Questions for the Case:
Who are the different customer groups for Schwab and what are their customer needs? Think carefully about this!
How does Schwab add value to each of these different groups, considered separately?
How does Schwab extract value from each of these groups, and how profitable are they (hint look at the financial statements)?
What lessons do you draw from this case
CASE ASSESSMENT
Charles Schwab Corporation catered to a wide variety of customers. They can be broadly classified as follows:
6.1 million Individual investors – These customers were offered services through four channels: at branch offices, through representatives at call centers, via automated telephone services and on the Internet. They were also referred to independent fee-based investment advisors. Schwab took full advantage of deregulation in 1975 in order to offer products and services previously unavailable to low-end or marginal customers. Also with the advent of ‘information age’ where investors were well informed and intelligent at making investment decisions themselves, Schwab shifted its focus from advising about the securities to just being a facilitator of access to security transactions. The ability to rely …show more content…
When in 1991, Scwablink was incorporated, the independent advisors could outsource all transactions, record keeping and statement preparation duties to Schwab’s computerised system for a fee. This enabled Schwab to expand their market in a big way.In 1995 AdvisorSource, an advisor referral service was started which was meant to refer customers to appropriate advisors. In exchange, Schwab would receive 30 % of the advisor’s fees in the first year, 25% in the second year, 20% in the third year and nothing thereafter. By 1995, Schwab had amassed 82% of all available assets through these fee-based