A cASE STuDY from qm group

opTimiSing SAlES AnD proDucTiviTY in A rETAil or brAnch bAnking EnvironmEnT

A WhiTE pApEr from ThE qm group

for mAnY rETAilErS AnD All high STrEET bAnkS, A SignificAnT proporTion of rEvEnuE iS gEnErATED Through SAlES of proDucTS AnD SErvicES WhErE ThE ADvicE AnD knoWlEDgE offErED bY ThE SAlESpErSon ArE AcTuAllY An inTEgrAl pArT of ThE proDucT offEring.

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Retailers can broadly be divided into two categories. Those operating on a supply model, such as the multiple grocers, are driven by a need to have product on shelf and enough staff in place to meet consumer demand. If they can achieve both these objectives and match workforce scheduling to customer demand they will, assuming all other variables are controlled tightly, return a profit.

In simple terms if the product is available at a competitive price in an appropriate environment consumers will buy, because food is a need driven purchase and the opportunities to increase basket size significantly through highly knowledgeable staff with a strong customer service ethic is limited.

While this is a gross simplification of the supply driven retail model it allows simple comparison with those operating on a service model, such as technology or white goods retailers where the knowledge and expertise of the store staff can make the difference between a sale and walkaway. The service model is very similar to that of high street banks selling added value products such as mortgages, loans and insurance, all of which rely on knowledgeable, appropriately qualified staff to manage the sale and offer the customer guidance.

As well as a lost revenue opportunity there is also the damage such a poor customer experience has on a retailer or bank’s brand. While it is difficult, if not impossible to measure this quantitatively, there is a qualitative perception that the loss is significant especially if projected over the value of a customer over an extended period of time. But measuring damage to a brand solely in terms of lost revenue from that customer fails to take into account the fact that a customer who has had a poor experience is more likely to tell their peers about the bad experience and thus taint the views of their friends and relatives about the retailer or bank in question.

Within a retailer operating on the service model and a high street bank, a number of key issues exist that can have a profound impact on a retailer or bank’s ability to generate revenue on a service focused sales process. This white paper looks at the key challenges faced by such organisations and provides a best practice guide as to what steps retailers should take to allow them to:

• Managequeuesandcustomerexpectationmoreeffectively

• Improvestaff productivityandmeasurethatimprovement

• Allocateresourcemoreeffectivelyandinenvironmentswherecomplianceisanintegralpartof thesalesprocess,ensureallguidelinesaremet.

the knowledge and expertise of the store staff

can make the difference

between a saleand walkaway.

Within any retail environment queueing is an inevitability at certain times of the day. This is driven by the fact that customer arrivals are essentially stochastic in their nature. That is to say that each customer arrival is independent from another customer arrival and as such they represent a random event. Because of this retailers and banks will never eliminate queues, but they can take a number of steps to:

• Ensure a fair and equitable process is in place

• Ensure the process is clearly communicated to customers

• Implement a system that shortens the perceived waiting time

• Ensure the appropriate resource is available to manage customer enquiries quickly and efficiently.

For reasons of simplicity, this white paper uses the example of a high street bank branch as its model. It should be noted that this model is totally transferable to a retail environment where service, knowledge and expertise delivered by the staff are an integral part of the sale, i.e. any retailer operating on a service as opposed to supply model.

In order to define what a bank can do to manage queueing more effectively, we first need to look at how queues form.

Figure 1 shows capacity, i.e. how many staff are on duty and an average customer arrival rate represented by the dotted line.

The wavy line represents the actual customer arrival rate which, as already stated, is stochastic in nature, whereas the capacity and average arrival rate on which resource is planned are both fixed lines. This means there is under capacity at points B and D and this will result in queues, whereas there is over capacity at points A and C meaning that the branch is not running at optimal efficiency.

This shows graphically that queueing is inevitable. More importantly for the branch manager is the equation which governs how customers feel about the queue they are joining and the experience they encounter.

ThisisdeterminedbyS=P–E*

WhereS=Satisfaction,P=PerceptionandE=Expectation.* Credit David Maister

This equation determines how the customer feels about the experience and whether they will leave rather than continue to queue.

Essentially a high satisfaction level is achieved if the customer has a very positive perception of the process but a low expectation from it. In essence this equation represents a mathematical version of the old adage, under promise, over deliver.

