Who's in Charge of the Customer?
Today's lead story in 1to1 Weekly takes a look at the role of the Chief Customer Officer. As companies look to shore up their customer strategies to weather the economic storm, it looks as if having an executive in the board room with a focus on customers would be a good idea. Some, however, don't agree.
Only a handful of the Fortune 500 have a CCO in their executive ranks, and even the companies that do have one run into challenges when it comes to authority and accountability. They might overlap with the Chief Marketing Officer, or not be held to the same reputation as the CFO or CIO.
I think that the benefits of having a CCO outweigh the negatives. Some say that all executives focus on the customer, so why should there be one in particular. But from many of my experiences interviewing executives, I've learned that lip service about customer centricity and a truly customer-centric culture and strategy are two very different things.
What do you think? Do you work at a company with a CCO? Are you a CCO? Do you think the position is unnecessary?
Related Entries
- Hoffman's Hot Seat: The Chief Customer Officer: Building a Customer Strategy
- Is Social CRM the "It" Strategy of 2010?
- What Was Your Favorite Customer Strategy Story of 2009?
One example of a CCO having success is Bob Johnson of Century Furniture, which appointed him as CCO when it decided to take a more customer-focused sales and marketing approach: http://www.1to1media.com/View.aspx?DocID=31135.
The CCO's role and mandate should help mitigate the issue of simply giving customer centricity lip service vs. having an active customer-centric culture and actionable strategy.
In order for the CCO role to succeed, this role along with the other CXO roles need to be clearly defined where customer accountability is concerned. Doing so should also help liberate companies from the siloed way of operating by tearing down the walls of the mini-empires built by traditional functions through a mandate toward a common customer objective.
The CCO will be instrumental in helping companies to survive in the current economic downturn by championing the philosophical, functional and financial commitment to customer centricity and ensure that a focus on the customer is not the exception but the rule, as an essential competitive strategy that is especially important during an economic recession.
Finally, the CCO will need to help companies align their budgets with their customer centric journey. Unfortunately, budgets often reflect the conventional way of operating and Finance doesn't have the processes and technologies in place to view departmental accounts through a customer-centric lens, thereby compounding the risk of the customer being impacted, ignored or alienated when tough business decisions are made.
In all, the role of CCO is a step in the right direction.
My research I've conducted for my upcoming book, "The Key to Customer Strategy: The Rise of the Chief Customer Officer" indicates that the average tenure of the Chief Customer Officer is about 18 months, with some notable exceptions on either side of the average. As Rich said, The CCO role is suffering from some of the same issues as the CMO, namely that their role is ill-defined, most executives have no idea how to quantify the CCOs contribution to the bottom line, and many results take longer than 1-2 quarters to realize. However, the most successful CCOs are addressing these issues.
1. Some of the early CCOs expanded their role until it burst and they either burned out or were fired. Now, the notion that they have to own all customer-facing functions is being replaced by the need to own the customer-facing processes. The CCO can improve the customer experience by streamlining the customer-facing process without having direct reporting authority.
2. CCOs are beginning to run their organizations using accepted metrics to quantify and justify their impact on customers and their organization. These include internally focused, “value captured” metrics such as satisfaction, renewals, churn, profitability, lifetime value, and interestingly, more “value provided” metrics such as customer estimates of improved business capability as a result of the business relationship.
3. Performance metrics are increasingly tied to profitability. Those whose metrics don’t include profitability haven’t lasted long. As much as it is “the right thing to do”, pure customer delight doesn’t impress the CEO and the board.
4. Balance between short- and long-term customer results is very difficult. While they may be given a 3-6 month “bye” to make changes, those that last the longest can prove they provided a near-term lift in revenue and profits while tracking towards the longer-term changes that are inevitable in a customer-centric journey.
It's great to see CCO's frequency of interactions with company boards. In addition to revenue-generating goals adding clout to CCOs, profit-generating goals may give the other CXOs a compelling reason to respect the CCO. Profit-focused customer experience initiatives can provide stamina, positive culture change, and longer-lasting results for customer experience improvement and its accompanying benefits in market share, share of wallet, and so forth. I've written about this in Overcoming Ethnographic Customer-Centricity, and Customer Experience Improvement on a Tight Budget.
A smart reminder to start off the new year.... After a decade of working with companies at various stages of the customer journey, I've noticed that CCO's with the greatest impact are those who can prove the positive / negative impact of corporate decisions on consumer's willingnesss to pull out their wallets. All other tactics and measures are moot.