Web app boosts customer service for Vanguard Group

Reports of the death of customer relationship management (CRM) have been greatly exaggerated, according to Vanguard Group CIO Tim Buckley.

He told attendees at Computerworld US's Premier 100 conference here that the aims of CRM initiatives are worth pursuing, and then described how Vanguard, a US$600 billion financial services company with 17,000 shareholders, uses its self-service Web application as a CRM system across all its sales and support channels.

"It's the approach to CRM that's been wrong," Buckley said yesterday. "The goal is delivering necessary real-time information to clients and associates to better serve the clients' needs, and no one's going to argue with that."

Valley Forge, Pa.-based Vanguard resisted buying a CRM system because the company didn't want a vendor to determine how it served its customers, he said. Technology had always been at the heart of Vanguard's business, and in the past five years, the Web has been the cornerstone of the company's technology strategy.

"We are a virtual company," Buckley said. "With three physical locations, there's not a lot of face-to-face with our customers."

He called the company's use of technology a significant competitive advantage, citing Vanguard's costs at 0.27 percent of each transaction, compared to an industry average of 1.4 percent.

Vanguard's online customers have for some time been able to access a consolidated view of all their assets, perform transactions and do a wide range of self-provisioning on their accounts. The company has found that online customers maintain balances 50 percent larger than those of phone or mail customers; retention rates are 20 percent higher; and the average cost of transactions is 95 percent lower than the cost of transactions for customers using other channels.

That was good news. But it also became increasingly apparent to the company that there was a disparity between the service Vanguard was providing online and the service it offered to other customers. "We gave our [online] clients better tools than we gave our associates," said Buckley.

To address the problem, the company decided to make its Web application available to desktops throughout Vanguard. That meant, for example, that an employee taking a phone call from a customer could call up the consolidated view that appeared online and provide all the services requested. Previously, phone customers were passed from associate to associate to gather pieces of information or to perform multiple transactions.

The companywide portal reused 80 percent of the customer Web application, with the remaining 20 percent consisting of in-house functions that serve to prompt and coach the associates.

Buckley said that after rolling out the Web-based application, it was crucial to retire old desktop systems, and he acknowledged that Vanguard's approach required careful handling of enterprise data and functions that were for internal use only.

Among other benefits, Vanguard found that investment cycle time dropped by 90 percent and administration time plummeted. Employee training was transformed, too.

"Our associates had been spending a lot of their time managing Windows, and that's what we trained them to do," said Buckley. Now, much of the six-week training period is spent teaching employees about funds and investing so they can be more valuable to the customers -- and to Vanguard.

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