Benchmarking performance in branches, especially in mature markets, can be critical in building differentiation and efficiency, but is extremely difficult without the appropriate data. About five years ago, KBC – Belgium’s third largest bank and one of Europe’s top 10 bancassurers, with a network of 800 bank branches in Belgium alone – had a relatively poor financial performance. It had a cost/income ratio of more than 80% for its domestic retail distribution activities.
General manager distribution Erik Van Acker and senior adviser Stefaan Van Der Vekens say an initiative to improve the efficiency of KBC’s sales network has been an important driver behind its recent improved performance (comparable cost/income ratio of 55%).
KBC introduced a hands-on mobilisation programme to upgrade the performance of its 300 largest branches. This not only increased overall efficiency levels by 13% and client-facing time by 50%, but also almost doubled productivity, measured by number of meetings and sales per adviser over a two-year period. The programme jump-started improvement around a limited number of key ‘people performance’ metrics in the branch network.
Different thinking
The programme transformed management thinking on running the network, moving from an approach that focused exclusively on results to one where increased attention is now paid to measuring, benchmarking and managing the resources and means required.
In the past, an internal benchmarking system kept track of the comparative revenue performance of branches but provided little basis for corrective action – neither for branch managers to improve sales, nor for senior management to adjust staffing levels.
What did the programme do? Initial pilot studies showed enormous variability or room for improvement, such as :
- Client-facing time ranged between 10% and 40% of the working day;
- Number of meetings ranged from six per day for high performers to less than two for low achievers;
- Difference in proactive meeting generation by advisers ranged from 10% to 60% of total client meetings; and
- Overall efficiency levels per branch ranged from 54% to 90%.
The approach focused on a limited number of productivity drivers rather than on measuring and managing all elements of the sales pipeline. The activity metrics used (efficiency; number of meetings with clients; proactivity in customer conversations; conversion ratio; and type of products sold) were aggregated and compared with branches of similar size and ‘market opportunity’.
Mr Van Acker notes: “The internal benchmarks proved very helpful in creating stretching targets and the activity metrics allowed the network sales plan to be operationalised into specific expectations from every individual employee which can easily be followed up on and managed. This improved sales plan included milestone dates for discussing progress with senior management, as well as daily and weekly follow-up meetings at the branch level.”
After two years, an average efficiency improvement of 13% was registered in the branches in question due to the reduction in staff numbers and growth of commercial activities. Also, over the same period, client-facing time improved by 50% (rising from 23% in 2002 to 34% in 2004). Today, almost half of the average adviser’s time is spent on commercial activities (meeting preparation and client meetings).
Other metrics were also improved:
- The number of client meetings per adviser increased by 75%;
- The number of client meetings initiated by advisers doubled (see chart below); and
- The conversion ratio per customer meeting decreased by 4% but sales per branch per full-time employee (FTE) increased by 60% as the number of client meetings increased.
Noting that the successful benchmarking process should not be limited to within the bank, Mr Van Acker concludes: “Obviously, sales performance is only one piece of the puzzle. The extra focus on sales performance was only successful within a more holistic approach, including service performance, quality of the sales people and management, balanced reward systems and efficient back-office processes.”
Clearly, better data and benchmarking can work.
