The Vanguard Group: Team Four

Vanguard is a large investment company and leader in the mutual fund industry. In the early 2000s, it underwent a transformation to elevate its marketing function and enhance customer segmentation. This included outlining a customer relationship management process. The reorganization involved market segmentation, organizational restructuring with four client service areas and a solidified marketing department, and implementing dashboard metrics to monitor key performance indicators. The changes aimed to increase customer satisfaction, loyalty, and retention in response to growing competition.

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The Vanguard Group: Team Four

Uploaded by

Samyak Jain

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THE VANGUARD

GROUP
Team Four
What is Vanguard?
 Large investment company
 Mutual fund industry leader
 Underwent company transformation in 2002-2003
 Elevated the marketing function
 Enhanced customer segmentation

 Outlined a customer relationship management process

The Vanguard Way:
From the Beginning
Organization and Values Employee Satisfaction

 Client focused  Emphasis on training and

job rotation
 Loyalty driven  Low turnover
 High brand equity  Potential to earn 20-40%
 Overall cost- above market based on:
 Developing the team
leadership
 Delivering superior value
 Vanguard competitive  Meeting key performance
advantage indicators
Vanguard Focus: Prior to
Reorganization
 Target Customers:
 Long-term investment goals
 Discouraged active traders
 Marketing Strategy:
 “Buildit and they will come”
 Customer retention
Vanguard vs. Competitors

Vanguard Competitors (E.g. Citigroup)

 Market Leader  Market challenger

 Customer-focused  Market-driven
 “Mutual Mutual Funds”  “Shot-gun approach,
organization trying to be all things to
 “Past-performance is no all people”
guarantee of future  Differentiation
results”
advantage
 Cost advantage
 External advertising
 Internal advertising focus focus
Vanguard Focus: Reasons for
Reorganization
 Growing number of competitors
 Client satisfaction decline
 Demand shifted downward during 2001-2002 stock
market crash
 Low brand and advertising awareness
Vanguard Focus: Reorganization
Process
1. Investor Demand Study
 Market segmentation
 Customer relationship management process
2. Organizational Restructuring
 Four client service areas
 Solidifying the marketing department
 “seat at the table”
3. Dashboard Metrics
Market Segmentation
 Seven different investor types
 Focus on investors with a high Customer Lifetime
Value
 Low-cost client

 Clients who understand Vanguard’s core values

 Enhance
 Customer Satisfaction
 Customer Loyalty

 Customer Retention
Customer Retention:
Lock-In Strategy

Core Voyager Flagship

Marketing Change
 Increase database marketing
 New advertising campaign
 “Investin our Way of Investing”
 Reinforce brand attitudes

 Revamped website
 Education vs. selling
Vanguard Dashboards
 Dashboards often provide at-a-glance views of the
company’s key performance indicators
 Metric based system
 Helps make better data based decisions
 All company elements are related

 Aligns everyone in the company

Dashboard Key Performance
Indicators
Investment
Performance
Accounts

Net Cash Client

Flow Loyalty

Product,
Net Service,
Expenses Market
Development

Crew
Satisfaction Relative
and Fund
Effectiveness Performance

Operational
Excellence
Vanguard Dashboards
 Personal dashboards linking into business unit
dashboards
 Uncovers important issues to be resolved
 Only correct way to reward performance
 Quantitative
and qualitative results seen
 Managers bonuses tied to results
Looking into the Future: SWOT

Strengths Weaknesses
• Low operating expenses enhancing • Lack of support from brokerage houses
customer returns and independent agents affecting bulk
• Balanced business operations helping transactions
to sustain tough times • Weak international presence
• Reputation and customer loyalty
ensuring repeat business

Opportunities Threats
• Growing global asset management • Strong competition outside of the US,
• US retirement market expansion likely and in retain channels
to sustain demand for Vanguard’s • Equity markets performance could
services affect mutual fund flows
• Increasing competition from in
entrants into equity markets
Adapted from Marketline Report
Looking into the Future
 Target “emerging mass-affluent level”
 Stemming from Financial services deregulation
 International expansion
 Strategic Alliances
 Brokers