Branch Remodels
Leading US retail bank investigates the impact of branch remodels
The Company
Leading US retail bank
The Challenge
Remodels had traditionally been viewed by the bank as a cost of doing business and were scheduled accordingly. The client was worried that their latest branch upgrade effort was not showing significant sales gains, but managers across the network were enthusiastic and heavily supportive. Management wanted to directly quantify their returns prior to continuing major remodel activities.
The client chose to use APT’s enterprise Test & Learn software to quantify their remodel investment
The Solution
The bank, with the help of APT and the APT Suite, built models to understand the impact of each of the various types of their remodel program.
Rigorous evaluation of these remodels showed that the program impact had a marginal ROI. De-averaging of results indicated that remodel results were widely divergent throughout the network, creating substantial value in certain locations and minimal lift in others. Segmentation identified that remodel success was very sensitive to both competitive intensity and key indicators of local growth. These two key drivers along with thousands of other branch demographic and condition facts were evaluated for inclusion in a model that could be used to predict the ROI of future remodels.
Variations in the execution of remodels over time allowed this client to use APT to determine the effectiveness of each remodel component- ranging from new signage fixtures to parking lot resurfacing, from furniture replacement to new lighting. Aspects of the remodel program which were found not to drive incremental sales were removed from building plans for future remodels resulting in significant cost savings.
While performing value engineering analysis, APT uncovered a key insight that revealed an unnoticed flaw in the clients operating philosophy. Business plans for remodels included time and money to make structural and operational changes to branches while the remodel team was on site. The idea was a seemingly sensible one - kill multiple birds with one stone - but that had an unintended side effect. Correlates analysis found that these structural changes were seriously disruptive activities that extended the remodel time period and drove customers away from the branch. Trend analysis showed that once these potential customers were lost, they were lost for good - they adapted their behavior to do business at other, less convenient branches (reducing customer satisfaction) or worse, went to the competition. As a result of this finding, the remodel program was altered to reduce customer facing disruption and structural changes were scheduled only when required and completed more quickly.
Results
Using outputs from APT, management prioritized and targeted future remodels, generating an incremental $10MM in revenue in the first year, operating within the same capital expenditure as prior years.
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