In our last newsletter, we discussed some of the guiding principles that top retail banks like Umpqua employ to differentiate the branch experience and distinguish the bank from others.

 

 

This newsletter focuses on four other elements that are critical to branch success, particularly in the hyper-competitive and low margin environment in which we are operating: branch marketing strategies, staffing, service quality, and employee management.

 

If your bank or credit union would like to learn more about creating a differentiated branch delivery model please contact Charles Wendel at 917-744-6600.

 

 

Marketing strategies

 

* New branch openings. Whenever Umpqua opened a new office, it provided a local donation as a draw for new customers. The bank would make contact with local organizations and ask them to identify local projects that needed funding. Once the bank developed a list, the local community had 60 days to vote and select the one they felt was most important. The bank promoted the projects on a video touch screen with electronic voting and announced the winner with a special open house event to which they invited the winning organization and their supporters. Significant free PR was achieved through this program.

 

Winners might include a grade school that needed new band instruments for their marimba band, a new crosswalk near a busy intersection, or new playground equipment at a local park. Many of the organizations, their board members, and their community supporters became excellent relationship customers.

 

* Community ties. The concept the best community banks, such as Umpqua, follow centers on positioning the bank as a small business advocate and attracting a higher value client to the bank. For example, each branch reviews its trade area and identifies up to 20 different high value retail small businesses. The branch and the business would agree on a date to host an evening event at the branch to promote their business. (The branch should host an event a minimum of every two weeks.) The cost for these events is minimal, yet the positive public relations achieved can be significant. In some cases the bank featured the business’ products in the branch the week of the event, for example, a new mountain bike or a special floral arrangement. This is a continual, not a one-time, program that emphasizes local businesses not national players.

 

* Random acts of kindness. Umpqua also emphasizes what it terms “random acts of kindness” as a differentiator and one of the fundamentals of its culture. Examples include delivering coffee and cookies to local florists on Valentine’s Day and/or Mother’s day, to CPA firms on April 15th, and to bicycle shops on June 21st to celebrate the first day of summer. (We have seen similar approaches used by banks serving the middle market.) Another example involved working with a local grade school to ask them to make Christmas decorations for the branches’ tree. Parents and customers were then solicited to purchase the decorations, with the proceeds going to the school art or music department.

 

* Focus on local merchants. At the newest “Neighborhood Stores” Umpqua uses video monitors with touch screen technology that allows businesses to enter information about their company. If a customer wants to know where a local hardware store or barber shop is located, they can find this information on the video monitor.

 

* Adopt a local grade school. Each branch adopts a local grade school. During the year, the branch hosts several fund raising activities. The bank also implemented a program called “Learn to Earn”. Every Thursday morning an associate goes to the grade school for “Banking Day” and students bring in their deposits in special envelopes and make a deposit. Of course, a tremendous number of low balance savings accounts are acquired, but many parents began banking with Umpqua due to the program. It is yet another part of the bank’s relationship focus.

 

 

Staffing model

 

* Universal Associate. Umpqua maintains two job families within the retail store environment: The Store Manager and the Universal Associate (UA). Every UA, once trained, can handle any customer need, from basic teller work to new account transactions to assisting with operational questions. During the course of a month a UA may handle teller duties one day, act as a store greeter the next, and the next day open new accounts. All staff are encouraged to rotate positions often to retain basic skills in all operating areas of the store. This model offers customers significant value as any associate can answer questions or assist with a transaction.

 

* Extensive training programs. Over a three to four month period, every new UA receives extensive training, both in the classroom as well as in a mentoring program in the store. Training includes teller duties, new account opening, operations, loans and, most importantly, Umpqua’s culture of providing exceptional service.

 

* Selecting the right employees. Every employee, from executive office candidates to entry level branch Universal Associates, goes through a minimum of four interviews. At the store level, the bank usually tries to have a prospective employee interviewed by two peers and by the store manager and a regional manager. Prior banking experience is not the primary qualification. Rather, personality and desire to help individuals leads a long list of critical personal attributes. We see many banks fail in the critical area of hiring.

 

 

Service Quality culture

 

* Non-negotiables. Several “non-negotiables” form the basis of branch culture:

 

• Every employee wears a name tag.

 

• Employees stand and greet the customer.

 

• Employees call the customer by name. The phone will be answered “Welcome to the world’s greatest bank”. Employees will respond to all email and phone calls the same day.

 

• Employees will acknowledge the customer within 30 seconds of entering the store.

 

• Every store will hold a “motivational moment” every day. The motivational moment is the Umpqua branch’s opportunity to gather together, usually in the morning, and start the day with a song, a motivational reading or just a discussion about their favorite movie. It may seem “corny,” but it helps to create a positive culture. Many stores actually invite their customers to participate.

 

• Finally, maintain a high level of professional appearance.

 

 

* Measuring service quality monthly. Many banks talk about the importance of providing exceptional service quality. Banks such as Umpqua measure service quality every month at every branch as well as every department. At the end of each month, the bank publishes a report that recaps the scores achieved at every store based on criteria such as the following: customer service surveys, new account surveys, in person mystery shops, sales effectiveness ratio, and customer retention.

 

* Integrating monthly service quality measurement into employee incentive plans. Every store has the potential for a monthly team incentive award. It is a requirement that a certain level of service quality be maintained, or the team incentive is lost. Every store knows their ranking from 1st place to last, every month. This program provides significant emphasis on always providing exceptional service quality.
Employee recognition and empowerment

 

* Service excellence awards. Each month nominations are submitted to recognize employees that have provided exceptional service. A committee identifies the monthly winner and a special presentation is made that includes a monetary award, an extra day off, a certificate, and recognition on the bank’s intranet.

 

* Brag Box. Banks that are serious about positioning themselves as having superior customer service begin with recognition programs. Umpqua has a special location on the front page of its intranet called the “brag box.” Any employee can submit a brag about another employee, branch, or department. The brag usually started out with “You can’t believe what xxx did for a customer.” Normally the comments are very short, but they promote the value and recognition you receive for providing superior service to a customer. A monthly award was presented for the “Best Brag.” This was only one of several employee recognition programs that resulted in a unique service culture.

 

* Employee empowerment. The bank empowers every store staff member to make decisions in the best interest of the customer and the bank. This can include the ability to waive a fee or to match a competitor’s rate for full relationship households. The staff is well trained on how to manage this responsibility and waiver reports are available daily for management’s review. Umpqua’s waiver rate and its cost of funds remain competitive with almost any community bank’s performance.

 

 

Results

 

All these elements and their consistent execution resulted in strong bank performance, for example, deposits that were up to 2.5 higher than average, significantly higher cross-sell, and high customer retention.

 

Not every tactic used by Umpqua will work for other banks. However, evaluating your branch approach versus a bank like Umpqua that is viewed worldwide as a clear leader provides management with an understanding of where its gaps are and a roadmap for better building the branch franchise.