|Zecco Steps Up Technology and Service: An Interview With CEO Michael Raneri|
|Written by Benjamin Pousty|
|Wednesday, 16 November 2011 12:14|
This article first appeared in the Consulting Insights Fall Issue.
Zecco first entered the self-directed brokerage industry in 2006, making a play for investors with a value proposition resting on two pillars. One was low costs — the name “Zecco” stands for “zero commission costs.” The other was social media, specifically the ZeccoShare community. While most clients no longer enjoy free trades, Zecco still allows clients to share their trading activity and performance and discuss the markets and investing through forums and blogs.
This September, Zecco announced the release of Zecco Elite, a premium loyalty program for investors who maintain a balance of $250,000 or perform an average of 25 trades a month over a three month period. Zecco Elite members receive a variety of perks including access to a dedicated team of agents, no added cost for broker-assisted trading, free use of Zecco Streamer and breaks on IRA account and bank wire transfer fees.
We recently caught up with Zecco CEO Michael Raneri to discuss Zecco Elite and the firm’s social media and online trading initiatives.
Corporate Insight – Tell us about Zecco Elite and the factors that led to the release of the program.
Michael Raneri – We’ve been doing it in the background for quite a while now. With Zecco Elite, we wanted to make sure that the clients that really drive our business — the 20% that really move the needle in the form of assets, equity trading, etc. — that they had a great experience. Everything from customer service with the most educated, experienced reps to the way we communicate with them. It was so successful as a behind-the-scenes program that we wanted to make it more public. We not only wanted to use it as a retention tool but also a marketing initiative for individuals that met the requirements.
CI – Initially Zecco Elite was rolled out as a program for Zecco clients that met the required thresholds. Has the focus now shifted to using this program to add new clients?
MR – That’s right. Typically, being a small, aggressive firm, our customer segment tends to be the lower tiers of investors at some of the larger firms. The marketing message with Zecco Elite is that we will treat you better.
CI – What types of new clients are you trying to attract with Zecco Elite?
MR – One clue is the level of minimums. We are trying to attract the mass-affluent client that is an engaged investor, not necessarily active. These are investors that are engaged in the markets and trade five or more times a month. They aren’t necessarily day traders, but they might be engaged in more sophisticated strategies. We have a new online trading platform coming out that is a drastic improvement for complex options.
CI – When is your new online trading platform going to be rolled out to the public?
MR – Our online platform is in pilot right now and the roll out is imminent. If you go to Zecco’s Facebook page you will see a fan page that has a video on it highlighting key features. It has only been announced to our customers and Facebook fans so far, but if you “like” us on Facebook you’ll get to see it.
CI – Getting back to Zecco Elite, if I am a mass-affluent or engaged investor, what do you think is the best selling point for the program?
MR – Hopefully it’s more than just the Elite program. Our value proposition is that we offer powerful web tools, community intelligence and spectacular customer service at half the price of major competitors. With Elite you would get even more. With the launch of our new online trade platform, we’ll be on par or better than our competitors.
Zecco Share has over 500,000 members and allows the community to share intelligence and sentiment. This gives members additional information streams and helps to validate their strategies and ideas and avoid common investment mistakes.
CI – Speaking of social media, we noticed that you just came out with Zap Trade and the Wall Street Facebook app. Can you tell me about these products?
MR – Zap Trade came from the realization that there is a segment of people that go to brokers to do research and place trades. However, most often what causes them to take action on an investment idea is content from third-party publications — Yahoo! Finance, TheStreet, etc. So, Zap Trade is a way for us to take advantage of the semantic Web and allow people to buy and sell a security right from the article they are reading. Zap Trade comes as a web browser plug-in, and we have also cut deals with publishers where Zap Trade is inserted in their user interface.
Our Wall Street Facebook app is an extension of this concept. We embedded Zap Trade into a Facebook app where people can get a quote or chart, or talk about securities with friends. The app is tightly integrated with our Facebook page as well as Zecco Pulse, our blog which writes original content to three customer segments we focus on — active/engaged, options and forex traders. An update to the Wall Street app will be out by the end of the year.
What we have is a social media ecosystem that will become more seamlessly integrated over time. We have a broader social media audience than we have accounts and the idea is to ultimately add new accounts from this audience.
CI – Are there any specific trends that you’ve noticed among active and engaged investors that led you to develop more resources for this audience?
MR – Social media and social networks like Facebook and Twitter are parallel with the Internet in the early 90’s. This decade is about people leveraging the network, and to date it’s been all about connecting and socializing.
In my opinion, Facebook is more than that. It is a platform for social commerce and for businesses to do more than just present their brand — to literally offer their services on the network rather than requiring users to return to their site. Coupled with innovations in mobile technology, I can see a trend toward upwards of 20 to 30 percent of trades being executed outside of the website in the next two or three years.
Improvements in mobile technology and Facebook apps will further encourage users to take action and complete trades away from their desks.
CI – Zecco Elite is a departure from your firm’s traditional model of competing with lower prices and as such targets a different type of investor. How do you think Zecco Elite changes the firm’s approach going forward?
MR – Offering low commissions is a great way to enter the business. However, I think as we mature, while low prices will remain a part of our positioning, customers want more. They want you to answer their calls in 30 seconds or less, [along with] new product and tools and community intelligence. We think the opportunity is there for us to move up in the market and service the mass-affluent versus the investor that is solely interested in low-cost commissions. It’s a strategic move for us to seek a more valuable account than we have in the past.