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The Evolving Chief Customer Officer: Identifying Value, Authority, Scope, Responsibilities & Strategic Direction Within the Enterprise

23 December 2015

Interesting blog post by Michael Lowenstein, Ph.D., CMC, Thought Leadership Principal for Beyond Philosophy, proposing five core areas that identify the operating functional landscape, and contribution potential, represented by an effective CCO.

In the past decade, we’ve seen the number of companies with an individual in the role of Chief Customer Officer (CCO) – nicely defined by Wikipedia as “the executive responsible for the total relationship with an organization’s customers” – grow from under 100 to thousands today. Reflective of the escalating focus on customer data, experiences, and relationships across all methods of communication and access, the role is rapidly evolving and morphing; however, there is general agreement regarding its significance in building and sustaining true value, planning capability, and enterprise customer-centricity.

The Chief Customer Officer Council has determined that the CCO role, in part because its requirements, authority and scope are being constantly reworked almost in real-time, have the shortest life-span of any senior executive, with an average tenure of less than 29 months. While colleagues such as Jeanne Bliss, Tony Zambito, Maz Iqbal and Bob Thompson, and consulting organizations such as Forrester, Aberdeen, and Strativity, have done much to flesh out the customer-centric contributions and responsibilities of a corporate CCO, what is becoming recognized is that the function requires greater education, understanding, and awareness of its benefits among C-suite executives.

In studies, articles and reports addressing how organizations build customer focus and customer passion, Forrester has identified that the CCO, serving at a senior corporate level, has (as reported by Paul Hagen of Forrester on the HBR Blog Network) “…the mandate and power to design, orchestrate, and improve customer experiences across the ever-more-complex range of customer interactions.” The function now exists in companies as varied as Dunkin’ Brands, USAA, Philips Electronics, FedEx, The Cleveland Clinic, Allstate, and SAP. And, where there is a CCO in place and working with other C-suite executives, the authority and scope associated with the position has direct influence over corporate customer experience priorities and application of resources.

Five Core Areas of Functional Responsibility

From my perspective, there are five core areas that identify the operating functional landscape, and contribution potential, represented by an effective CCO. They are;

  1. Customer Experience and Value Optimization

Studies by Strativity, and other consulting organizations, among corporate executives have identified the financial benefits of increasing customer experience management-related resources. For many companies, the brand-appropriate customer experience spans across multiple channels and touchpoints, and it can involve internal groups such as IT, sales, marketing, operations, customer support, new product or service development, and product management. Corporate reputation and image, and brand equity, also come into play; but, it is experience, and resulting perceived value, which is the single biggest driving component of customer behavior.

For the CCO, broad background in customer experience optimization transcends the brand-building focus of marketing (the CMO’s role) or IT/operations (frequently the CIO’s role). CCOs must understand marketing, sales, service, brand perceptions, and operations, of course, but their principal goal should be to deepen relationships, establish greater levels of trust, and build stronger customer loyalty behavior.

  1. Customer Insight, Data and Action Generation

Today, businesses are able to measure their activities, impact of customer experiences, and customer relationship with unprecedented precision. Many are actively collecting Voice of Customer (VOC) data through surveys, feedback management, analytics and market research relating to customer retention, loyalty, brand equity and satisfaction. As a result, they are able to create enormous streams and bases of data – known, collectively, as “Big Data”.

With the growth of the digital economy, where clickstream data and content are available through mobile communication channels, real-time insights into consumer behavior (through semi-structured and unstructured information) can be readily provided; and information management software and predictive analytics are available for virtually any enterprise. This is then combined, or integrated, with qualitative and quantitative customer research (in other words, it is not possible to gain a complete MRI of customer behavior without tactical and strategic research), especially in areas of customer need and behavioral segmentation.

Customer-related decision making is now knowledge-based, replacing intuition and guesswork. It is the CCO who leads, and is the focal point, in collecting information from inside and outside of the company, integrating and analyzing it for trends and clues, developing actionable results (such as identifying patterns of customer behavior), and, in a collaborative way, leveraging this material to improve experience performance and customer value.

Building insight, supportive data, and action which impacts customer behavior also involves inclusion and periodic debriefing of employees, for alignment and support of corporate customer-related initiatives 

(http://www.matthewtgrant.com/writing/satisfied-customers-are-not-enough-how-to-build-real-loyalty/)

  1. Customer Relationship-Building

In this omni-channel world, maintaining proactive and positive relationships with customers, throughout the life cycle, is a key component of the CCO’s role within the enterprise. CCOs, in other words, need to be able to align and innovate engagement and relationship strategies. This requires both a knowledge of, and facility with, the insights and metrics associated with perceived brand equity, and customer communication and experience as well. As noted building and reinforcing trust, which leads to integrity and a strong relationship, is the goal here.

