When choosing a branch location, what's the difference between parcel "A" and "B"? They may look and cost the same, but subtle distinctions could have an impact on viability.
Problem: You need a location for a new branch. You have completed your demographic survey and you have a fairly good idea where the branch needs to go geographically, say within a half-mile radius. Within this target area, you have identified two comparable sites at the same price (so cost is not a factor). How do you decide which site is better? In other words, what are the nitty-gritty details you have to take into consideration when narrowing down the site choices?
We posed these questions to a sample of five site-selection experts who work for clients in the financial services industry. Their observations and comments are organized below under seven categories of “things that need to be taken into consideration.”
1. Are both lots big enough?
When estimating your lot-size need, have you taken everything into consideration? “You want to be sure your branch footprint will fit on the site,” says Robert Schrader of Branch Facilitators LLC, Troy, Mich., “so have an architect standing by to evaluate the site-the architect will help establish how much you need for your ideal positioning, too."
The ideal branch position is not always the one facing the street. If the majority of your parking will be away from the street, behind the building, your main entrance should face where most of your customers will be arriving, so your prospective site must have enough space to accommodate parking behind the building. Zoning ordinances may have more to say about how much parking is enough than you will, so be sure to check the local requirements before you decide that the site is adequate. Also, “Will there be enough space for a drive-through window?” asks Mary Beth Sullivan of Capital Performance Group, Washington, D.C. In addition, you’ll need space for an “escape lane,” notes Steven Reider, of Bancography Inc., Birmingham, Ala. You want easy ingress, egress and circulation around your branch.
“You may need to buy a site that is bigger than you want or need to get a premium location,” says Schrader. “When the market is hot and there is a lot of competition for one location (from pharmacies and retailers as well as other banks), you may need to pay extra for the site that is truly the best for you, but it will be worth it.”
Buying three acres when you only need one may seem wasteful or impractical, but it can give you greater flexibility in positioning your building. Then, you can sell or lease the land you are not using, keeping control over who your new neighbors will be.
For urban sites, if you are choosing between two storefront sites, you probably won’t be as concerned about a drive-through, or even parking, but you may be focused on the size of the existing site and whether there is room to expand (if it is a small site or if expansion is definitely in your plans). The size of your site will depend on the potential for growth in the market, says Joseph Sullivan of Market Insights Inc., Chicago. “In the current craze for building branches, many banks are choosing suboptimal sites,” says Sullivan. “Base your decision on the potential for that market and whether the target market will be served by that location and that size building.”
Be cautious about planning for future expansion, notes Reider. “We are adding branches faster than we are adding people in many communities, so it would follow that the size of most branches will decline. It won’t be possible to support a larger branch if deposits hold steady or decline.”
2. Location, location, location
Locating your branch near other popular retailers is essential to success, say all five experts. Work with a local, knowledgeable real estate agent when you evaluate the potential of different sites. “The agent will have the ‘historical’ knowledge of some sites and can tell you if businesses have succeeded or failed in those locations,” says Reider.
“Many banks assume that a busy street will bring in many customers. If the busy street is midway between two “destination” locations, such as a grocery store and a Target, but there isn’t much around the bank itself, the bank might as well be located on a highway,” he observes. “It’s more important to operate within the sphere of someone else’s draw because banks can’t change customers’ daily paths. Be sure to assess the quality of the surrounding retailers.
If you are considering a site within a strip mall, it is very wise to consider the freestanding out-parcel, according to Reider. If you do select the out-parcel, have your bank’s door face the doors of the other stores: It will be more inviting to customers.
For larger malls, be sure to evaluate the site within the mall or the out-parcel carefully, says Blair, or you may have a very poor location within a great location. One bank selected a location within a mall, but failed to examine the traffic flow or the visibility. The institution got a better price on its parcel and thought it had found a great deal, but it turned out the best location was at the other end of the mall and there was no visibility for the branch where it was situated.
Be sure the surrounding locale is appealing too,” says Mary Beth Sullivan. By an appealing locale, she means surrounded by trees and well-maintained shops instead of a junkyard. The surroundings can draw or repel customers.