By managing both the mathematics and the behavioural elements together it is possible for a branch to lower the capacity line, i.e. reduce the number of staff on duty and thereby reduce operating costs while at the same delivering an improved customer experience.

Within this area of opportunity there are a number of considerations that need to be factored into any potential process change:

• Not all customer enquiries take the same length of time

• Different enquiries require staff with different qualifications

• Customer expectation varies significantly depending on the nature of the transaction they are looking to undertake. To illustrate this, a customer visiting a bank to pay in a cheque expects to find a well managed, fair and efficient process that allows them to pay in their cheque with minimal queueing. They assume a bank has the wherewithal to manage such a basic operational process efficiently and if they do not find this situation their stress levels rise and satisfaction levels fall. However a customer visiting a bank for financial advice recognises this takes time and there may be a wait to see an expert. Providing this wait is managed appropriately, it is possible to turn it from a perceived negative into a potential positive.

The delivery of an improved customer experience relies on a detailed examination of the customer journey, i.e. how they navigate their way from the point at which they enter the branch wanting a particular service, through to the point at which they actually get it. Defining the journey is the first step, examining the touch points where stress is caused is the second step. And adjusting capacity accordingly allows the bank to balance the satisfaction calculation.

fAcing up To ThE iSSuES

Figure 1:The Customer, Resource, Queue Conundrum

Time

Cus

tom

ers/

hour

Arrival Rate

Average Arrival RateCapacity

A

B

C

D

essentially a high satisfaction level is achieved if the

customer has a very positive

perception of the process but a low

expectationfrom it.

WhAT ArE ThE poTEnTiAl impAcTS of ADDrESSing ThESE iSSuES?At the most basic level, the benefits are happy customers and increased sales. On a more granular level they include:

• Better customer way finding – better flow through a branch that looks organised and managed

• Lowered customer stress (easier to talk to them when they are in front of you)

• Customer satisfaction criteria met

• Faster customer flow rate

• Higher staff productivity (lower cost per transaction)

• Better atmosphere

• Increased sales

• Data generated around the process – allows a bank to understand transaction time, sales performance of staff members, etc.

Depending on variables and environment it is possible to improve efficiency, flow rate and sales by between 8 and 30% within a typical branch. However it needs to be stressed the importance of establishing a base line in the first place from which measurements can be made.

WhAT conSTiTuTES bEST prAcTicE?We have clearly demonstrated that by addressing a number of issues and processes in branch there are several potential gains for a bank. What constitutes best practice that allows a bank to realise these benefits? As we have already highlighted a one size fits all approach is unlikely to unlock the full potential opportunity because of the number of variables involved. (Both tangible such as capacity and intangible – customer perception.)

Similarly it is not just a case of implementing a single process to change everything based on an examination of the customer journey. Rather it is a series of process changes, starting with basics such as improved signage and customer way finding, improved meeting and greeting to better qualify the customer need, leading towards more effective management of queues and ultimately improved cross selling.

At a strategic level there are essentially four areas where measurable improvements can be made:

• Management of meet and greet and way finding to allow customers to be directed to appropriate staff or services

• Self service technology

• Linear queues to access basic counter services (simple supply type transactions)

• Non-linear queues for personal bankers and advisers (more complex service driven transactions)

it is possible to improve

efficiency, flow rate and sales

by between 8 and 30% within a

typical branch.

ThE STArT poinT – WAY finDing AnD ThE rolE of ThE mEETEr grEETErThe first 30 seconds in branch are vital to the customer’s experience. Customers don’t simply step into a branch and do what they need. They take a few moments to orient themselves and this includes adjusting their walking pace and slowing down in the ‘landing strip’ inside the branch. During this time they will be looking for visual clues as to how to do what they need to do and how to get service. They will have different propensities to seek advice.

We need to build a process that delivers a repeatable result for all customers. This must start at branch entry and must map though each decision point that the customer will reach in each service process.

A meeter greeter can play a vital role in this process. Great meeter greeters are made not born but in our experience most service organisations don’t put enough effort into training and supporting this role. The result is obvious – a few mavericks do a great job, the rest aren’t really meeting and greeting they end up serving because it’s easier and the poor old customer has to find their own way.

When properly executed the meeter greeter role triages the customer demand and signposts customers to the right service process. This not only supports non-linear queue capacity but can help to switch customers across to self service for simple transactions. The meeter greeter can play a major role in setting the tone for the customer experience and efficient service allocation…or they can play no role at all.

hArnESSing ThE poWEr of SElf SErvicE TEchnologYIn many ways this is a case of pushing at an open door. Consumers are comfortable with self service in certain settings – for example cashpoints, but what value does self service deliver to the customer and the retailer? It lowers costs on simple transactions but it doesn’t necessarily offer the customer a better experience or facilitate additional business. This is graphically illustrated by studying ‘self scan checkouts’ in major retailers. The comparison with till service is interesting. A queue invariably forms for both. Typically the queue moves faster for till operators as they know what they are doing and perform the process quickly and effectively. The same is not true for those that self scan, meaning that self scan may lower the cost for the supermarket, but it actually slows down the customer and in some cases even the cost saving is a false economy as confused customers seek advice from store staff. In the worst cases a store has to place an assistant at the self scan checkout simply to answer customer queries.

ATMs are great, but unmodified they don’t allow human interaction. A customer can use a branch and have no interaction at all. This minimises cross selling potential. Technology needs to be kept in context – it has a role, but so do people.

It is possible to harness the power of the ATM and combine this with knowledge of the customer and use the ATM as a channel to offer relevant products to them. By linking this to a non-linear queueing system (see section on non-linear queueing) it is possible to enable a customer to request assistance from a staff member in response to the promotional material displayed on the ATM screen. This is known as assisted self service.

when properly executed the

meeter greeter role triages the

customer demand and signposts

customers to the right

service process.

inTroDucTion of linEAr quEuEingLinear queueing is a methodology that is already well understood and used by most banks, but it should be stressed it is not a panacea. In most cases linear queueing is understood as a single queue with a call forward system that directs the person at the head of the queue to the next available member of counter staff.

Linear queueing is an appropriate methodology to use for relatively short transactions with variable standard deviation on transaction length, i.e. simple transactions with a relatively limited number of variables and processes such as paying a bill, paying in money or withdrawing cash.

When used appropriately it evens out the variation in waiting time for customers and the regular flow rate encourages customers to join the back of the queue. By storing a buffer of customers close to the counter it makes best uses of available space and can maximise productivity of servers.

Greater use can be made of a linear queue to manage a customer’s perception of the experience and to leverage greater productivity and flow rate and a good call forward system can improve flow rate by between 10 and 30%. It does this by reducing customer hesitation and importantly allows tellers to pre-call customers eliminating wasted time at the end of the transaction.

Because call forward systems are now so commonplace they have effectively conditioned the way a customer behaves. A customer sees a call forward system and knows the routine. Therefore if branches have call forward systems it is vital they actually use them at all times and use them in a consistent fashion. Failure to do so results in customers looking to behave in a certain way because they’ve spotted the queueing system, but when it is not operational the result is chaos, and in some cases, a transaction time that can even exceed the time with no system in place at all.

ShifTing pErcEpTionSThe introduction of video content on the screen at the head of a linear queue can help reduce the perceived time a customer waits by providing a relevant distraction to that customer. This works because consumers are conditioned to watch the screen at the head of queue because it directs them to the next available teller and in practice 85% of customers actually watch the screen.

If customer expectations are met and perceptions shifted, there is an opportunity for tellers to become sellers that allows tellers to spot opportunities during the transaction and pass the customer on to an appropriate sales advisor.

mEASurE proDucTiviTYThe introduction of head of queue sensors allows a bank to measure the occupancy level of the queue and compare this to the productivity of tellers using data from the call forward system. As well as identifying top performers, this data can also be used to help shape training needs or potential changes to a branch layout or process.

inTroDucE ShorTEST procESS firSTShortest process first (SPF) is a methodology used in a wide range of settings to increase efficiency. Its most common application is in email software where the smallest message is sent first from an email outbox regardless of when it was dispatched. Introducing SPF can sometimes be applied to linear queues to leverage faster flow rate and better productivity.

Typically this is where a group of transactions can be separated out and served through an alternative queue. Effectively this means customers with a pre-defined set of requirements are sent to a fast queue whereas those with more complex, non-standard needs are directed to a different part of the branch. The introduction of SPF reduces the risk of a customer with a complex enquiry slowing down the counter service as a teller tries to deal with something about which they may have little or no knowledge.

non-linEAr quEuEingAll of the steps previously detailed are geared towards optimising customer flow through branch and ensuring basic transactions are dealt with as efficiently as possible while customer perception is managed at times of extended queues.

Non-linear queueing has a role to play where transactions are relatively long and variable and typically of varied type. This is compounded in a banking scenario where compliance is an issue and specialists serve certain transaction types and not others, for example an advisor may be trained and qualified to provide mortgage advice but not insurance.

The other area where non-linear queuing has a role to play is when there is an element of customers pre booking appointments. Non-linear queueing harnesses many of the techniques already detailed but in a format that is fundamentally different from linear queueing and importantly it requires a software solution capable of managing the processes, interactions and data sources required to handle a complex customer transaction.

Central to successful non-linear queue management is the meeter greeter who determines the customer need and if it is straightforward and purely transactional customers are directed to the linear queue for counter services.

If the requirement is more complex, non-linear queueing allows the meeter greeter to request a service type and then examine the available expertise and occupancy in the branch to estimate a waiting time or to allocate a server immediately if one that meets the criteria is available. The customer gets the opportunity to review the waiting time before committing, resetting their expectation of waiting time. Non-linear queueing software then ensures that the customer is served in that time. The customer then waits in a defined place with a defined promise where video content is dynamically adjusted and shown on a queue feedback screen. The content is adjusted to best fit waiting customers’ interests using their time effectively and building sales opportunities for the bank. Behind the scenes the staff member is alerted by phone or pager that they have a customer waiting and also what their potential requirement is. The software accesses a database containing staff expertise and ensures compliance by only allowing appropriately qualified staff to serve the customer.

The benefits of such an approach are significant and can include:

• Skills based allocation of service, irrespective of initial touch point

• Managed waiting experience and resource optimisation

• Booking resource against real prospects

• Dynamic content tuning – tailoring sales messages to audience

• Lower cost per transaction

• Sales uplift

cAll cEnTrE AnD brAnch inTEgrATionThe integration of many of the elements of best practice detailed can be extended one step further to ensure calls to branches, which come via a call centre, are managed in a similar manner to match expertise in branch with customer need.

Figure 2 shows how harnessing each area of best practice can create a one branch, one team scenario.

SummArYIn summary it can be concluded that:

• Queueing is inevitable in even the best managed branches

• There is a real opportunity to match resource to demand to ensure queueing is minimised

• Introduction of linear queueing systems can reduce the time people wait for basic services and improve throughput

• Using in-branch media in a number of areas can alter the perceived time a customer waits, but it is vital the content is relevant and informative and avoids hard sell techniques if it is to create a positive impact

• Non-linear queueing technologies should be harnessed to manage complex transactions, allocate resource accordingly and ensure compliance.

The queue will never cease to exist for so long as there is demand for a service or product at the price the market will support, but banks and retailers can take steps to improve perceptions which in turn increases customer satisfaction, retention and ultimately profitability.

Prospects routed from Call Centre

Waiting area/media area

ATMs

Tellers

Currently close x% of deals

coming in but dropping calls

Matchmaker® application running –�managing resource allocation and waiting experience

Sensor to monitor linear queue occupancy

Assisted self service through meet and greet, teller or ATM

Figure 2: Branch Schematic – One Branch, One Team

Qm Group Ltd, Lincoln Lodge, Castlethorpe, Milton Keynes, MK19 7HJ

T: 01908 511400 E: info@qmgroup.com W: WWW.qmgroup.com

AbouT ThE qm group Qm Group is the leader in the provision of solutions to allow organisations to manage how, when and where their customers wait for services or products. The company is focused on four core markets: retail, banking, public sector and leisure and its systems enable these customer groups to manage consumer waiting experiences more effectively to increase profitability, improve productivity and ultimately increase customer loyalty. Established in 1993, Qm Group is the organisation behind the ‘Cashier No 3’ queue management system and this type of solution is at the heart of the company’s offering. Qm Group has more than 7,000 systems installed in the UK alone and customers include The Post Office, Boots, Marks & Spencer, Lloyds TSB and Argos.