Forrester's Paul Hagen: The Rise of the Chief Customer Officer

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Customer Engagement
Customer Experience
Over the past five years Forrester has observed an increase in the number of companies that have a single executive leading customer experience efforts across a business unit or an entire company. Whether firms call them a Chief Customer Officer (CCO) or give them some other label, these leaders sit at high levels of power at companies as diverse as Allstate, Dunkin' Brands, Oracle, and USAA.

Over the past five years Forrester has observed an increase in the number of companies that have a single executive leading customer experience efforts across a business unit or an entire company. Whether firms call them a Chief Customer Officer (CCO) or give them some other label, these leaders sit at high levels of power at companies as diverse as Allstate, Dunkin' Brands, Oracle, and USAA.

We define the CCO as: "A top executive with the mandate and power to design, orchestrate and improve customer experiences across every customer interaction."

Who are these new customer experience executives? Why do companies appoint them? And does your company need one? To answer these questions for a newly released report called "The Rise of the Chief Customer Officer", we gathered data on 155 CCOs, surveyed a panel of customer experience decision makers from large North American firms, and conducted in-depth interviews with CCOs from both B2C and B2B companies. Here are a few of the nuggets we found:
- Title: 44% have the title "Chief Customer Officer," 23% are called "Chief Client Officer," and 8% go by "Chief Experience Officer" . The many, highly varied titles of the remaining 26% highlight the extreme difficulty of trying to spot CCO-level people by title alone, such as USAA's "Executive Vice President, Member Experience" and SIRVA's "Customer Experience, Operational Excellence, and Chief Innovation Officer."

- Tenure: 82% of CCOs have spent two years or less in the position and 55% have one year or less on the job. 83% are internal hires who have a significant history at their companies. Median time at their firms among those we studied is nearly 8 years. 33% of the CCOs previously held Division President or GM roles, 31% previously held marketing positions, 31% previously held sales positions, and 24% formerly held operations positions.

- Senior leaders: 75% of those we examined sit on the executive management team within the company.

CCOs' organizations depended on whether the position was structured as an operational or advisory role. In firms like USAA where the CCO has marketing, sales, support and distribution channels reporting into him, organizations can include thousands of people and budgets can run to hundreds of millions of dollars. Conversely, in companies where the customer experience team acts in an advisory or consulting role to other parts of the organization, the CCO has a much smaller team and budget.

When we asked companies about the breakthrough moments that lead to the creation of a CCO position, we expected to hear stories involving an awakening brought about by a cataclysmic exodus of customers. While these stories do exist, several other themes also emerged including: a change in leadership, a desire to accelerate growth, a reaction to competitive forces, and a response to changes brought about by rapid growth.

A chief customer officer is not a silver bullet for a company's customer experience problems. One CCO provided this warning: "I worry about this as a role...it's in vogue and many companies will hire one because they think they need one. In 3-5 years, I'm afraid we may see lots of flameout because they weren't given the seniority or authority to make a difference." To avoid this fate, CEOs considering a CCO should establish three preconditions for success: a strategic mandate to differentiate based on customer experience, cultural maturity, and the creation of a viable position.

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About the Author: Paul Hagen is a Principal Analyst at Forrester Research serving Customer Experience professionals. He blogs at http://blogs.forrester.com/paul_hagen

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