Another location favored by many banks is near or at a traffic light. This provides excellent visibility, notes Kevin Blair of NewGround Resources Inc., Manchester, MO. However, there can be drawbacks, too. If at certain times of the day there are long backups at the light, it is actually more difficult to get in and out of an establishment at the corner because the entrance/exit is blocked for several minutes during each light cycle. Also, if there is a median in the road that prevents turning in one direction or prevents drivers from turning into your branch easily, fewer people will use your branch.
3. Traffic flow
Related to location is traffic flow. “You want to get a 24-hour traffic count at each site (which you can request from your municipality),” says Joe Sullivan, “to ensure that your site will have the high level of traffic you need to make your branch profitable.” But don’t rely on high numbers alone. The retailers that surround the location affect the site’s traffic flow, too, either positively or negatively. “Again, you want to be sure you are destination-oriented,” says Joe Sullivan. “It increases your drawing power if you are located near places your customers will go often (like the grocery store, or Target or Wal-Mart).” Reider concurs: “Pass-through traffic won’t stop.”
Another aspect of traffic flow to consider carefully is if it is heavier in a certain direction. “You want to be sure to be on the side of the street that more people travel at a certain time of day,” says Mary Beth Sullivan. “You don’t want your customers to have to cross a heavy line of traffic to reach you if you have a choice. If ‘Site A’ allowed you to be on the ‘busy side’ of the street, it would be preferable to ‘Site B’ on the other side of the street.” Sometimes, you might just have to drive it to see which side is the “better side of the street” for your branch, she adds.
4. Visibility
A part of the traffic flow question is visibility, a key factor in site selection; say both Joe Sullivan and Mary Beth Sullivan. “Your branch is not just a transaction location, it is a marketing too,” say both. “If your potential site is blocked from view by a large building, it would be less desirable than a site that allowed customers to see your branch and your signs as they approach.” Mary Beth Sullivan notes. “What’s around your site also affects how you position your building-whether or not to put it on a slant or directly facing the street.” Your visibility is an essential factor to consider when selecting your site. Mary Beth Sullivan says the signs you choose are key to attracting attention and customers, as is the environment around your bank. “You only have a few seconds to get customers’ attention.”
5. Target market
Your demographic surveys will have indicated whom you will be serving the most, but remember to analyze the market’s future potential. Is the area built out or still growing? If two sites are near each other and one is located in a growing area and the other is not, that might affect which site you choose, says Joe Sullivan.
“You can’t please everyone, so you must determine your key markets and allot the correct amount of space for those customers-small business, mortgages, baby boomers planning for retirement, and so on.” Sullivan says there is a trend toward fee-based products geared for aging baby boomers, therefore there is less emphasis on the teller line and more on facilities that allow one customer-service representative to handle multiple transactions. “There’s more emphasis on ‘relationship building’ space, and there should be more emphasis on proper merchandising, “he says.
As you consider who will be using your branch the most, your plans for entrances may also be affected. Will you have wider doors? Automatic doors? An ATM lobby? Few or no steps? Younger generations will appreciate more automation, a more ‘video-oriented’ environment. Older generations will want a place to come in and read,” says Mary Beth Sullivan. Choosing a site that allows you the flexibility to offer the right environment for your target market is critical.
“Align the conveniences of your location with customer needs-smaller, near-by branches for everyday needs like checking, and larger locations that may be a longer drive for ‘big stuff’ like mortgages and retirement accounts.” Says Reider.
6. Competition
“I don’t fear proximity to other banks,” says Reider. “When consumers choose banking relationships, they choose normal banking locations. If they have chosen to leave a bank that is already on their regular route and you are right next door, they will be likely to switch to you.” Reider also says, “If you don’t think you can succeed across from competition, if you don’t believe in your products enough to go up against their offerings, you may need to rethink your product line.”
There may also be an advantage in locating near a competitor. A small bank may be able to capture customers near a new big bank because of the difference in service or products it provides, says Joe Sullivan.
Robert Schrader says choosing a site can be used as a specific strategy to eliminate a competitor, when the competition for the site itself is between your bank and another bank.
