4 Branch Design Considerations that Affect Member Loyalty

by: Michael Downs, Vice President of Marketing, Momentum

Our work with Credit Unions across the country affords Momentum the opportunity to engage with executive management teams on a diverse set of issues that impact overall performance and longevity.  Without question, one of the most pressing concerns we hear about is member loyalty.  The value of loyalty to a Credit Union is very simple and compelling: It leads to more profitable long-term growth.  However, in an environment of hyper competition, demographic complexities, mobile technologies, and advertising overload, the task of building loyalty can be overwhelming to Credit Union executives.  In addition, these challenges are compounded by the fact that member expectations can no longer simply be fulfilled, but must be exceeded.

With the above in mind, the payoffs for Credit Union that invest in building member loyalty are immense. According to research conducted by Raddon Financial Group (2010), Credit Unions with higher levels of member loyalty outperform their peers that do not.  In areas such as new product cross-selling to existing members, high member loyalty credit unions perform at a ratio 45% higher than those with low member loyalty.  All of this adds up to an increased significance on how effective Credit Unions can use their retail branch networks.  The good news is that Credit Unions can leverage their retail branch strategies to strengthen member loyalty by considering four key areas: demographics, technology, member engagement and brand consistency.

1.  Member demographics
While member data and demographic analysis have long been used to evaluate market opportunities and potential locations for branches, more Credit Unions are using these insights to understand what should actually go inside the branch itself.  The demographic characteristics of the members a branch serves and/or desires to serve are critical drivers in decisions regarding the design, layout and function of the branch. It is essential that a Credit Union know the members using or living near the branch before it builds or remodels it.  For example, a branch located close to a college campus or high-tech business center is likely to serve a large number of “Gen Y” members, whose lives are entrenched in mobile and social technologies.  As a result, a branch that appeals to their technological sensibilities and exposes them to education on products such as long-term investments is likely to be successful.  Alternatively, “Gen X” members are typically busy, middle-aged people, who are likely raising families. They have lifestyles that are on-the-go, and they prefer one-stop shopping where their kids can be entertained while they conduct their business. For those members, a branch design that offers amenities such as a children’s area would be very appealing. In the end, a Credit Union should look to understand its members from a generational standpoint and develop a branch design and service model that best serves the needs of those members.

2.  Technological balance
Most people agree that the Apple store concept is cool and innovative.  However, does it mean it is the right design for representing your brand personality and the way you engage with Members?  Knowing how far to push the boundaries of technology is tough, as most Credit Unions want to convey a progressive image, but do it in a way that does not lose sight of the human element.  Much of this decision is driven by the member characteristics described above, but it is also driven by the operational workflow you hope to achieve in the branch. Technology has the power to solve problems, delight and engage, but also has the ability to intimidate, frustrate or alienate certain types of people.  The key is to integrate technology where it makes the most sense and to align your technology strategies to the goal of each branch.

3.  Member and staff engagement
While the speed of change in technology is blindingly fast and members are more mobile than ever, there is still no substitute for the level of personal engagement that Credit Union staff can deliver.  Consequently, this is an irreplaceable element of building member loyalty in the retail branch.  In evaluating staff and member engagement in possible branch designs, two critical factors are space and brand personality. The use of space is important because it affects communication, efficiency and the quality of the aesthetic and technological experience a member has in the branch.  Ultimately, it makes or breaks member loyalty.  While it is important to convey an image of stability and strength, it is equally important to elicit an atmosphere that is welcoming forward thinking.  Members need to feel comfortable talking about personal finances with branch staff in a space where their business cannot be heard by others, and they also need the option of using self-service technology.  This requires a delicate balance.  We see many Credit Unions moving away from the traditional teller windows to designs that are flexible enough to allow spaces for both open and private interactions. More and more Credit Unions are incorporating lounge areas, coffee bars and internet cafes—spaces where people are comfortable and more interested in hanging out, instead of completing a transaction and leaving.

4.  Consistency
It is important to remember that the design of things we encounter in life shapes our experience of them, and if those experiences are inconsistent, loyalty becomes more difficult to establish.   In all retail environments, people expect their favorite brands to speak in a consistent voice, in store, online and in traditional and digital channels.  Within the Credit Union movement, this continues to be supported by research which shows that consistent store branding drives increased revenue of 20% per square foot for a retail branch network.  Without question, it is extremely difficult to get all the member-facing components to convey consistency and relevancy.  However, a holistic approach rising from branch design gets all the retail components working together.  Things such as light, color, texture and shapes become a complete brand language, orchestrated to create stories and meaning about your brand. They can convey a brand’s passion, kindle the imagination and elevate emotion for a more memorable member experience.

As outlined above, establishing and maintaining member loyalty has never been more challenging than it is today.  Credit Unions are competing in an environment of constant change, one where members are increasingly mobile and difficult to satisfy.   Yet despite these factors, Credit Unions have an opportunity to leverage their branch network as a powerful to tool for building member loyalty.  By developing branch design strategies that incorporate considerations for demographics, technological balance, member engagement, and brand consistency, Credit Unions can put themselves in a better position to win the long term battle for member loyalty.

Michael Downs is the Vice President of Marketing at Momentum, a national design-build firm.  Mr. Downs and the Momentum team work with Credit Unions to facilitate strategic planning, evaluate facilities growth needs, and implement systems for ongoing measurement and benchmarking. Mr. Downs holds both a Bachelors and Masters of Business Administration, completed the ABA School of Bank Marketing at Southern Methodist University, and has more than twelve years of experience working with clients on strategic planning and marketing.  Learn more at www.momentumbuilds.com or connect at www.twitter.com/plandesignbuild