What Zecco Has Done to Improve Their Service: An Interview with Zecco Trading
It has been more than one year since I became a Zecco customer. Since then, I have used my Zecco account quite actively (especially with my play money) and shared my experience. Like many other Zecco customers, I like the idea of paying zero commission to buy stocks, but I had quite some frustrations with their service, the website and those quick policy changes in the early stage.
A couple of weeks ago, with the help from Loren Cheng, VP, Head of Product Management, I had the opportunity to have a written interview with Craig Prickett, VP of Marketing at Zecco Trading. With the interview, I was trying to find answers to questions I have for some time: where Zecco stands in the industry, how they addressed concerns regarding their customer service, and what improvements they have done and will do to give customers a better experience (I noticed some changes recently myself).
Did I get what I was looking for? Read the interview and find out yourself.
Sun: Zecco has been around for more than 2 years now, but there are still many people not familiar with the company. Could you please give us a brief introduction of Zecco and its products?
Craig: Sure. Like you said, we are a little over 2 years old. In fact, the company was “born” on the 4th of July 2006. It started with the belief that there are independent investors out there who are comfortable making their own decisions and who would rather see their money go toward their investment return instead of paying higher commissions. So far, it’s working: about 160,000 members have signed up with Zecco Trading, and they have opened around 100,000 trading accounts. We get a little over 1,000,000 site visits every month and growing. We provide online trading for equities, options, and mutual funds through Zecco Trading. We provide some research from companies like S&P and Motley Fool. We’ve recently added in education resources, particularly for those interested in learning about options trading. And we’ve got a comprehensive investor community for those investors interested in finding other “like minded” investors and opportunities to explore ideas.
Organizationally, Zecco.com is a financial portal of Zecco Holdings, Inc., which also provides access to Zecco Trading, Inc.’s trading service. Zecco Holdings, inc. is not a securities broker/dealer, all securities and investments are offered to self-directed investors by Zecco Trading, Inc. which is a member of FINRA /SIPC, and secured through VeriSign. In other words, we have a full-blown broker/dealer for handling the regulated investment side of the business, and we have a holding company that manages the non-regulated side of the business like the community. For those that want to know more about our company structure and organization, they can check it out at http://www.zecco.com/trading/TradingDisclosures.aspx
Sun: Since I started to follow Zecco Trading, I have noticed some back-and-forth on its policies. First there was a $2,500 account minimum, then it was reduced to $1,000, but later the limit was brought back per last year. These changes gave me a feeling that Zecco is not stable. What’s the reason for making these frequent changes?
Craig: Yep, Zecco Trading has had some pricing changes – both in the minimum equity balance as well as the number of no commission trades per month. As I’m sure you can appreciate, in addition to giving our customers an amazing deal where they can save money, Zecco Trading needs to make money. As a new business, it just took us a little while to get enough data to find the right balance.
Sun: I hate paying commissions to trade stocks, so Zecco Trading is the perfect place to buy stocks for me. However, the original monthly limit 40 free trades. What’s the reason to reduce the limit to 10?
Craig: I hear you, and I wish we could give away unlimited free trades. But basic economics drove the change. As I’m sure you know, there is a small cost the broker/dealer incurs from each trade order, and there are a series of other costs incurred just for the broker/dealer. While Zecco Trading makes good money on options trading, margin interest, and paid equity trades, the original limit was simply too high to be offset by these revenue streams and was not sustainable over the long term. We still think it’s the best deal available – who else give you 10 free trades per month with just $2,500 net equity?
Sun: From what I heard from Zecco users and my own experience, there are some problems with Zecco. Most complaints are about Zecco Trading’s customer service (a recent SmartMoney survey didn’t give Zecco Trading a good mark on that). For example, I got this comment from a client last month “I have gone through the setup and funding process. I scheduled a transfer and they executed it early causing a NFS charge from my bank AND a 2$5 fee from them. My bank refunded the bank fee even though it wasn’t their fault. Zecco refuses to refund their $25 fee even though it is clear they pulled the money 2 days early. Also, instead of showing a -$25 balance, they posted a -$20,025 balance and issued a margin call on my account. I was then in the hole 20K+ before I even started trading. I guess this is how they fund 10 free trades a month.” And there are quite some confusions about opening an account, executing a trade, or withdrawing money from an account. From what I know these problems are not new. A lot of people have the feeling that you got what you paid for. Why are so many confusions? What has Zecco Trading done to address these issues?