7. Restrictions
The most desirable, affordable, ideally located site can turn out to be disaster if you haven’t done your due diligence research into zoning and signage restrictions, and examined many other legal details (including checking the reputation of the property seller). “Always ask, ‘What can we do to protect ourselves?” says Blair.
“Make sure you review building and zoning restrictions thoroughly,” he says. “There may be height restrictions for your new building that would keep it blocked from sight by an existing building; there may be covenants that dictate what design you may use and what signage is permitted. Bankers don’t think of themselves as retailers but zoning officials will treat you like retailers.”
‘Check for zoning on curb cuts and look into variances to ensure you can build access to the site,” he says. “How quickly a branch can be built on a site may also affect your decision to buy.”
When you have decided on a site, take it with an option – 120 to 160 days to review the site and check all approvals before the deal is closed, says Blair. “Most sellers only want to give you 30 days, but don’t let yourself be rushed. Also, always include a clause that says ‘subject to the approval of the board of directors’ as a final way to dissolve a deal if necessary.”
Environmental issues are a huge concern when purchasing a site, whether it is completely vacant, has existing unused buildings or is a storefront. “Have an environmental study done on all property you are considering, including soil testing for hidden contaminants,” advises Blair. “Drill down all around the perimeter of your planned footprint. You may find rock or a water table that will prevent you from building a basement.”
“Finally, make sure all city officials have signed all approvals so that you won’t be saddled with the cost of widening a road or adding stoplights. Many last minute assessments have been added to site deals that have almost ruined the bank’s plans and have cost them hundreds of thousands of dollars,” he observes.
Poor site-selection procedures over the years have created headaches for more than one bank. For example, there once was a financial institution that opened a jazzy new branch on a busy street, only to see it fail because few stopped by. In another case, a bank bought a terrific empty lot for a branch right in the center of town only to find out later that the parcel was brimming with hazardous waste. By following the few, simple precautions outlined above, you can avoid these problems when making your final site selection. TOP OF PAGE
At a time when some banks are using bold prototypes to move in new sales and marketing directions, few would argue that a good-looking branch can be strategically valuable. Figuring out exactly what works, in practice, is the hard part.
At the moment, many designers seem to favor an unconventional treatment of interiors to win the battle for customer share of wallet.
Certainly, the majority of designers that spoke with ABABJ seemed to prefer opening up floor plans and ditching teller lines-among other eye openers we’ll look at.
This is partially because convenience has become merely expected and is less of a differentiator. Visual elements need to play that role instead. “We’re seeing greater use of open spaces and a willingness to get a little bolder and create an interior that exhibits real energy and spirit,” says Peter Dixon, a senior partner and architect with Lippincott Mercer in New York City.
Yet he and others admit that use of any single design tactic won’t work universally: most designers believe in working from a menu of options that offer flexibility for future adjustments or easier installation from branch to branch.
For a design to be well executed, says Dixon’s colleague, partner Randall Stone, there should be an alignment between an institution’s “personality,” brand, and the design elements put in play. Done correctly, this can result in walls that “pop” and information displays that don’t get passed in a flurry of transaction activity.
Yet not everyone is in love with the visually daring. For interiors, Marcos Makohon, principal, and an architect with Branch Facilitators, Inc., Troy, Mich., tends to favor an approach that looks businesslike, calls less attention to itself, and reflects the seriousness of banking
Here, based on interviews with a group of bank design professionals, are some problems to consider during that process of determining what will work for you.
1. Being stuck in an operations mentality or not using design elements strategically.
The branch, traditionally, has been designed with employee efficiency and operations in mind.
“For a hundred years, banks have done [in terms of layout] what’s convenient for them versus what can convey marketing messages or meet the needs of customers,” says Bruce Dybvad, president with Design Forum, Dayton, Ohio.
“Upon walking in the door, the typical bank customer is confronted with an underlying message, ‘If you’re spending time with us, you’ll need to have your own agenda, know the procedures, and know what to ask for, and who to ask,” he explains. “Otherwise, you need to be willing to wait in line to be told what to do.”
The result? Teller lines that are evident and that can look long unless the bank is empty, plus a physical environment that can appear distantly institutional. It looks as safe as a vault, but as cold as one, too.