Relationship building, incidentally, also includes active involvement of employees in all customer-related initiatives, building the level of ambassadorship and contribution 

(http://www.customerthink.com/blog/employee_ambassadorship_and_advocacy_living_the_promise_of_wow_customer_value_delivery_part_i)

There’s proven strong financial linkage between customer behavior and employee interaction and loyalty. Beyond just understanding employee satisfaction and what employees value and desire in their jobs, it is essential that companies have a research and analysis method which correlates staff performance to customer actions so that they can create project teams, and hire, train, recognize and reward employees for how they contribute to customer value.

Employees are at least as important as other aspects of customer management in optimizing benefits for customers, and they frequently represent the difference between positive experiences or negative experiences, and whether customers stay or go. As research into this effect concludes with regularity, employee attitudes and actions, especially around customer commitment and engagement, and championing a company’s products or services, can’t be separated from the effective delivery of customer value. So, another skillset component of the CCO should be to both engage employees in customer-related programs, and effectively form and lead cross-functional project teams.

  1. Customer Journey Management and Lifecycle Strategic Consultation

Organizations need to understand how elements of the customer experience journey, and the journey in totality, impact downstream customer behavior (including informal word-of-mouth). This is another key role and function of the CCO.

Further, the CCO’s operating parameters will include the complete span of a customer’s life. Just as relatively few companies have developed algorithms and processes for estimating lifetime customer revenue value, so also few companies truly comprehend how experience management programs have to be modified depending on the customer’s life stage. In their role, CCO’s will see experience management as never-ending processes that embrace mutually beneficial and value-producing relationships for all customers, i.e. past, present and potential, and internal, intermediate and external, creating not only enticements to become customers, but also barriers to exit or churn.

As we see them (and as fully described in Customer WinBack, a book co-authored with my colleague Jill Griffin), there are three major phases of a complete customer life cycle: Targeting/Acquisition, Retention/Loyalty, and Lost/Won-Back. And, though there is a great deal of flex in these phases (depending upon the type of business involved), adeptly managing customer value over the lifecycle is a major responsibility of the CCO. The customer, and the customer’s loyalty, can never be taken for granted – a fact well-understood, and driven into the organizational DNA, by the CCO.

  1. Customer-Centric Culture Leadership and Liaison

The cultural role and senior-level influence of the CCO is continuing to crystallize, but is already extremely important. If an enterprise is going to have the right message to the right customer in the right medium at the right time, then creating a top level of touch-point experiences—and doing it profitably with the right organizational structure, with the right mindset—everything begins with data and ends with insight and action.

The continuing goal is to build and sustain (and repair, when needed) rock-solid relationships with customers and to make employees, at all levels and in all functions, ambassadors for delivering value. And, it needs to be accomplished in a financially feasible and responsible way. All of this is planned and directed by the CCO.

The Emerging CCO Skillset

According to Forrester research (as recently reported by Bob Thompson), holders of the Chief Customer Officer position have rather diverse, and even fairly eclectic, backgrounds. Almost 90% come, in a pretty evenly distributed way, from operations/quality/process improvement, divisional senior leadership, or marketing; however, experience in sales, service, strategy/innovation, customer experience, product development, customer and brand research, and IT are also well-represented. Ideally, the successful CCO can bring, and synergistically blend, many of the capabilities inherent in these varied functions.

One survival factor that is, or will become, common to the continuity, scope, and authority of the CCO is the ability to demonstrate direct impact on revenue – acquiring attractive new customers, driving customer loyalty behavior throughout the life cycle (including reduced churn and more proactive complaint management), and lowering customer management costs. From the organizational side, and again quoting Paul Hagen, what C-suite executives should do to make the CCO position optimally effective is establish “…a strategic mandate to differentiate based on customer experience, a portfolio of successful projects that create buy-in and a cultural maturity in the organization, and a uniform understanding on the executive management team for what the position can accomplish.”

Whether this senior position and function is labeled CCO, Vice President of Customer Management, or Vice President of Customer Experience, its responsibilities in supporting sales, marketing, operations, service, culture development, organizational planning, and VOC feedback mechanisms make it a critical role in any customer-centric enterprise.

 

Source: Beyond Philosophy

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