Tweet

Lesson #2: Take the Risk for Your Customers’ Rewards

Article Overview: “I can't overemphasize that we have the right kind of client-relationship people who really have the interests of the client at hand first – not second, but first,” says Schwab. “We are willing to risk short-term revenue to do the right thing for the customer and ensure long-term success.”

Lesson #2: Take the Risk for Your Customers’ Rewards

“I can't overemphasize that we have the right kind of client-relationship people who really have the interests of the client at hand first – not second, but first,” says Schwab. “We are willing to risk short-term revenue to do the right thing for the customer and ensure long-term success.”

Each and every day, Schwab comes to work and reminds himself of why he is there. “Fundamentally, to help a lot of people,” he says. “That really means making sure our clients have a sense that they are financially fit.” And, he has no illusions about who he owes his success to: his customers.

At Schwab, management is constantly asking itself a number of questions to refocus on its customers and their priorities: What can it do better? How can it make its customers’ lives easier? What new services or products would they like to see offered? Is it fair and responsive to their customers? Is it constantly striving to improve its operations? And, is it worthy of its customers’ trust?

“We think we have a superior value, and we’d put that value up against any of the traditional firms,” says Schwab. “Even against the so-called discount firms. We want to be a superior value against any other financial service company, that's our ambition. And we maybe are not there in every component, but we're pretty close.”

Schwab says one of his top priorities has been to find every possible way to give his customers the most bang for their buck. “Every company, a mature company, can look at their costs and redundancies. It's natural for every company that's successful to build up infrastructures that are inefficient. We're all human, we all do that. So that is number one,” he says. “And you want to take whatever savings you can out of that and figure out how to get it back to your loyal clients. They will reward you with additional business, even if you mess things up.”

Schwab has shifted his strategy away from being simply the best discount brokerage to the one that offers the most value. “The value proposition is front and center to us,” he says. “We've taken out the account fees, the minimums – all these things we've done the past couple of years have been very dramatic.”

On top of offering value, Schwab has underscored the importance of making sure his clients have a sense that they are valuable. “At the end of every day, having a clientele that speaks well of you, that’s the largest source of business,” he says. “I don't care what kind of business you're in. Clients referring us to their friends or relatives is so much more powerful than any advertising we could ever do.”

But in a world where Schwab is up against the likes of Bank of America, he says nothing is more important than offering customers value. “Our organization just has to outfox our larger competitors by really emphasizing our value proposition, which is really outstanding compared to them,” he says. “The good news is we are a highly flexible organization. We have a national footprint, we have low costs, we're efficient, so we can compete at this point with almost anybody and do a great job for our clients.”

Related Articles
  Why Rewards Cause Problems #5: Rewards Discourage Risk
  How A Game Of Rugby League Can Teach You To Make Your Online Business A Success.
  Motivating Employees in the Workplace
  The Risks And Rewards of Being Self Employed
  New Study of Corporate Rewards Program Proves...

Article Tags: ambition, client relationship, discount brokerage, do the right thing, financial service company, illusions, infrastructures, loyal clients, mature company, risk, schwab, term success, top priorities, traditional firms



Related Forum Posts
Re: Two Useful Books To Help You Focus On The CLIENT - Hi David, To add to your thread, I'd like to recommend Jonathan Tisch's "Chocolates On The Pillow Aren't Enough: Reinventing The Customer Experience". Tisch's book includes content on "Welcoming Customers", "The New Art of Customization", "The Challenges of Customer Diversity" and "Offering Something Extra to Your Customers" to name a few.
How to valuate a business - Hi Garth - here is how we did it at Northern Crown Capital when I was helping them raise venture capital for Toronto-based entrepreneurs. Assume the start date is 2003 so 2008 projections are 5 years out: How Northern Crown Capital Valuates a Business 2008 Financial Projections Earnings Before Tax $5,865,000 Tax Rate 42% Taxes $2,463,300 Net Earnings $3,401,700 Amount Seeking to Raise Today $3,500,000 Discounted Value of Future Opportunity, 5 Years Out 2008 P/E Ratio 15 Value of Company in 2008 $51,025,500 Discount Rate Applied 30% Year 2008 $51,025,500 Year 2007 $35,717,850 Year 2006 $25,002,495 Year 2005 $17,501,747 Year 2004 $12,251,223 Value of Company at Investment in 2003 $12,251,223 Less: Investment Amount $3,500,000 Present Value $8,751,223 Discount for Risk & Private Company 40% Less: Discount for Risk & Private Company $3,500,489 Private Company Value $5,250,734 Present Value (What the Owner Keeps) $5,250,734 60.00% Financing (What the Investor Gets) $3,500,000 40.00% Total $8,750,734 100.00% I hope this helps!
Show the Benefits - Offer a free test drive of the Product or Service with a Money Back Guarantee - Take the Risk out. This will help them make the decision but you have to work with them to realize it by explicitly state the benefits they are receiving.
How to Do Great Marketing with (Amost) No Money - I've given this presentation to CEOs many times. Now i can share it with you. But I cannot because I do not yet have 20 posts. Jeff Ogden, President Find New Customers
Dan Kennedy Marketing Methods - We haven't sent out the physical letter yet as the person owning the list wanted to make modifications to the letter that we knew would work well but the List owner had a point - it didn't reflect her personality so her clients would know it didn't come from her. Lesson learned for me. We're back to the drawing board with the list owner more involved in the development of the letter and emails. I should have known better being a Business Analyst in my day job that you never leave the end-user out. So Evan we haven't had the opportunity to test any of it yet but it's been a fun process for me to stand back and look at.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

What If You Had a 100% Success Rate?

The State of the Sustainable Furniture Industry

Are You Too Good for Your Job?

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.