Moreover, it is an environment that can create a series of psychological barriers between customers and bankers.
At very least, the right sort of layout can signal a new kind of safety to the customer, says Andrea Simler-DeGolier, retail coordinator and “creationeer” with DEI, Inc., in Cincinnati.
That is, one that says its fine to let your guard down and be open to suggestion. Deploying glass walls in an interior, for instance, can create a sense of spaciousness and minimize barriers between bank staff and customers.
A dramatic, open lobby with views onto the street can also serve to attract new clients in an urban location, notes DEI’s Design Architect Bill Bily. Admittedly, there are security risks to some of these ideas.
“It’s very popular to deconstruct the teller line into something more open and approachable,” says Damon Taseff, associate, with Allegro Realty Advisors, Cleveland. “In certain high crime areas it wouldn’t work,” he explains, noting that he’s seen design teams create an interesting visual idea only to have it go back to the drawing board when a field visit to the location reveals lots of bulletproof glass.
Taseff also advises: “You want the interior to be welcoming and an efficient place to do business. You also need to create areas for private conferences apart from the zones of public traffic so that people who do need to talk about finances feel comfortable sharing information,” he adds. Several others agreed this was critical.
Some, however, believed every bank should consider creating a “living room” in at least some of their branches because it could encourage people to browse bank brochures and other educational materials.
2. Not making the branch a sales hub.
You may have a tasteful branch, but does it work as a sales hub? According to the experts, traditionally designed branches are not as conducive to selling as they could be, because they don’t encourage face-to-face contact away from the teller line.
Architects and designers can adjust elements-from lighting to the positioning of counters, kiosks, and promotional material – so that branches can work as sales destinations.
A good layout can direct movement in the store, call attention to key products, and facilitate those useful sales conversations that solidify relationships and solve problems.
That said, everyone who spoke with ABA BJ emphasized the importance of proper staff training so that the connection established by a warm interior can be acted upon by bankers: in effect, converting passive interest in something being displayed, perhaps, to an active commitment to purchase a product.
Yet another way to think about it: Every square foot of retail space has revenue potential, according to George Frerichs, chairman and CEO of GRFI Ltd/ The Frerichs Group, Chicago.
You don’t want, in effect, to discount your potential by letting a facility get shabby or look blah--or by laying it out in such a way that sales people get, effectively, shut off from in-bound traffic.
Frerichs works with a regression model developed 40 years ago to simulate retail sales viability. Based on 42 factors that effect selling potential, such as competition in the area, it also incorporates 12 different environmental models that, in effect, determine the extent of a region’s pull or reach. (New York City, for example, is a “core” area, one with “strong pull,” Frerichs explains. A core area is one environmental model.)
A typical solution his company poses is derived, in part, by evaluating the sales potential of the geographic region and immediate vicinity, and will sound something like, “This facility should be 4,000 sq. feet. You should highlight mortgage products and put ten sales people on the floor to generate revenue of $18,000 per square foot’.”
Likewise, decisions about exteriors should be of a calculated nature, because they are the stuff of which first impressions are made and allow a facility to stand out in a crowded field of retail outlets.
Branch Facilitator’s Marcos Makohon explains it this way: “We believe it’s critical to get the customer’s attention first-then to convey brand. A pitched roof or turret, for instance, can attract the eye and cause customers [that typically patronize another branch] to stop by if they need to make a quick transaction,” Makohon explains. In theory, a strong brand presence across the network can increase the exposure a bank has with its client base.
3. A neutral interior that doesn’t reflect brand.
Brand should stand for your operating philosophy and value. And your design should both support brand and nurture a selling environment.
If you think the design/brand equation doesn’t matter, just contrast and compare the approach-and fate-of K-Mart to Target, says Eduardo Alvarez, senior vice-president, director of strategy and design services with Willey Brothers, Rochester, N.H.
“K-Mart really suffered for a time from not maintaining their physical network,” Alvarez says.
“The two stores aren’t dramatically different in terms of positioning,” he explains, “yet Target attracts a more discerning buyer, partially due to its innovation layout.”
