Contrary to popular belief, the CEO of discount brokerage Scottrade is not named Scott. In fact, aside from three branch managers in Florida and Texas, no one in management is named Scott. But CEO Rodger Riney doesn't mind being called the wrong name, and maintains that every employee should be on a first-name basis with customers.

The financial services company got its start in Scottsdale, AZ, 20 years ago on the notion that customer strategy is paramount, says Chris Moloney, chief marketing officer. With nearly 1.7 million accounts, Scottrade conducts most of its business online, but Moloney says that doesn't stop the company's personal connection strategy.

"We want to exceed the customer's expectations of what a discount brokerage can do for customer service," he says. He likens it to "Nordstrom service at Sam's Club prices." For example, when a user registers via the Web site, Scottrade takes that information to customize direct mail, and triggers a call from one of its 300 local branches. Acquisition is important, but customer retention, satisfaction, and loyalty drive the company's success.

Thousands of customer service reps
Scottrade does not have a customer service department. All of its 1,700 employees are customer service representatives, Moloney says. For example, there is no IVR system for customer calls. Every call to the 800 number gets routed to the local branch nearest to the caller. Branch employees handle the calls themselves. "We think of our branches as 300 local call centers," he says. "And customer service is a metric on which they're measured."

In addition to being licensed stockbrokers, Scottrade employees each receive an average of 23 to 80 hours training on customer service, relationship management, communication skills, diversity, and leadership development. The training is conducted in person at its St. Louis headquarters and online via its Scottrade University online program. Earlier this year the company was named a Training Top 125 winner by Training magazine.

"We believe that investing in superior, unwavering customer service will pay off in the end," Moloney says. "Rodger never views customer service as a cost. He looks at it as an investment." The value of an individual transaction might not be worth the price of the customer's call, but the long-term value of the relationship is well worth it. "The challenge in organizations is that they have relied too much on technology," he adds. "We rely on our people. It's up to them to respond to and deliver on the experience."

Strive for advocacy
Customer service leads to satisfaction, which builds loyalty and ultimately advocacy, says Moloney. "Happy, active investors lead to more happy, active investors," he says. And he can back it up with research. Prior to joining Scottrade, Moloney developed a marketing research tool called the Magnetic Advocacy Model. It shows that financial services customers who make referrals tend to be worth 50 percent more than a typical customer, and a new referred customer is worth almost as twice much as a customer coming from other channels. Also, "advocates become more valuable and more loyal simply by making a referral, because they put their reputation on the line," he says.

Results
So how does the magnetic advocacy concept play out in practice? Moloney doesn't reveal specifics, but does admit that a large percentage of Scottrade's business comes from customer referrals. And during the past 12 months, Scottrade's customer assets grew by $4.7 billion to $55.7 billion; active customer accounts grew 12 percent to 1.66 million from 1.48 million; and revenue grew by 70 percent to $789 million. And in 2006, the company was recognized by BrandWeek magazine for leading the investment industry in customer loyalty.

The challenge, Moloney says, is to keep the personal customer relationship strong as the company grows. "For being a large company, we're focused on personal experiences," he says. And like CEO Riney, he doesn't mind when people call him Scott either.