Put the ‘Milk’ in the Back of Your Branches
There are pundits in the financial industry who believe branches are dead. Most financial marketers, however, acknowledge that branches are not going away anytime soon, and that teller-based transactions will continue to occur — at least to some extent — for the foreseeable future. If your financial institution is among those sustaining its investment in branches, then there are some critical questions your senior leadership team should address:
- When you build a branch, is it designed strategically? Or do you simply duplicate what you’ve always done?
- Why do you use the layout(s) you use? What design decisions were made and why?
- If you only need 2-3 tellers 90% of the time, then why do you put in 8+ teller stations?
- Do you follow branch trends and study best practices? Or do you just hire some local architect to make something that looks and feels like a bank should?
Reality Check: Financial institutions are lousy retailers. They make many retail mistakes, starting with the basic layout of their branches.
Among the many lessons banks and credit unions could learn from retailers is the maxim, “Put the milk in the back of the store.” The underlying rationale is intuitive: Drive consumers past everything else you sell as they make their way to the one thing they need most often.
“Put the milk in the back of the store.” Duh, right?
Despite the fact that this expression is practically a cliché, the vast majority of financial institutions completely ignore it. They put their tellers (the “milk,” as it were) everywhere except for where they should — even including right by the front entrance!
This article examines the advantages of applying this basic retail principle and why financial marketers should locate teller/transaction areas in the back of their branches. Three different floor plans are presented, each demonstrating common flaws financial institutions make when designing their branches, followed by two examples where the “milk is in the back of the store.”
Common Flaw #1: The Split
In this familiar layout, the entrance opens into a shared common area (green), which divides the Transaction Zone (orange, left) from the Sales & Service Zone (red, right). Four Tellers sit across sit across from two sit-down Service Representatives and a modest waiting area. The design intent is to isolate the noisy hustle and bustle of high-volume transactions from the quiet privacy of consultative sit-down spaces.
Design Flaw: Unfortunately, the reality is that customers perceive an implicit barrier (indicated by the black-and-yellow strip) between the neutral public area and the Sales & Service Zone. Customers trust that as long as they stay in the green zone, a Sales Rep won’t sling sales pitches at them. Customers who need something know to step inside the red zone. Everyone else knows to stay out, and avert eye contact with “those people who just want you to open another account.”
Security Flaw: Bad guys always like to keep an eye on their exit while committing their crimes. This layout gives robbers excellent field of vision. They can easily scan the teller area and their escape route in one casual glance.
Merchandising Flaw: Retail Displays are placed near the entrance/exit where people are moving too quickly to pause or notice. This is a high-speed, high-traffic zone, not a “dwell zone.” People aren’t going to linger here. Anyone who stops to absorb marketing messages would be subject to the ‘butt brush factor.’
Common Flaw #2: The Straight Shot
In this example, the emphasis is on convenience, enabling customers to get to-and-from the Transaction Zone quickly and without obstruction.
Design Flaw: The “milk” may be in the back of the store…er, branch… but it’s a straight shot: customers walk in, conduct their transaction, then leave. The very instant customers enter the branch, they are focused on the queue, then zeroed-in on the tellers. On the way out, the only thing that has their attention is the exit. They get tunnel vision, so they never notice the Service Reps off in the periphery.
Security Flaw: Think about it…if customers can get in-and-out easily, so can robbers.
Merchandising Flaw: Customers may love this kind of branch because it makes things easy for them. Of course grocers could give shoppers an unobstructed path to the milk fridge too…but they don’t.
Again, it’s not generally very effective to situate marketing near entrances/exits. The message has to be very short and extremely simple — no creative abstractions or complex concepts.
AN EXAMPLE OF THE STRAIGHT SHOT FLOOR PLAN
Common Flaw #3: L-Shape
This layout is frequently used by financial institutions who believe it is important to have 8-10 teller stations available for those 1-4 peak days in a month (typically Fridays) when transaction volume is at its highest. This results in a long row of teller stations dominating the entire branch.
Design Flaw: Service Reps are tucked around a corner, so there are no opportunities for engagement. Customers could walk past the Sales & Service Zone a hundred times without knowing what goes on back there. How would customers know you offer home loans when they can’t even see you have a mortgage rep?