Do your signs, fixtures, and furniture contribute to your bank’s overall image, or in case of your branch network, has function trounced form entirely?
The reputation of trustworthiness is enjoyed widely in banking and can be a positive attribute, notes Cynthia Grow, “visioneer” and vice-president of creativity and imagineering with DEI, Inc.
Yet, interiors that rely on traditional images of trust can also tend to convey blandness, at one extreme, or intimidation, at another.
This tendency can be avoided, say designers, if bankers first think about what they enjoy or are drawn to in the stores and public areas they visit and see if some of those ideas can translate in their own branch network.
For starters, consider offering an open space with a concierge who directs customers and diffuses any anxiety, confusion, or impatience that customers may feel, says Richard Grow, DEI president.
Others agree that doing more to visually demonstrate why a given institution is different or valuable – by creative use of images and signs-can boost bank tangibles such as cross-selling and retention figures.
Admittedly, the exact ROI of design isn’t easily calculated and is an indirect contributor to success. Partly because of that, “most banks are a bit afraid to step out of box,” says Cynthia Grow.4. Not using color to create a retail-savvy space. For that matter, not thinking about differentiation in visual terms.
4. Not using color to create a retail-savvy space. For that matter, not thinking about differentiation in visual terms.
As a general rule, banks tend to offer undifferentiated environments; this extends to their use of color.
Willey Brothers’ Alvarez noticed that most U.S. banks prefer blue, which is a classic corporate color.
“The color is used by something like 80% of all institutions,” he says. “It’s associated with logos, marketing, and interiors,” he adds. “While blue is soothing and can project safety, financial competence, and traditional values, its harder to stand out from the pack if everyone is using it.”
Color can differentiate a brand, but in the branch, it can also induce a certain mood or highlight aspects of message, however subtly. Likewise, use of certain color palettes or materials create a sense of ease and an environment where customers can feel a bit more positive about addressing financial concerns.
While some bankers are beginning to adopt unconventional hues and textures in materials and finishes to create a warmer or more compelling space, not everyone is ready to make the leap into looking or being dramatically different, says Lippincott Mercer’s Peter Dixon.
Walk into your average branch and it feels like the branch of a competitor down the street: only the posters and logos are different. That is, perhaps, the biggest design challenge of all.
While blending in with the crowd was effective for years, today’s consumer has higher expectations about architecture and interiors, notes DEI’s Bill Bily.
“We remind clients that, on one level, their competitors aren’t merely other banks. In the great race to break through information saturation, a bank is battling Disney and other retailers for ‘mindshare’ and those innovators are raising the bar on consumer expectation,” Cynthia Grow adds.
Many institutions achieve a handsome look with brass and marble and exude an air of old-world banking, yet it isn’t exactly friendly or approachable the way high-end mall stores can succeed in pulling in passersby.
Even if an overt retail look isn’t what a given bank aspires to, bankers need to be analytical about appearances as opposed to making a snap decision about their environment or changing as little as possible for fear of making mistakes.
5. Products convey your brand and your institution’s personality. Are you showcasing them?
Treatment of products can seem complicated, because, on the one hand, the industry has long been told by various experts that banking products are generic-and a banker can interpret that to mean that they need to somehow de-emphasize them.
Or, bankers might assume that customers already know what the bank has.
But designers suggest that correct merchandising can compensate for a product’s vanilla characteristics or at least engender consumer comfort by encouraging them to get informed.
“You want to move customers through the store,” says Jon Nedland, senior vice-president with Custom Commercial Environments, Lincolnshire, Ill. “When people come into a branch and aren’t doing the usual transactions, they are likely in search of very specific product information. Within the FDIC’s guidelines for product presentation [that require deposit and investment product information to be separate], do you make it easy for bank customers to know what you have and find what they need?”
When considering merchandising approaches, the idea isn’t to incorporate a specific suggestion blindly as much as to understand a general principal: the customer wants to feel empowered when they walk through the door rather than adrift in a sea of product facts.
That is, customers need to be moved to an “informed state” quickly. “That’s one lesson we learned from the internet boom,” says Design Forum’s Bruce Dybvad, “people like to feel comfortable wit h the product details before they get into discussions.”
