Customer relations and customer services are terms often used in business to refer to the relationship between and organization and its customers in terms of ability to attract new customers and retain the existing ones. In most organizations, this is measured by degree to which the organization is able to see the customer as the reason for their existence in the industry. Promptness in handling customers over the counter, communication and providing feedback to customers, solving conflicts of interests, establishing business partnerships with customers and offering the best possible deals in terms of price and quality are some of the tools used to determine good customer service.
In the online brokerage business, success is highly correlated to the relationship with customers due to the fierce competition prevailing. In this respect, this paper will address customer relations by comparing the customer services in two renowned online brokerage firms in US—Charles Schwab and E*Trade.
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Customer Service Analysis at Charles Schwab
Charles Schwab is among the leading brokerage firms in US and has been known over the years since its inception in 1792 for an exceptional customer centric strategy (Hill, Jones, 2008).
The stated customer service policy of this company is to empower its customers by providing them with ethical financial services, tools and information that they need in order to make their free-willed decisions about securities investment. This services the key strength of this company because it does not persuade its customers to make questionable stock trades so as to increase their commissions, but rather it treats its customers as business partners who are supposed to growth and develop at the same pace with the company (Hill, Jones, 2008).
This policy is greatly complimented by the company’s corporate culture which seeks to continually upgrade its financial services in accordance to the current market and technological developments within the industry. This ensures that the right services, tools and information are always provided to the customers (Schwab, 2010). Charles Schwab has a history of being the most rigorous discount brokerage company in innovations, product development and creativity centered towards making its customers more comfortable, satisfied and optimistic about their future with Charles Schwab (Hill, Jones, 2008).
All the years, Charles Schwab has successfully implemented its customer service policy by ensuring that all its activities and operations are customer centric (Brokerage Review, 2010). The company ensures continued incentives to its customers to win loyalty from them—for instance, after the introduction of Telebroker system, Charles Schwab decreased commissions on transactions which completed using this system by 10% as a method of drawing customers towards using it.
Unlike other discount brokerages, its customers are charged extra fee for using the new improved techniques for simplifying online trading every time a new technique is introduced (Hill, Jones, 2008). Further, the company has a savvy investment strategy technology and information systems: It was the first discount brokerage firm to implement online trading. Its IT market lead in helps in winning the confidence and satisfaction of customers thus a competitive advantage. Schwab has a testimony of new product and service development to improve customer suitability (Schwab, 2010).
Charles Schwab ranks the best discount brokerage firm in customer relations and services (Brokerage Review, 2010). Customer satisfaction is the chief reason behind the success of the company because despite the fact that the company does not operate in full line brokerage business, its current profit margins and customer base is equivalent to that of full brokerage firms in US.
Customer Service Snalysis at ETrade
The customer service policy of ETrade is founded on the company’s principle of succeeding in the delivery of diversified, innovative, integrated and customer focused products and services by maintaining professional ethics in customer services (E Trade, 2010). During its early years in business, ETrade recorded high performance rates and in the period 2000-2002, its total profitability optimized (it was more productive than Charles Schwab). This was due to the fact that its staff and management were committed towards ensuring that the company’s corporate culture complimented the customer centric objective (Hill, Jones, 2008).
However, at the present, the company’s corporate culture does not reflect the level of customer satisfaction. For instance, since 2008, the company has been struggling to keep its customers who have been shifting to competitors due to poor customer services. As a matter of fact, the number of recorded printed customer complaints since 2008 are approximately 3,000 for each quarter (Hill, Jones, 2008).
This implies that the customer satisfaction rating for ETrade is currently too low that it is gradually losing its market share, against its corporate culture policy which endeavors for perpetual growth and development. Poor customer satisfaction constitutes the major problem behind the declining profitability and market share of E* Trade because most customers are dissatisfied with the long duration it takes for the company to address customer complaints and the frequently at which the website goes down due to too much business (Brokerage Review, 2010; Hill, Jones, 2008). Although the company does not charge any IRA fees, its customers are simply dissatisfied with the company’s inability to consider their satisfaction a first priority (Brokerage Review, 2010).
For Charles Schwab, the company needs to upgrade into full brokerage trading since it has matured in the retail brokerage trading capacity. This is because, research shows that there are many full line investors who would prefer the services at Charles Schwab but since the company only deals with retail brokerage; they are compelled to seek alternatives.
ETrade business needs to reemphasize its traditional customer service practices and policies and focus more on good, fulfilled relationships with the current customer market before considering opening new branches and introducing new methods and techniques for conducting business. This is because even with many branches, customers need to fill their worth in order to remain loyal to the company.
- Brokerage Review (2010). Charles Schwab versus E*Trade review. Retrieved from http://www.brokerage-review.com/compare/etrade-vs-schwab-review.aspx
- E* Trade (2010) US E*Trade. Retrieved from https://us.etrade.com/e/t/welcome/welstatic?gxml=brk_insurance.html
- Hill, C. W. L, Jones, G. R. (2008). Strategic Management: An Integrated Approach, South-Western, Cengage Learning.
- Schwab (2010). SCHWAB brokerage. Retrieved from https://www.schwab.com/public/schwab/home/welcomep.html
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