There may be the capacity to staff six teller stations, but how often will all six be staffed? What will customers think when they see employees at only two stations? They’ll think you look sad and abandoned, like airline counters on the graveyard shift. And God forbid a queue develops while you’ve only got two staffers manning your massive teller operation; customers will moan about how woefully understaffed you are.
Security Flaw: The closer you put tellers to an exit, the more likely you are to get robbed. In this layout, a robber could practically keep one foot out the door while passing his note.
Merchandising Flaw: With this floor plan layout, don’t be surprised if customers think of you as nothing more than a check-cashing store. No matter what you try to tell customers, the design of your branch says exactly what you’re about: processing transactions.
When tellers are near the entrance, you run out of space for retail displays, further limiting cross-selling opportunities.
Putting Milk in the Back of the Branch
There is one common problem shared by each of these three flawed branch layouts: Branch visitors must make a conscious decision and a deliberate effort to engage with Service Representatives. Service Reps are left twiddling their thumbs, passively waiting for a Customer to voluntarily upgrade themselves to a Prospect by stepping across the “barrier” and venturing into the Sales & Service Zone.
Situating your teller area in the back of your branches allows you to integrate Service Reps into the experience. “But just placing tellers at the back of a branch is not enough,” points out Paul Seibert, a principal at EHS Design and one of the world’s foremost authorities on branch architecture. “The experience must be engineered to properly expose products, services and staff to customers as they move along the path to the teller area, and then back out towards the door.”
If people are coming in to conduct costly transactions in your branches, why not make them say “hi” to your friendly, personal employees and pass by a few of your marketing messages? It’s only fair, isn’t it? When you move tellers to the back of branches, you not only create opportunities for positive interactions, you give yourself more space for marketing.
What’s more are the security benefits you’ll realize when situating your Transaction Zone in the back of branches. If you want to minimize your risk of robbery, move your tellers as far from the entrance/exit as possible. Robbers prefer the shortest possible path between the teller area and their exit, and, preferably, to keep an eye on both locations at the same time. Putting obstacles and people in front of robbers is good security. Putting smiles and promotions in front of consumers is good business.
The concept is known as SafeCatch. Developed by the FBI in partnership with EHS Design, SafeCatch requires customers and potential robbers to follow the same path, but each have very different psychological experiences. “Customers feel they are the center of attention and well-served, while robbers experience vulnerability and loss of anonymity as they move through the branch,” Seibert says. “When properly implemented, SafeCatch reduces robberies by as much as 70%.”
The Open Floor Plan
This layout takes customers looking to conduct transactions on a journey to the back of the branch. Along the way, customers must navigate a path that passes both Service Reps and Retail Displays, giving the financial institution more flexibility, security and cross-selling opportunities.
Design Advantages: If you equip your sit-down desks with the proper technology, Service Reps can pick customers out of the queue whenever customers start to line up. For instance, a Service Rep who might spot someone holding a check can say, “Sir, if you’re just here to make a deposit, I can help you with that.” Shifting some of the transactional workload onto Service Reps during peak hours is a great way to reduce the number of teller stations you need. But Service Reps can only assist in this capacity if juxtaposed along the queue. Do it right and you won’t ever need 6-8 teller stations again.
EHS Design’s Seibert endorses this solution. “Over the past ten years we have seen the size of teller lines shrink from an average of 6-8 down to three or four,” Seibert says. “Managers and service representatives are getting out of their offices and working the line to help alleviate any crunches in the teller area.”
Merchandising & Cross-Selling: Savvy retailers don’t cave to every consumer desire, yet banks often build their branches to suit customers without giving any consideration to the organization’s strategic objectives. What you need to do is carefully craft the experience. You must engineer where customers go and what they see, because every time you get them to engage with one of your employees or retail messages — even briefly — it helps fuel potential cross-selling opportunities.
Security: Acknowledging people with a smile and a friendly greeting isn’t just a nice thing to do, it’s the FBI’s favorite technique for deterring robberies. Simply saying “hello” to a would-be robber cuts your robbery risk significantly. Robbers hate making eye contact with employees because they don’t want to be noticed. When bad guys realize they have to engage with your peppy, proactive employees on the way to rob your tellers, they’ll probably decide to move on down the street and rob your competitor instead — you know, the branch that isolates staff and offers robbers an easy getaway.
