, said a renewed focus on service emerged in the banking industry around 2001. As a result, banks have become more interested in tools to address such challenges as optimal staffing. Some are also implementing low-tech solutions, such as lobby management programs or appointment banking.
"In the late 1990s the industry was not spending a lot of time worrying about providing better customer service," Mr. Demos said.
But after the Internet bubble burst and the 9/11 terrorist attacks occurred "the tide started changing," he said. Concepts like lifetime value came into vogue. Instead of talking about the 80/20 rule - the idea that 80% of profits come from 20% of customers - bankers started thinking they could make customers more profitable by keeping them longer.
"So they rolled out customer service initiatives like how to make people feel like they're waiting less time in line or adding tellers," Mr. Demos said. "It's relatively new that service is perceived as a driver of profitability in banks. Or, I should say, it's come full circle again."
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