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Charles Schwab CMO on Leading the Industry with a Challenger Mentality

The following article is based on an episode of Outside In, the customer centricity podcast.

In Charles Schwab’s 2016 Annual Report, CEO Walt Bettinger explained how its strategy of running its business “through clients’ eyes” enabled its success the previous year, and why the firm is positioned for further growth. So far, the strategy is working. Schwab just announced its 2017 Q1 results: profits rose and clients opened more than 360,000 new brokerage accounts – Schwab’s highest quarterly total in 17 years.

Aside from the numbers it continues to post, Schwab is leading the industry in another category: the most customer-inspired brand in financial services. According to C Space’s 2016 Customer Quotient (CQ) study, Schwab makes customers feel respected and maintains an open, ongoing dialogue with them – both key attributes in a healthy relationship.

For nearly 50 years, that relationship has been essential to Schwab’s success. It has built its business around empathy, authenticity, transparency, accountability, and continuous innovation – all centered around clients and their investment needs.

“We truly are a purpose-driven culture,” says Schwab Chief Marketing Officer Jonathan Craig, whom I recently spoke with for the Outside In podcast. As CMO, Jonathan is responsible for the Charles Schwab brand and driving growth for the company, leading its marketing and corporate communications, and overseeing the global data team. From 2008 to 2010, at the height of the global financial crisis, Jonathan served as Chief of Staff for Schwab’s eponymous founder, Charles “Chuck” Schwab.

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Jonathan says the company operates as a “challenger brand,” a nimble, innovative disruptor in the financial services space. “We are willing to disrupt ourselves in the short term for the benefit of better long term outcomes for our clients,” Jonathan asserts.

Of course, when you’re America’s largest publicly traded investment services firm, maintaining a challenger mentality is easier said than done. With nearly $3 trillion in assets, Schwab manages more than 10 million active brokerage accounts, and employs more than 16,000 people. How do they do it?

Schwab’s “through clients’ eyes” strategy permeates the company’s culture and sits at the core of every decision and action. Starting with CEO Walt Bettinger, Schwab employees pride themselves on seeing the world, and the business, through the lens of the client: “What would the client want us to do? What would the client think?” Jonathan says everything Schwab does is filtered through these two simple questions.

The “through clients’ eyes” strategy also means that Schwab is “focused on driving cost and complexity out, and transparency in,” Jonathan says. As part of that focus, the company emphasizes and encourages client engagement. “To get the best outcomes in life, you need to engage,” Jonathan explains. “You need to ask the tough questions.”

So that’s exactly what Schwab does – on social media, through word of mouth, in small communities, in person – always listening and asking and learning. “You need to hold the people you’re working with accountable. That’s how you truly get great outcomes.”

In just the last six months, Schwab has introduced products and programs to better serve its clients. The company lowered commissions to among the lowest in the industry. It also launched the Schwab Intelligent Advisory, an interactive financial planning tool that combines technology with human relationships. Clients have 24/7 access to online tools, certified financial planners, and support.

In addition, Schwab has launched a client satisfaction guarantee, a first among brokerage firms. “It’s pretty fundamental,” Jonathan says of the guarantee. “In 2017, if you’re not satisfied with something that you paid for, you should get your money back. It is as simple as that. Yet, in our category that’s not the case. At Charles Schwab it is.”

As with any business, but particularly in the financial industry, Schwab’s success depends on trust. “Trust is everything,” Jonathan says, referencing the 2017 Edelman Trust Barometer, which highlights a worldwide waning of trust in institutions. “It is earned over a lifetime and lost in an instant.”

We can all think of organizations that are dealing with this very issue right now. One mistake, or a company’s response to it, Jonathan warns, can spell disaster, and sometimes the fallout is felt industry-wide.

As the years go on, trust is only going to become more prominent of an issue for brands and for consumers. “In 2017, it’s not about what you say about yourself, it’s what other people say about you that matters,” Jonathan says.

He’s right. Here’s what a client said about Schwab in CQ: “By knowing me and my goals from face-to-face meetings, they KNOW me.”

There’s perhaps no better way to build trust than by having that kind of relationship.

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