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Design Thinking-Deeply immerse yourself in your customers' world

Tuesday, March 22, 2016


"Our customers are leaving in droves. Those that stay are killing us in price negotiations. We need your help to fix it." A major pharmaceutical company asked me to understand how, despite spending millions in marketing, advertising, and sales, low-cost generic competitors were eating their lunch in a particular segment. They had slick brochures that promised great benefits including higher inventory turnover, lower COGS, enhanced cash flow, highest returns on investments, high-tech inventory management programs, and more. Yet revenue was sliding. Customers seemed to only care about low price. Salespeople were negotiating away margin, and over-servicing customers to make up for what seemed like inflated prices. The dots weren't connecting.
I sat down with an elderly Mr. Wong in the cramped backroom only barely separated from the noise and hustle in the front of his small NYC pharmacy. When I asked about his experience in working with my client, he told me that he hadn't seen his sales rep in four years. He had never seen the brochures detailing the bevy of programs that my client offered. He admitted, in fact, that he didn't didn't know what COGS was (cost of goods sold). I came up empty as I tested all of my client's assumptions.
Flummoxed, I asked Mr. Wong, "What is really important to you in running your business?" His answers were surprising:
  1. I want to spend more time with my customers
  2. I have to grow volume. 
  3. But I can't do either because the insurance companies are squeezing everything.
  4. I'm looking ahead at retirement and I need help in getting my son ready to take over the business. 
I repeated these interviews in many, many different pharmacies across the US. The answer was shockingly consistent: customers were clamoring for help. They were willing to pay more for greater value. But they didn't understand what my client was telling them. My client was providing glossy brochures designed for the CVS and Walgreens of the world. But the small pharmacists didn't understand COGS, inventory turn, ROI. They were pharmacists. Who were forced into running a business.
In the absence of real value, they turned to price-the only thing they had left. I suggested four key hot-button issues that marketing and sales could use that actually met customer needs. And sales increased by $20M. Each year. 
One of the foundational tenets of design thinking is deep immersion in your customer's world. Like my client, without this deep immersion, you are stuck with supposition and belief-which may be completely wrong and may have damaging financial ramifications.
What if you were to deeply immerse yourself in your customer's world? What if you were to simply ask your customers, "What are you trying to accomplish? What is important? Why?" There are any number of methods to formalize this process from simple phone interviews to "follow-me-home" visits to full ethnographic research.
But what if you started with a direct conversation with a couple of your best customers and asked, What? And Why? Whom can you call tomorrow?
Take the first step in applying design thinking by deeply immersing yourself and your team in your customers' world. 

We're focusing exclusively on design thinking in our upcoming CCO Council meeting on April 12. Brilliant conversations with brilliant CCOs. If you think you should be there, call me @ 978-226-8675. 

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Categories: CCO Council | Customer Insight | Customer Retention | Design Thinking

Design Thinking vs. Customer Experience

Sunday, March 13, 2016

Last week I called my bank, entered my account number into their automated system, then my pin, then my zip-code, then the last four numbers of my social security number.  Having properly identified myself as the real Curtis Bingham (or at least a sufficient facsimile), I proceeded to check my balance and then transfer a balance to another account. I realized that my car payment was being deducted twice. So I pressed “0” to speak with an agent.  The agent then asked me to provide all the same information, again. 

This is my biggest pet peeve in dealing with banks and their IVR systems:  despite having proven my identity enough to make payments on a loan or even completely zero out my account, every agent makes me provide the exact same information. Some want additional verification, some say they didn’t receive it from the IVR. Making customers provide the same information all over again creates friction. And how many times have you gone to a doctor’s office and been asked to fill out three forms, only to find that you have to enter in all the same information on all three. Or been stuck listening to an agent read, verbatim, a three-minute long legal disclaimer before confirming a change you’ve made to your life insurance plan?

Someone created these processes to meet a business need—to verify identity, get information, or fulfill regulatory requirements. But like many processes, they neglect the customer. You’re predisposing someone to be irritated with you before you even begin the human interaction. Too much friction creates dissatisfiers which, if left unchecked, can lead to churn.

Despite significant efforts to improve the customer experience, many NPS programs have plateaued and customers complain even louder on social media. Chief Customer Officers (CCOs) are stuck in groundhog day: dealing every day with an endless stream of apologies, billing statement credits, and service recovery efforts. The focus is on remedial efforts to reduce detractors. And they are often “lipsticking” bad processes—making inherently business-centric technology and processes more palatable to customers. But this only takes you so far.

