Who has not heard of The Charles Schwab Corporation? It really needs no introduction. Listed as one of the largest banks and brokerage firms in the United States, The Charles Schwab Corporation provides a wide variety of services ranging from brokerage and banking to money management and financial advisory services. Founded in 1971, it has also consistently been listed as one of the most admired companies in the world. However, in 2004, this financial services giant was struggling to stay afloat due to the spiraling costs. To add to the slump, its stock prices had plummeted from $40 to a paltry $6. The firm had run aground with an annual growth rate as low as -3.6% between 2003 and 2005. With these ominous figures looming in, the company’s future seemed extremely bleak. Such a drastic plunge could only be recovered by the Captain of the ship and so came in Charles Robert Schwab himself. The founder and erstwhile CEO of The Charles Schwab Corporation came out of retirement to turn around fortunes and steer his company back to its former glory.
Schwab had once admitted,
We had lost our connection with our clients—and that had to change.
With the man back at the helm, things soon began turning for the better. From 2005 to 2008, the company recorded an annual growth rate of +17.5%, and by 2008, The Charles Schwab Corporation had regained its position as the front-runner in the industry. It has, since, maintained its position as one of the most dependable banking and brokerage firms in the United States.
So, what does the firm owe its success to?
According to the current CEO and President Mr. Walt Bettinger, NPS® has played a crucial role in reviving Charles Schwab.
So, how does the Net Promoter System at Charles Schwab work?
- To begin with, each of its customers is surveyed twice a year with the standard NPS questionnaire.
- Once the customer shares the feedback, it is fed into the company’s database, which everyone in the organisation can access and draw insights from.
- A special “manager alert” is triggered for the clients who give a “detractor rating” for the firm following which the respective manager connects with the customer within a maximum of 24 hours. This process, thus, closes the loop for all the feedback.
Although the first two steps feature commonly in every organisation that captures customer feedback or the Net Promoter Score, it is, perhaps, the third step – closing the feedback loop – that has been the game-changer for Charles Schwab.
How does Charles Schwab close the loop and what are its benefits?
Very disciplined and consistent approach
Managers at 500+ of the Charles Schwab’s offices and call centers follow a similar routine to start off their day. They rigorously scrutinize the feedback from a day before, including the verbatim comments from customers. They meticulously decide which of the customers need to be followed up. Furthermore, they touch base with the staff who dealt with a particular customer to understand the context and the background to the feedback. Subsequently, they set up a call with the customers to understand the issue and resolve it in the best possible way. This consistent and rigorous approach has been in place at Charles Schwab for years and still is.
Resolution is not the only solution
Managers generally look forward to calling their customers for multiple reasons – customer retention increases business growth, feedback helps make processes and products better. However, a customer might not always be looking for a resolution. Sometimes, even though the issue isn’t successfully solved, a customer feels valued and happy just to receive a followup call on his/her feedback. It shows that the organisation cares and customer happiness is extremely important for the company.
Although one doesn’t realise this, several issues can be nipped in the bud by just communicating with the customer effectively. Here is an example to prove that point: one of Charles Schwab’s customers expressed an extremely negative feedback way back in 2008. The manager, instead of dismissing the feedback as just another rant, ensured that he spoke to this customer. Upon more communication with the customer, he realised that the displeasure was not with the firm, but rather with the uncertainties of the economic recession. Realising this, he set up regular monthly calls with the customer to alleviate his anxieties; in the process, he not only retained the customer but also made him a customer for life! Such a simple solution! Many such issues can be acted upon before they magnify and hurt businesses by merely communicating with a customer in the right manner, at the right time.
Delayed resolution is no resolution
With the “manager alert” feature and a rule that a manager should call a detractor within 24 hours of the feedback, Charles Schwab ensured that the turn-around time on detractors is quick. The prompt response sends a message that the firm is really reading through the feedback and is working on them at the same time. Managers also realised that the faster they acted on customers’ complaints, the more effective it was. This process went a long way in impacting the NPS positively.
Feedback is a goldmine of information!
Troy Stevenson, former VP Client Loyalty at Charles Schwab, said that the insights from the customer feedback helped them discover ideas and suggestions that would improve their business, that they wouldn’t have observed otherwise. Insights drawn from feedback helped the organisation identify gaps in the product line, areas where the pricing needed to be more competitive, and technological improvements for the website. Backed by these insights, Mr. Troy Stevenson kicked off several initiatives to improve customer loyalty that resulted in increased repeat business from customers.
CX starts from the top
One of the primary reasons the entire program took off and followed with such intensity is that the man leading the organisation – Charles (Chuck) Schwab – himself was a huge proponent of customer experience. He took it upon himself to pioneer this program and ensured its success. Such was his customer-centric ideology that The Charles Schwab Corporation, in 2005, released a series of ad campaigns with the title ‘Talk To Chuck’, named after its eponymous leader, revitalising its image as an approachable organisation that provides sound financial advice.
In fact, this is a common feature among the leaders of all the customer-centric organisations across the world right from Amazon or The Virgin Group to Southwest Airlines. There is no denying that the vision of customer centricity begins with the leaders of the organisation.
In 2008, when the entire financial services industry was in turbulence, Charles Schwab saw its revenues increase by 11%. The clients entrusted it with $113 billion in net new assets and brokerage accounts increased by 10%. This is, undoubtedly, one of the best turnaround stories of a company. But, undeniably, what was in the midst of this turnaround was an efficient feedback system that enabled the company achieve this humungous feat.
This wonderful message that is seen on the website of The Charles Schwab Corporation perfectly sums everything it stands for:
Ultimately, everything we do as a company – how we listen, how we solve, how we serve – is focused on helping our clients take ownership of their financial futures.
Do watch this short video where Mr. Walt Bettinger shares some wonderful insights into how the firm reached its pinnacle of success by focusing on customer experience.
Any organisation of a considerable size deserves a comprehensive feedback system that could give insightful reports, raise “alerts” for detractor rating for customers, and, all in all, help the organisation improve holistically. Working with brands like Axis MF, Religare, and Coverfox, Omoto has established itself as one such comprehensive feedback solution. You too can begin your journey towards success by requesting for a demo.