Craig: There’s no doubt about it. Last year we had some growing pains in our service organization.
That said, I’m really happy with the way Zecco Trading responded. We made and are continuing to make significant investments in improving our service levels. At the beginning of the year we brought on new service center executive management, who added people and systems to begin the process of building out a world class service experience.
I can’t speak to the specifics of the example you mention, but I can tell you that our service levels have improved considerably from last year. For example, we’ve halved the average time Zecco Trading clients wait to speak to a service representative since just earlier this year; a client’s current average wait time is only 60 seconds. But, this is not a perfect process… there are times when it seems like a specific customer is under a dark cloud and no matter what we do that cloud won’t shake off. Anyone who has been in the service industry knows what I’m talking about. Our management and energy has been around improving overall service. Read our CEO blog for more information about our service changes- http://www.zecco.com/blogs/zeccoscoop/You-spoke-We-listened-Were-delivering.aspx
Specific to our Web site, this summer we’ve been placing a lot of focus on improving some key online experiences – for instance we enhanced our money transfer user interface – it’s very easy now. We are introducing a much cleaner online account opening experience later this month and we’ve got a new trading dashboard that made its debut earlier this month.
Sun: I myself contacted Zecco Trading a few times in the past for various problems that I had and every time I called, it bothered me a little that Zecco Trading didn’t even have a toll free number. Now I am glad to see that Zecco Trading has a toll free customer service number, but the web site is still not that user friendly compared to other brokers I am using. What other improvements has Zecco made? Does Zecco plan to upgrade the web site to improve user experience?
Craig: I’ve got to tell you, I love seeing our customers give us feedback and how we are able to take action. I’ve read customer comments where they say that it is a “night and day” difference between the Zecco of today vs. the Zecco of just a few months ago.
In addition to the changes that I mentioned earlier, we are currently engaged in a significant project to reengineer the backend architecture of our site – which in turn, will allow us to have greater flexibility in not just the user interface, but also delivering content and trading functionality in ways not seen before. A big element of the user experience is the speed at which the pages refresh. We’ve increased the speed of page loads by a factor of 3 this summer, and with our systems changes, we will see another dramatic improvement in the page refresh speed. We are pumped about what the site is going to be able to do next year – which is not that far off.
In terms of trading functionality, we’ve made huge strides already, and you’ll see another huge improvement early next year.
Sun: Finally, ZeccoShare. From what I know Zecco was one of the first to offer a community for its customers. Now, many, including Scottrade, TradeKing, and TD Ameritrade, have similar service. What’s the purpose of setting up an online community? Do you have any suggestions on how investors can benefit from it?
Craig: We love the entry of the investing industry into community. We firmly believe that it represents the next revolution of individual investing and the more it becomes mainstream, the more investors will benefit from it. The purpose of the community is to give investors the opportunity to exchange ideas, learn, and share with each other for the purpose of making more informed investment decisions and hopefully, making more money.
I think the best analogy is to observe investor behavior at trade shows or conferences. The action is not in the speeches or meetings; it’s in the hallways where investors exchange ideas and eavesdrop on conversations between passionate investors. I think of the online investment community as that hallway discussion on adrenaline.
While we’ve seen the larger brokerages dip their toes in community, they’re mostly dealing with early 90s modalities: message boards. There have always been problems with this old model of investing community. (1) you never knew if the guy you were talking to was a lousy investor and you really shouldn’t be listening to him, or worse (2) if he was just trying to pump up some thinly traded penny stock and dump it on you.
At Zecco, we’ve taken community light years ahead of that model by allowing users to create individual profiles, publish their REAL holdings, REAL trades and ACTUAL, VERIFIED performance. Now you know exactly what this guy is buying and selling, and exactly what his performance has been. So you now have transparency and credibility.
Plus we offer a range of additional tools that allow members to find other like-minded members. They can sort based on rate of return, holdings, investment objectives and so forth. For some investors, they like to start at the beginning, and indeed, the beginning investing forum is one of our most popular. Others may have a specific security or strategy in mind and begin to engage in conversation with other investors that have experience in their particular areas of interest. And like viewing consumer product comments on Amazon.com, many of our members lurk around and capture snippets of comments from various community members that may influence their buying decision.
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