What Gets Measured, Gets Done: The following article is one of six that, as part of Credit Union Journal's ongoing series on growth, takes a look at measurement metrics. The other articles can be found in the related links box on the right.
CINCINNATI — When it comes to measuring branch performance, credit unions may have goals and metrics, but often they are not specific enough.
According to Arp Trivedi, VP of strategic planning at DEI, it's not enough to say the credit union will open 60 new accounts in a month. "You need to determine what kinds of accounts, what kinds of households, and what kinds of potential members and members you are going after. The specificity is what's usually missing in terms of how credit unions go about building a branch business plan and measuring results."
Straightforward and simple metrics are best to start with, laying out objectives in terms of numbers and dollars. The next step, Trivedi explained, is to break goals down by member segment. "Now it's what are our member segments, which ones are our most profitable, and set your goals accordingly," Trivedi said. "This will cascade back on the rest of the organization in terms of marketing, sales, and other outbound initiatives to capture additional market share."
Trivedi emphasized setting external goals, as well, measuring factors outside the CU.
"Look at the market dynamics around the branch, both in terms of the demographic appeal as well as the competitive environment and understand where you stand in the market," he advised.
The credit union can gauge branch presence by visiting the FDIC website to learn bank branch deposit totals. "You can get a sense of what the average deposit number is per nearby bank branch and make assessments," Trivedi said. "Say you have a $10-million branch when the average branch nearby is a lot higher, there's a significant opportunity to gain market share."
Specifics should not be overlooked with external metrics, as well. "See where the hot neighborhoods are," suggested Trivedi. "Are you located close enough to them? What about being located near grocery and department stores? How is the branch positioned in terms of convenience?"
Trivedi said answering all of those questions help the credit union avoid making mistakes by only watching internal metrics. "Sometimes bad decisions are made by looking at internal figures and saying the branch is not making money," Trivedi shared. "The credit union says the branch is not growing, but they may not be looking at it properly in the environment in which it exists."
Net income per employee is a metric being used more often today to gauge branch performance, Trivedi added. "How much are we actually throwing off in terms of net income per staff member? You are not just looking at efficiencies and other things, but actually how much income each employee is generating."
Trivedi said that number can be achieved by factoring in branch overhead, the number of FTEs, and the net income generated at the location, "and making some assumptions."
