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Jan 16, 2002
Case Study

Schwab Research Reveals Email Alert Subscribers Place Five Times More Trades

SUMMARY: If you work for an online brokerage or bank, you'll obviously want to read this Case Study. However, it's also a really useful article for everyone who works for any type of large institution where you have multiple departments and/or marketers all sending out email to various customers. Schwab's story of how they gathered "pockets of email activity" from all over the company into one centralized department is sure to be inspirational.

Like many large corporations with multiple marketing departments and product lines, at first Schwab got email religion "in dribs and drabs." Vince Errico, VP eCommunications explains, "There were pockets of email activity happening around the company, but not necessarily a focused, concerted effort."

As the online brokerage account marketplace took off "fast and furiously", so did Schwab marketer's email programs. By 2000, Schwab was offering more than 40 different broadcast email alerts and newsletters from its various product marketing and customer service groups.

It was messy and confusing for both customers and marketing. Errico says, "We weren't really serving needs very well."

And although the marketers were sure email was successful, nobody had measured how it affected accounts overall, or if the company as a whole could be using it more effectively.


Together with his team, Errico, who's also known as Schwab's "Email Evangelist", led three company-wide efforts to solve the problem; 1. research, 2.centralization, and 3. redeployment.

In olden days, most large companies probably would have taken this process step, by step, by step. But the marketplace was growing so quickly, that there wasn't any time. So the Schwab team juggled all three efforts simultaneously from June 2000 to December 2001.

-> Research

Schwab ran both qualitative research(an ongoing series of focus groups) and quantitative research (a datamining project) efforts at the same time. The focus groups were great for quick feedback. The datamining took a bit longer.

In June 2000 Katie Cole, Director of Analysis & Learning at Quris, who managed Schwab's datamining project, gathered data on a pool of four million Schwab customers who'd registered at the Web site in the past six months, including 1.2 million who'd opted in to receive email. She explains, "Data was very silo-ed, as it is typically in large companies." Because Schwab is a financial services company, security was paramount so Cole couldn't just request a data dump from each source. She had to "access data pools" very, very carefully.

One of the biggest challenges was figuring out which of hundreds of data variables to include in the analysis. Cole laughs, "It's the nature of the beast, I tend to go overboard and want to examine everything!" In the end, 25 key demographic and activity variables were chosen - most of which were boiled down from other multiple variables (for example, the web activity variable was based on a ratio of web trades to total trades and recency.) Quris also asked an independent analyst to cross validate their reasoning on how these variables related to outcomes before proceeding further.

Next, Cole's team spent six months from October 2000 to March 2001 doing the actual statistical modeling and reporting on these variables. Her base-line goal was to determine how Schwab email subscribers were different from customers who were non-subscribers. How much impact did email have on trade behavior and customer retention?

Finally Cole presented the project findings in a series of strategic email planning tutorials for Schwab marketers. "We discussed how to leverage the results in tactical contact strategies, and began to define a plan for long-term channel growth -- who do you target with email and how do you message it? Where do you get the biggest bang for your buck without saturating your list? "

-> Centralization

Errico was extremely lucky in that, unlike many large companies, 99% of Schwab's customer email addresses were already being held in a single database; and, that about 80% of Schwab marketers emailing campaigns to customers were all located in the San Francisco office. From June 2000 - December 2001, he worked with marketing and management to centralize email activities even further.

He explains, "We [now] have a centralized area of email operations, and they keep track of essentially who got what and when." All outbound broadcast emails to customers, including those from both marketing and customer service, must flow through this department and abide by its rules.

Errico's team put rules in place saying customers couldn't get more than a certain number of emails in a certain time period. He explains, "If the market is active and customers are getting a lot of alerts, we probably won't send marketing email. We've also been playing with tolerance levels. Customers who are more engaged with their investing tend to have a higher tolerance for information and interaction with us, versus other customers who prefer quarterly updates."

Schwab sends roughly a million email messages every day the stock market is open, so the department established a company-wide email calendar to manage the flow. Errico says, "We have a pretty good system in place. The centralized calendar tracks editorial email and random marketing requests and how it's going to work with customer service emails, in order to say we're sending X number of emails today, and how is that volume looking."

Tracking all these emails closely has enabled Schwab to start bundling related emails into a single mailing. For example, if a customer subscribed to several different end-of-trading-day newsletters, now they will get a single email combining all the end-of-day data items they requested.