EXAMPLE OF AN OPEN FLOOR PLAN W/TELLERS IN THE BACK OF THE BRANCH
Using a U-Shaped Traffic Pattern
A greeter warmly welcomes people as they enter. Customers “bounce” off Service Reps and branded retail displays as they make their way back to the teller area.
Design Advantages: The Greeter, which replaces one of the tellers, is not a new fulltime position. The existing branch staff are reassigned and rotated into the Greeter position following a regular schedule. This means no one gets stuck with the same job all the time.
Most financial institutions improperly deploy Greeters. If a Greeter doesn’t have the right training and equipment, they become little more than a smiley, feckless lump. But if you use Greeters strategically and effectively, they will be able to intercept a significant number of those customers who don’t need to travel all the way back to the Transaction Zone. With some sly design, you can create a Greeter Zone that won’t look like someone is missing when the station is unstaffed.
The growing trend of online+mobile has put the number of in-branch transactions on an irreversible decline, so it’s smart to cut the size of your teller activities. In the U-shaped illustration, giving the Greeter and both Service Reps the right tools enables them to act like three additional tellers during peak hours. This is another reason you no longer need branches that accommodate an army of tellers.
Merchandising & Cross-Selling: A good Greeter can really help you build positive customer relationships. If they regularly assist customers with cashless transactions, there will inevitably be opportunities to teach people about alternative delivery channels. If the Greeter position is staffed by someone trained as a Service Rep, then they will be able to assist customers with their needs, or, alternatively, walk a customer over and introduce them to another Service Rep.
The U-shaped layout provides the greatest potential for retail marketing. Customers must look at no fewer than four walls before reaching the teller area. Plus there’s one more wall behind the tellers when they get there. Every one of these walls represents a retailing opportunity.
If you want to put a corporate identity display in your branches, there’s no place better than on the wall behind the Greeter. Financial institutions frequently waste the space behind tellers with a large logo and slogan. But the “teller backwall” (as its officially called) is premium real estate. Why put a logo there when customers already know where they are? The teller backwall should almost always be used for eye-catching digital displays that present the financial institution’s most attractive, most popular and most profitable products.
Security: There is no single robbery prevention technique more effective than a dedicated Greeter. Also, the U-shaped layout means robbers can’t see their exit during the heist (“Are the cops waiting for me outside?”) and they have a long, circuitous route out of the branch after they’ve got the loot. They have to loop all the way around the greeter backwall during their getaway.
[Please note: These examples are rough illustrations intended to illustrate concepts. They do not take into consideration factors such as location, size, technologies, products/services nor the commercial context of a branch -- all which significantly impact design decisions.]
Search For More: Branch Strategy, Most Popular, cross-selling, EHS Design, FBI, greeter, SafeCatchAll content © 2013 by The Financial Brand and may not be reproduced by any means without permission.
Wait … is it 1999 again?
Good summary of the branch design concepts. The fatal flaw is that even in Canada where this stuff has been studied 6 ways to Sunday, is that the final design choice is applied to _every_ location no matter the size or shape. The best shapes and locations are often picked up by banks who choose to invest earlier and at different points in real estate cycles, so other banks end up taking the stuff thats left with odd L shaped locations and with massive pillars in the middle. Once you overlay physical constraints the theories just come out in strange implementations.
I still believe in the notion of specific purpose locations. Not every bank needs a vault and tellers in this view. Enormous capital spend could be saved with some offices housing CSR’s opening accounts, loans, mortgages and investments.
One thing I am curious about though. The 1999 view said that people open bank accounts because of branch location. Has that shifted to ‘people open bank accounts because of best online banking?’
Great article and insights by you and Paul at EHS Design. And, even with a fabulous branch layout and the right retail merchandising, you can’t forget that if this is a new direction for your branch design — it’s going to be a major culture shift and elevation of a new relationship-building focus for everyone there. It should make you take a long, hard look at your Brand Position and how it relates to how this new branch will serve members. Staff needs to be ready and understand they will (or should be) now making the first move to interact with members, not burying their heads and waiting for the member to get “their” attention.
I’ll be sending this article off to number of credit unions just getting ready to look at new branches and questioning whether or not to brand before they build.
Thanks Jeffry!