Yet in matters of presentation, bankers always have to contend with important restraints, whether dictated by budget, compliance, or environment.
There can also be restrictions of a legacy location or certain architectural features not easily altered.
Within those confines, however, bankers can often find ways to break from the usual modes of presentation. They can do so, perhaps, by using outsized graphics or smarter product display-or making use of fresh iconography.
“We think of display in terms of billboards,” says DEI’s Bily. “Not literally, of course, but we play with dimension. The idea is to create an image that catches your eye by being unexpected.”
Instead of relying on traditional symbols of wealth and safety or over-used stock images of lifestyle, innovators are incorporating something that shakes their customers awake.
“In certain markets, high-quality giveaways are making a comeback.” Alvarez adds. One banking client of Willey Brothers, for instance, installed a promotional retail fixture (i.e., a round, red platform with levels) in the lobby that displayed seasonal product giveaways tied into the sales of key products. One month, for example, a customer who purchased a CD was given a Palm Pilot. Another month leather briefcases were given away. The items on display served as an ice breaker, creating an opening for a sales representative to approach a customer about the bank.
Lippincott Mercer’s Peter Dixon points out that proper merchandising—including greater use of the electronic signs or plasma screens-are all incorporated with an understanding that less can be more in retail.
“We like electronic signs because they let bankers easily keep promotional information current,” says Dixon, “and also break through visual clutter.”
6. Demographic Info. Bankers, traditionally, have not collected and analyzed enough demographic information about their customers.
To make an environment that truly connects, the bank needs to think about what tone and message may resonate with the typical customer based on what you know about them or what you can find out.
DEI’s Bill Bily points out that good design is appropriate to the facility’s function and market served. (Pioneer Bank, pictured at right, clearly reflects the western region in which it operates.) This extends beyond the usual distinctions between, say, discount selling and a luxury sales environment.
“We can’t create something in a vacuum,” says Bily. “We need to know about the institutions history and identity, certainly, but we also need to know about the region they operate in and the make-up of their customer base. That context is the basis for all great design inspirations.”
Bob Shrader, principal in Branch Facilitators, Inc., agrees that customer preference counts.
“Many of our clients rely on focus groups to get a sense of what will be well received. While some ideas look great in concept stage, it can be useful to get feedback. Although, given the wide range of options out there, you may walk away realizing you can never satisfy everyone.”
“Some standouts are getting better at making that connection with their customer base,” notes Lippincott Mercer’s Randall Stone. “Charter one is relatively edgy for a bank,” he says. “And that look speaks to the communities it serves. ING Direct has a positive, upbeat personality and a brand that connects with a particular type of business professional. They also leverage their brand color [orange] quite effectively in their café/branches,” says Stone.
Rhode Island’s Citizens Financial Group, a client of Lippincott Mercer, trusted the design team to play fast and loose with the color wheel on accent pieces to create a shimmering, airy looking interior with a lot of natural light. (Because the institution’s tagline is “Not your typical bank,” both the colors and unusual images are appropriate.)
Then, there is Washington Mutual, says Stone, which has succeeded with the low-tech, family-friendly “Starbucksian” look of its Occasio branches.
7. Lighting – Is it working for you?
If your lighting doesn’t beckon them in the lobby or highlight key merchandise within the branch by attracting the eye, you may be missing an opportunity to transform a routine visit into a sales exchange.
“Light impacts mood of your staff and your customers,” notes Peter Dixon. “It also can bolster visual points of emphasis the way good punctuation helps the reader gauge the emotion of the speaker.”
Branch Facilitators’ Marcos Makohon thinks that lighting should be warm and natural when possible as well as affordable and easy to maintain.
“While you want to draw attention to the teller line or a product display in the branch, in the office interior, you want to create a lighting environment that doesn’t strain eyes and generally supports productivity,” Makohon says.
All great design experts know that lighting strongly impacts how colors are perceived and, overall, effect how inviting an environment is. Our sources agreed it can be the foundation to an effective look.
“Natural lighting is the best at making everything look its best,” says Dixon. TOP OF PAGE
