When You're No. 1, You Try Harder

It's a no brainer. We all know that Charles Schwab & Co. gets the Web. It's the No. 1 online broker and a leader in developing products and services for wired investors. With 4.1 million online accounts and a 21% share of all Web trades, the game is Schwab's to lose.

So how does it intend to stay ahead? By ensuring that customers get what they want, when they want, and how they want it. In recent months, Schwab has launched a wireless trading service and new online research tools that let customers take investment courses and hear live audio feeds of lectures. It's also building more branch offices and phone centers to complement its online services. By integrating the online and offline worlds, says e-commerce expert David K. Pecaut, president of the business development firm iFormation Group, "Schwab has become the benchmark for others going online."

And how. Some 81% of its trades are now done online, vs. 36% three years ago. That's great for Schwab, since processing online trades costs 80% less than offline ones. But the savings go further than that. With customers doing their own trades and research, branch employees are freer to promote higher-margin services. In June, Schwab introduced Portfolio Consultation, which lets customers meet with a Schwab adviser for $400. And a new wireless trading service went live in July.

Schwab has given offline investors more choices, too. It has added 23 branches this year, bringing the total to 363. And it's opening a fifth phone center to add 3,500 operators. That will help Schwab boost service even more, letting it process more phone trades when the still-too-frequent Web site crashes occur. All these offerings are aimed at folks like James Getzoff, a retiree in Marina del Rey, Calif., who frequently visits Schwab's site but just as often phones up the company. When a stock moves, says Getzoff, "I get right onto the site and research that company. If there's not enough there, I call one of the brokers to read me reports."

One hitch: Getzoff could do that now with rivals E*Trade Group or Merrill, Lynch & Co., which are mirroring Schwab's multi-channel strategy. Imitation may be the sincerest form of flattery, but it also means that Schwab will have to keep mining the Web to hang on to the top spot.