Improving Branch Remodels: A Case Study
A leading retail bank spent tens of millions each year on bank branch remodeling but didn’t know how to strategically maximize return on investment on remodels.
- Management had not been able to see any benefit from prior remodels and had no clear way of deciding which branches should be remodeled going forward.
- The bank employed APT's Test & Learn for Sites™ and identified branches that would respond best to a remodel and specific components that would work best in a remodel (e.g. bank teller counters).
- The optimized bank branch remodel program improved annual EBIT by $10M over the planned remodel approach.
The Company:
A leading North American retail bank
The Challenge:
The bank had been remodeling branches market by market, and the majority of mature branches in a given market were remodeled around the same time. Since branch performance significantly varied by market, it proved difficult to find comparable non-remodel branches that could set a baseline to determine the impact of bank branch remodeling. Without being able to measure even the overall impact of remodels, it was impossible to determine where remodels were working best and which components were most profitable.
The Solution:
The client looked to APT's Test & Learn for Sites™ solution to identify the impact of past remodels and find the most profitable bank branch renovation and remodeling strategy going forward.
The bank used APT’s proprietary software to find comparable sets of branches that had not been remodeled. Each test branch (remodel) was compared to a custom set of control bank branches. This approach clearly showed that branch remodels drove an increase in performance.
The software also scanned thousands of factors to find that bank branch remodels drove higher returns in locations with a certain trade area profile based on income, population growth rate, and competitive intensity. Also, particular remodel components like new signage were successful in certain types of branches and not in others.
All of these factors were combined into a model that predicted remodel performance for each bank branch, as well as the incremental benefit for certain high-cost remodel components, such as flat screen TVs.
The Results:
For the first time, management was able to quantify the precise benefit of bank branch remodels. Understanding which branches would respond best to a remodel and which components would be most profitable improved the annual EBIT of the remodel program by $10M.
Next Steps:
