Toys R Us has finally closed its doors. And like the sad meme of their mascot Geoffrey the Giraffe waving goodbye the finality has people buzzing and experts (for better or worse) speculating about the future of retail in an increasingly digital world. What could they have done differently?
Most of the buzz is focusing on the retail industry, but banks and credit unions can also take away some important lessons from the Toys R Us closure, revolving around the role brick-and-mortar outlets play in providing a customer experience.
eCommerce Didn’t Kill the Giraffe
Initial reports called out the decline, bankruptcy and eventual failure of Toys R Us after a losing battle to Amazon to be the ecommerce giant’s exclusive toy provider. What we see though, is that regardless of digital or physical commerce, at the heart of the matter was failing to understand the customer and failing to meet customer needs. Toys R Us needed to better understand the role of their brick-and-mortar stores in their buyer’s journey and how these stores could help customers solve their problems (or complete their "jobs to be done").
For example, a large portion of Toys R Us shoppers were likely shopping for gifts. Having knowledgeable associates on hand to recommend and demonstrate gifts by age, interest, price range, etc. would have aided these buyers in completing their job: finding the perfect gift for their little nephew or grandchild. Perhaps some other shoppers were just looking to amuse their young children for a while. Toys R Us could have had a play center in which children could actually use some of the toys available in the store—and maybe even had a coffee stand for the sleep deprived parents to enjoy while letting the kids play. This would have helped Mom or Dad amuse the kids, and would also have likely resulted in some purchases.
Now, consider the current standard for physical banking. It’s a relic in which little has changed for centuries. We still use the antiquated teller window when completing a transaction at the local bank branch. How does something like the bank branch as we know it change to stay relevant and provide a positive experience while still balancing the need to provide a familiar and comfortable place for customers to conduct financial transactions? Just like retailers need to use their stores to help customers complete jobs, banks and credit unions needs to use their branch locations to the same end.
Focus on Jobs and Customer Experience
Brick-and-mortar retail stores have some unique advantages over their ecommerce equivalents, and so do physical bank branches—they just need to be designed around what jobs their customers need help with.
Why do customers visit branches? What jobs are they doing there? Most of the time, it's to deposit and cash checks.
For simple transactions like these, banks should take a cue from Southwest Airlines. For several years, the airline has offered multiple kiosks for customer self-service check in with one or two lobby agents available to help with technical challenges or complex transactions. This is a benefit for both the bank and the customer. Higher volumes of transactions can be managed with fewer resources, while also reducing wait time.
Infrequent branch visitors usually visit to talk to a banker about a loan, mortgage, credit card, or some problem with their account. The jobs that these visitors are trying to solve require more care are typically resolved with longer-term, higher-dollar products (e.g. mortgages and auto loans rather than checking accounts). These customers need more guidance, regulators require more disclosure, and expect more service while completing jobs like buying a new home—and both customer and bank can benefit by offering more human interaction and personal value. Offering more value for these types of jobs at branch locations can result in higher value customer purchases and longer, more loyal relationships.
Using more digital resources for simple transactions frees up time for branch employees to spend facilitating these types of customer jobs, but look beyond just transferring resources. Should branch representatives have more approachable desks out front instead of offices in the back? Would it make sense to host informational events for first-time home buyers? Or regular networking evenings for local businesses (that may eventually need small business loans)? Figure out what your clients are trying to solve for, and then design your branch around helping them to solve for it. Provide value in these key areas, and your customers will continue visiting your branch locations.
Non-Traditional Branch Experiences
There are only so many jobs customers are looking to complete at bank branches—so, why not also help them to solve for some other related needs to increase your relevance? Capital One has done just that with its Capital One Cafes. These cafes are more than just trendy branches. Customers can not only do their banking and get answers to financial questions, they can also get a coffee, charge their devices, get some work done remotely, host small meetings and attend money-related events.
Imagine you're a mom that works from home and has just dropped the kids off at school. You might choose to stop by the Capital One Cafe because you need to replace that debit card you've lost again, and you can also grab a coffee and work for a few hours in a new location with a change of scenery. Or imagine that you're a small business owner with no meeting space—you can meet up with a prospective business partner at the Capital One Cafe and also ask some questions about which type of loans might be best for helping to grow your business while you're there.
Through its cafes, Capital One is providing customers value by helping them fill needs that are not necessarily financial, but providing this value gets customers into the branches and helps the brand build stronger relationships them. When the need arises for a financial solution, they're more likely to consider Capital One.
Don't Forget Integration with Online
"Omnichannel" is the holy grail that both retailers and financial services marketers aim for these days. Customers want a seamless experience with your brand, regardless of what channel they decide to engage through. Best Buy has mostly figured it out, allowing customers to easily switch between online and offline channels as they desire throughout the buyer's journey. Banks and credit unions should be seeking to do the same.
Has your customer been chatting with a customer service agent online about mortgage options? Branch staff should have this information available to them when they pull up the customer's account in the branch. Got a customer that inquired about a small business loan in the branch? Serve him some related content when he next visits your website or mobile app. This type of online/offline integration goes a long way toward adding value for your customers and creating a smooth, helpful experience.
So, remember: It's not a matter of ecommerce giants or fintech disruptors stealing your chances for success. Success will come from understanding what your customers are trying to achieve and then using both your online and offline presence in concert to help them achieve it.
If only Geoffrey had known...