Back in the late 80′s, when I was with CoreStates, we developed a branch w/ NCR called the “Icon Branch”. The concept was to push the tellers deep into the back of the branch, requiring customers to pass a “sales gauntlet”, whereby real human beings would make an effort to intercept the customer as they passed by. Progressive for the time, and, a way to drive some level of engagement. What we lacked at the time, was a method to drive a relevant conversation. Times have changed, and now we can do this.
Jeffry,
Thanks for the great rundown of branch design/layout considerations. I think with the ease of online transactions, people sometimes forget how important face-to-face can be. That being said, I think elegant, strategic design is often overlooked, and can have an incredible affect on customer experience and satisfaction.
Apple is a good example of design/layout of retail space. Look at their stores – dissatisfied with poor layouts and design at retailers, Apple developed their own stores and staffed them with friendly, welcoming staff. The stores’ success shows just how important a well-designed and well-staffed physical location can be in augmenting a great online offering.
Please remember there’s more to banking than just transactions — the deposits, withdrawals, payments and transfers associated with one’s primary checking account. Branches that aren’t capable of anything more than processing transactions should be killed off.
For significant financial issues, many consumers prefer face-to-face interactions. This is when branches should be viewed as more than just “buck stops. They become “meeting spaces” or “sales offices.” Only around half the staff in the average branch are tellers. The others are (or at least should be) selling- and servicing new accounts and high value services. [Note: This begs a whole new series of questions about staffing, sales and training, but that is beyond the scope of this article.]
Please Note: The article does NOT advocate for remodeling or retrofitting branches to “put the milk in the back of the store.” It isn’t worth the expense to initiate a project just for this purpose. But if a bank or credit union is already considering remodeling its branch(es), and/or planning to merge with another financial institution and absorb its branch(es), then these principles should be applied. And obviously, if you’re building a branch from scratch, then please put the “milk” in the back of the store.
Today, the “milk” is transactions/tellers. What will it be tomorrow? Philosophically speaking, as long as financial institutions maintain physical locations, the “milk” maxim will always be relevant: Locate the thing that consumers need most commonly in the rear of your space while exposing them to other aspects of your brand.
Key Takeaway: Any bank or credit union spending any money building branches, remodeling branches, or taking over another financial institution’s branches should seriously consider putting the “milk” principles to work. If you’re going to remodel a branch, at least make sure you don’t replace an old set of design flaws with new ones. Unfortunately, many banks repeat their own mistakes by applying their flawed design to the branches of the banks they acquire.
Jeffry,
Placing the bucks at the back of the branch is a highly productive concept for most institutions and has been measured in terms of driving higher customer awareness of products and services, cross-selling and share-of-wallet while reducing cost. While this reorganization of elements and the customer path sets the foundation for a more productive customer and staff experience, it is just the beginning.
To get the most out of every branch delivery dollar we need to build a powerful brand experience upon this foundation or it can be a waste time and money. The experience must be unique to each institution and support specific business and market objectives such as Wealth Management, Small Business and Commercial Banking, Mortgage or Consumer Loans and the institution’s true values and interests and culture.
We need to engineer an experience that “wows” customers every time they visit our branches no matter the size, type, location, configuration or budget. An experience that engages their senses and constantly pushes the institution’s relevance to their needs and desires. We cannot just design a great looking branch with the bucks at the back, say we are done and walk away. It is easy to design an attractive branch that gets raves from customers, staff and management for its good looks.
Today, branches are a part of the brand amalgam and one of the key informers of customer’s brand perceptions. Just take a look at what Umpqua Bank and North Shore Credit Union have created in terms of a consistent and unique brand experience across all delivery channels resulting high market awareness, target market growth and ROI.
Thank you for such a thorough and thoughtful approach to branch design.
While we obviously want the opportunity to engage and cross-sell customers, shouldn’t consumer preferences take more of a front seat? While you’ve addressed consumer preferences to a degree (You point out that the branch design “Common Flaw #2″ is probably a favorite of customers), I’d vote to have the Customer Experience added to your key considerations alongside Design Advantages, Merchandising & Cross-Selling, and Security.
