Case Study: How Charles Schwab Stormed Back By Focusing On Customer Loyalty

Air Date: Thursday, March 06, 2008

Cost: $250

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Who should attend: Marketing Leadership professionals

Description:

In the late 1990s, Charles Schwab was the darling of the retail investing world. But in the early 2000s, as Schwab attempted to broaden its reach, the firm stumbled. By 2004, a string of disappointing quarterly results led to the ouster of President and CEO David Pottruck. What had gone wrong? Schwab lost its way as it morphed from a low-cost, no-frills brokerage to a firm that also offered advice, comprehensive wealth management — even investment banking. Client service levels declined. Schwab's reputation for value suffered. And the company's market cap plummeted. Today, three-and-a-half years later, Schwab is focused on client loyalty — and the firm is thriving again. Forrester recently talked to Walt Bettinger, now president of Schwab, to understand what senior management did to engineer the turnaround.

Schwab rolled out a new strategy built on the fundamental belief that customers will do more business with a firm that has their best interests at heart. "We married two perspectives: Forrester's customer advocacy and Bain's net promoter scores," said Bettinger. To mimic Schwab's success, leaders at other firms need to get buy-in from the top, and then push the principles of customer advocacy into the rest of the organization by:

• Articulating principles that will help every employee make decisions
• Reallocating resources to client-serving roles
• Redesigning compensation for client-serving roles
• Measuring every client interaction

Agenda

• The situation: "We had a burning platform."
• Action: A new strategy — "through the clients' eyes."
• Results: Customers are willing to buy more from Schwab; record earnings for the firm.
• Analysis: What it takes to demonstrate customer advocacy.

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