The central department also helps Schwab marketers abide by a set of company-wide creative guidelines. "Email has to be clearly defined as coming from Schwab," says Errico "and the subject line has to meet certain brand criteria. We never want to come across as a used car salesman or some cheesy potentially spam-like email 'free, free, free!'"

"Also each message needs to distinguish itself so customers understand what they're getting." He continues, "We help them distinguish a price alert and a new product offering. We would only use the 'Message from Schwab' subject line if in fact we were sending a message from Charles Schwab himself."

This distinction carries over to the opt-out (unsubscribe) line at the bottom of each email. Instead of saying "Take me off the Schwab email list", each opt-out line clearly specifies the specific list the customer is unsubscribing from, such as "If you don't want to receive marketing information about new mutual funds, click here and we'll take you off the list."

Last but not least, Schwab established very firm company-wide opt-in versus opt-out rules from the start. No customer is ever sent email without requesting it (in fact Schwab has email addresses for millions of customers that it does not use because they never requested to receive specific email.) Also email offering boxes are never, ever pre-checked. Customers have to proactively check the box to request that their name be added to any list.

Errico explains, "We're very worried about spam. We don't ever want to be seen as spammers. We want to get customers' permission to send them information. If you actually have their explicit agreement rather than implied permission, it really opens the door to a fuller conversation and less annoyance. They know what they're getting, they know how to use the information, and it gives us the opportunity to educate them a little bit."

-> Redeployment

Schwab's research revealed that customers often signed up for a particular email alert service on the site because it was the one they randomly stumbled across while visiting -- not necessarily because it was the option (out of the more than 40 offered) that was right for their particular needs.

So the Web development team was called in to redesign the site in three key ways:

1. Navigation -- They added a tab at the very top of the Schwab customer site reading simply "Email Alerts." This tab, which links to a page where customers can self-manage their Schwab email subscription options, appears on almost every single page of the site for easy access.

2. Situational Reminders -- Now when a customer takes a particular action on the site, the next page reminds them to sign up for a related Schwab email service. For example, a customer submitting an online trade would be reminded to sign up for Schwab's electronic trade confirmation service. Errico has ruled against any pop-ups or anything else that could slow page load time however, to avoid annoying customers making time-sensitive online trades.

3. Email Alerts Wizard -- The team also invented a handy online tool, the Wizard, that Schwab customers can use to pick the email alerts that are right for them. Errico says, "People love it. If you're brand new to Schwab, you answer a series of five questions and we'll make recommendations to you. If you already know what you want, you just pull up the menu and check the things you want and uncheck the things you don't want." (Again, note, absolutely nothing is pre-checked.)


Errico's team has been able to show that email has contributed enough to Schwab's bottom line that, despite the economic downturn, the Company has continued to make a substantial investment in infrastructure, research, and email offerings.

Although Errico can't reveal specific numbers, he says, "It's significant enough that there are 40-50 people on the email team now." (And that number doesn't include product marketers or actual customer service reps.)

The research results were highly positive. Katie Cole says, "We found people that subscribed to one particular email product, had five times the average of mutual fund trading."

Errico adds, "That result was indicative across the board. Data showed a very high correlation between increased profitability and customers who sign up for certain email services. It makes sense, if you're a certain type of trader or investor, you can't necessarily keep checking the Web site, but if we send you the information you're looking for in a timely manner, then it's much easier for you to act when it's appropriate."

Centralizing all email activities not only helped Schwab avoid depressing results from bombarding customers with too much marketing email, it also helped the Company react quickly on September 11th when a Company with a decentralized system might have been floundering.

Errico explains, "We essentially stopped sending all emails to customers, especially marketing ones. We cleared the decks to be able to send a message from Charles Schwab himself on what we were doing, and that people could still access their accounts online although the markets were closed. As a result, people felt very confident in Schwab as their broker."

Later in the year, Schwab's centralized system also helped the Company react more quickly than most emailers to transition affected names on their lists when Excite @Home abruptly filed for bankruptcy, disrupting email service for more than a million higher income Americans. Errico's team immediately reached out to all @home customers on Schwab's opt-in files to ask, "Do you have an alternative email address to share with us?"

The Web team also quickly added notes asking, "Is your email changing?" on several highly trafficked areas of the site. Errico says, "That actually turned out to be a great thing all around. It netted us additional email addresses in addition to solving the Excite problem."

Last but not least, this December Quris and Schwab won a Bronze NCDM Database Excellence Award from the Direct Marketing Association and Direct Magazine, for their data-mining project.

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