This is a nice take on branch design. I agree the customer experience is stimulated through the use of pods offering a variety of customer services. It provides the institution a sizable pallet to work with where before these offerings were presented behind walls in private offices. Pulling the tellerline away from an adjacent entrance is always good solution for security considerations as well. My only problem with pushing to the rear is the fact of simple convenience. Customers today relay on convenience and ease of assessibilty. Unless a second means of egress/alternate entrance is provided for the simple purpose of making a teller transaction, they may decide to visit the branch down the road. What really is the best solution? It certainly depends on the real estate you are working with. A new build is obviously more flexible. An existing piece of real estate most often provides existing exterior window and door openings with predetermined pedestrian and vehicular traffic patterns, making a total transformation more challenging.
Paul M. Velandry, AIA
Archiceptual
The truth is that most financial institutions would love to see high-volume transactors go away and leave their branches forever. In this day and age — where we have ATMs, online banking, mobile banking, phone banking, direct deposit, remote deposits, etc. — there is no shortage of ways for consumers to perform 98% of their banking activities.
Financial institutions who let transactors dictate their branch priorities will suffer. Teller transactions are very expensive to process, and the customers who conduct them are the least profitable. Why should a bank or credit union design its “customer experience” around expensive, unprofitable customers it doesn’t even want?
For those of you in the “customer experience” or “customer convenience” camp, ask yourselves this: Why does every grocery and convenience store in the U.S. put their milk in the back of their stores? Is it because it’s convenient for consumers? Do consumers decide to buy their milk somewhere else because they are irritated when Store X puts it in the back? Do consumers ever think, “I’m going to pass on milk today because it’s in the back of the grocery store?”
Paul, as someone who has been involved in the design of hundreds of branches, I agree that new construction is always easier, but I’ve never worked with a single existing building where the “milk” principle couldn’t be put to use. It sometimes requires moving the main entrance, but there has always been a floor plan that works.
If a financial institution encounters any potential property that is so challenging a branch can’t be designed correctly, then either (A) the existing building needs to be razed, or (B) the property needs to be abandoned and the bank/credit union needs to go find another location.
Site selection is the most critical component to branching success. It’s one of the myriad of factors the article above did not address. If you pick the wrong location, no design will ever save it. If you start with the wrong building, you may not be able to recover costs to redesign it.
I agree that the technology amongt other influences are altering the way people handle their money, but I don’t think bank lobbies are going away anytime soon. A large percentage of people prefer to make human exchanges with their hard earned greenbacks. I believe it somehow validates the reason we all fo to work day in and out.
The milk is certainly not in the back of the store for the customers experience, but more because it is a staple in everyone’s refrigerator across America and markets capatalize on this and the notion that most customers will grab other items as they move back towards the checkout. You are comparing apples to oranges here, but if you insist, yes I would probably buy my milk from a drive thru kiosk if it were available. Perhaps Deibold is working on it!
Paul M. Velandry
Archiceptual
Apples, oranges, milk or money, it’s all the same. The point of the analogy is to express the proven fact that if you place the most desirable products, services or experiences at the back of a store, the vast majority of customers will travel to that point as long as the path is easy to understand and enjoyable.
Branches are expensive. They must deliver a rich customer and staff experience that increases awareness of products and services, promotes the brand and creates natural opportunities for staff-to-customer interaction to maximize ROI. The richest customer experience guides customers along a path that exposes them to learning and engagement opportunities. The longer the path the more time and opportunity to communicate and connect. The planning skill is in balancing customer’s desire to feel smart through easy navigation and efficiency in terms of perceived time and effective messaging, learning options, interaction with technology and face-to-face contact.
If the milk (transactions) is at the front, you sell milk. If you place the milk at the back, customers may buy an entire picnic. I want to sell the whole meal.
I don’t do any banking inside an actual bank branch. I don’t see the point when I can use online banking for nearly everything I need. Plus it gets old walking into the bank knowing they are going to try to sell you another account or something else. I find it to be quite annoying just like when every retail store asks me if I want their credit card.
@Top Money Loans – You are like more and more customers today, those who never step foot in a branch for day-to-day banking needs. Most of the population doesn’t use branches for transactions anymore, which is another big reason why — for those financial institutions that will be building or maintaining branches through the next 10 years — it is all the more important to bury tellers in the back. It would be a mistake, however, to dismiss branches entirely simply based on declining transaction volumes, since a large chunk of consumers — even younger Gen-Y types — still prefer branches for product acquisition (e.g., when it’s time to open new accounts, get a home loan, etc.).