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Abandonment Rates May Be Impacting Revenue More than You Think

By Kip Sweeney, Vice President Client Relations at FMSI

Never waste a ‘warm lead’ - A vivid business lesson I learned fresh out of college working as a loan officer for an online mortgage lender.
 
‘Warm leads’ were the end-result of an enterprising, well-funded marketing department dedicated to get the word out about our company—telling people who we were, what we did and what differentiated us from our competition. The apogee?  Prospects who initiated contact with us, typically were ready to do business.
 
As someone who spent most of the day essentially doing my own marketing by cold-calling, you can imagine my excitement when I was on the receiving end of a prospect calling, and not vice-versa.
 
Recalling the value of these warm leads is precisely why I get spooked when I see financial institutions allowing top-quality, ‘Glengarry’ leads to storm out of their branches unassisted—and I’m not talking about one or two visitors here and there, I’m talking double-digit abandonment rates.
 
What does the term ‘abandonment rate’ refer to?  It originated as a contact center term describing the percentage of inbound calls received by the contact center where the caller hung up before speaking to an agent.  In the financial institution branch, ‘abandonment rate,’ refers to the percentage of visitors who arrive in the branch to speak with someone on the sales platform, but left-unassisted.
 
How Abandonment Rates May Be Hurting Your Revenue
 
In FMSI’s 2014 Retail Branch Lobby Study, over 25% of the organizations we assessed had an abandonment rate between 8-12%. Consider for a moment, the opportunity cost of wasting 1-of-every-10 sales leads. Think… If every lead lost was an opportunity for a new sale, the lost opportunity could be calculated as the number of abandoned visitors that could have been served, multiplied by the average sales conversion rate and the average revenue per sale.
 
 
Here’s an example of what a 10% abandonment rate could cost an institution:
 
An 8-branch bank with an abandonment rate of 10%, and monthly platform traffic of roughly 250 visitors per branch on average could be walking away from $72,000 in annual revenue, if they had been able to convert 15% of the visitors instead of letting them walk out of the branch unserved. That’s assuming 22 work-days per month and $200 of revenue generated for an average sale.
 
If Visitors Are Walking Out of Branches Unassisted, Here are Three Steps to Recapture Revenue:
 
1.  Identify & Quantify ‘Pain’
A strong correlation exists between visitors leaving a branch and waiting a long period of time. Acquire branch-specific information on wait-times and abandonment rates to find where issues exist. Identifying problem areas paves the way for quantifying the impact of the problem, and sets forth the motivation for organizational change. 

2. Establish Wait-Time Thresholds & Staff Accordingly
In our 2014 FMSI Retail Branch Lobby Study, our analysis found branch visitors waited an average of just over five minutes to be assisted. Additionally, organizations with a wait time of five minutes or less had relatively low abandonment rates (2.5% of all visitors who arrived in the lobby left without being assisted). Conversely, organizations with wait times near 10 minutes had abandonment rates nearly 400% as high (between 8%-12%).   

Assess the correlation between wait times and abandonment rates in your branches. At what point do your visitors leave unassisted? Is it five minutes or perhaps seven minutes? Figure out your average, and staff accordingly to prevent higher abandonment rates.

3.  Leverage Technology: Automated Staff Scheduling & Visitor Appointment Booking
Long wait times are often the result of staffing being out of alignment with traffic patterns in the branch. Automated scheduling tools can prevent this scenario by identifying peaks and volumes in branch traffic, and forecasting the right number of employees required to be in line with the fluctuating volume levels. Additionally, an online appointment booking system, that allows visitors to reserve appointments from a mobile device or PC ahead of time, allows the branch to encourage visitor arrivals at pre-determined times where wait-times are likely minimal.

Conclusion
 
Account holder abandons in the lobby wait area are going to happen.  It would be unrealistic to think otherwise. However, if left alone tens of thousands of dollars could be draining out of the bottom-line, annually.  Limiting the number of times people leave your branch unassisted by following some of the tips presented in this article can pay tremendous dividends for your institution.