Charles Schwab Customer Focused E-Business Strategy

Abstract

This case discusses the customer-focused e-business strategy of Charles Schwab & Company (Schwab), the leading discount brokerage firm in the US. It describes its multi-channel strategy that aimed at providing the customers as many channels as possible to interact and transact with Schwab. It examines the way in which Schwab focused on providing better customer service by promoting its website and proactively using Internet enabled technologies. The benefits Schwab derived from its e-business strategy are also highlighted.

"Technology is not a sideline. It's actually a core part of the brand. One of the things that technology executives at Schwab enjoy is that the technology people are treated like business people because we view technology as a core piece of our business. Almost every business decision involves a discussion of how we're going to use technology to do things for our customers that no-one else can do."

- Robert Duste, Senior Vice-president, Charles Schwab & Company in 1997.

"A core principle is that Schwab focuses on what their customer wants. They have been remarkably adept in anticipating customers' future needs and demands."

"Schwab was one of the first to recognize that the Internet was not exclusive of their other channels [but] another choice in the line-up."

- John Payne, Consultant at Cerulli Associates, a Boston-based Research and Consulting Firm.

In February 2004, Charles Schwab & Company (Schwab), a leading discount brokerage firm in the US, launched the Personal Choice program, targeted at individual investors. The program provided a wide variety of investing services and pricing options and benefited customers significantly.

Dave Pottruck, former president and Co-CEO, preferred to call Schwab as a technology firm, which operated in the financial services business. The company commenced stock trading through PCs and software in 1985 and started using the telephone for trading in 1989. Schwab was one of the first companies in the financial services industry to recognize the importance of the Internet to boost business. Schwab flourished in the mid 1990s, when it commenced online trading using the Internet, through its web-based division, eSchwab. This enabled it become the largest online trading company in the US. Following this, the number of online accounts handled increased manifold, from 335,000 in 1996 to 4.2 mn in 2002 (Refer Exhibit I on the growth of online accounts at Schwab between 1995 and 2002).

While adopting the Internet wholeheartedly, Schwab was conscious that its other customer service channels such as the branch and telephone network could not be undermined. This was reflected from the fact that though web-trading's popularity was increasing at Schwab (in 2000, 83% of trade was executed online by Schwab compared to 36% in 1997), the company continued to expand its branch network.

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        Case Code   ITSY042
   Case Length    18 Pages
              Period    1997-2004
 Organization     Charles Schwab
        Pub Date     2004
Teaching Note    Not Available
     Countries    US
      Industry    Financial Services

Issues

This case is structured in a way so as to enable students to:

Understand the importance of a customer-focused e-business strategy for the growth of an organization.

Appreciate the importance of a multi-channel strategy in providing better customer service.

Recognize the role of IT/Internet in integrating different business processes to make them more customer-oriented.

Identify the ways in which IT and the Internet can be effectively used for enhancing customer satisfaction levels and thereby improving the financial performance of the company.

Charles Schwab, E-Business Strategy, Customer Relationship Management, eCRM, Multi-channel Strategy, Channel Integration, Customer Segmentation, Implementing E-Business, Website Enhancement, Personalization, Positions Monitor, Schwab Alerts, Learning Center and Personal Choice Program.

Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.