The goal of many customer experience (CX) initiatives is to make many of these business processes more palatable to customers. The goal of design thinking is to determine how to do away with some of these processes altogether and recreate the rest on balance between customer tasks and business needs. The value and application of design thinking in the enterprise was described in the September 2015 issue of the Harvard Business Review. This issue included a very good summary of how Pepsi applied design thinking not only to product design but also to culture and customer experience. Design thinking brings disparate stakeholders, disciplines, and expertise together to first listen and intimately understand the customer’s tasks to be completed. Instead of immediately converging on a solution from a narrow set of options, design thinking allows us to create new choices, explore new alternatives, create new options that didn’t exist before.

There are a couple of core principles of design thinking: 

  1. Begin with people, culture, and context: understand human needs deeply enough to know where to begin design—the biggest challenge is ensuring that you’re asking the right questions
  2. Rapid prototyping: learn rapidly by building, testing, failing, and honing 
  3. Engage: enable participation of disparate stakeholders including customers, process owners, and even those outside the domain to build upon ideas and remove artificial domain constraints
  4. Execute: change is hard—especially the type of transformative change realized with such a wholescale reimagining of the customer/company interface

What would your product/service/process look like if it were wholesale reimagined, not from an operational-efficiency perspective but from the perspective of the customer task to be performed? How much customer-company friction could be reduced? How might this decrease call volume? Or service recovery? How much more “easy to do business with” might you become? What would be the impact on churn? On revenue?

Design Thinking helps us go beyond the incremental to the transformative. Using design thinking we can examine products, processes, and experiences holistically from the outside in, starting from the customer’s work to be done/tasks to be performed and work backwards with few constraints to create fresh and transformative processes that actually solve real customer problems. In the near term, we want to minimize the friction in the customer interface. In the longer term we want to align the brand promise, business objectives, job functions, processes, around facilitating the customer tasks to be performed—balanced with critical business needs. 

Come join us at our April 12th Chief Customer Officer Council meeting, where we’re going to be discussing how the discipline of design thinking can help us go beyond the remedial, incremental improvements that many CX initiatives may provide and help us align the business to solve real customer problems. Jill Herriott, former CCO of CIGNA and current CMO/CXO of the American Marketing Association (AMA) will be sharing her remarkable journey applying design thinking to create powerful end-to-end customer experiences that customers loved—and that promise huge ROI. And you won’t want to miss her discussion of customer archetypes that create emotional attachment and far greater customer engagement.

Steve Mescon, CCO of Riot Games (90 million customers!) is sharing how he used design thinking to create a powerfully customer-focused culture that enables them to bring in 83% of new business from word of mouth.

I typically reserve a couple of seats for guests. If you’ve missed your invitation, please contact info@ccocouncil.org to request an invite. 

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Categories: CCO Council | Chief Customer Officer | Customer Retention | Design Thinking

The Impact of the Chief Customer Officer, Part II

Tuesday, June 24, 2014

Last week, I described recent research conducted by the CCO Council into the impact of the chief customer officer on company financials. This week, I discuss the findings in detail and provide recommendations for managing them.

1. Customer Centricity is a two-year investment

Developing and improving customer strategy is a profitable but longer-term investment. It takes at least two years for the CCO's activities to flow through the company and make a significant impact on top- and bottom-line results. Once these results materialize, however, they appear to continue to grow commensurate with the investment. B2C industries tend to see results more rapidly than B2B. Industries with intense competition show heightened impact from the CCO.  

Recommendation: CEOs and Boards must commit from the outset to support and invest in the CCO and his/her initiatives for a minimum of two years to ensure the highest ROI. In turn, CCOs must manage the expectations of the CEO and Board to allow for this two-year probationary period. 

2. The CCO must show contribution to long-term revenue and profitability improvements 

Companies have demonstrated measurable improvements in revenues and profits while employing a CCO. In some cases, overall revenue drops after the CCO's departure. This research shows that the CCO can and should be accountable for improving top-and bottom-line results, although the impact may not be measurable on a quarterly basis.

Recommendation: CEOs should expect the CCO to provide, in addition to intermediate metrics, quantifiable impact on revenue and profits, and ensure the systems are in place to properly track the CCO's contribution. The CCO should begin by providing a clear line of sight from his or her actions to revenue and profitability. In some cases, the CEO and CCO may need to begin by agreeing upon an intermediate goal of driving loyalty and accept academic research proving that loyalty drives revenue and profit. However, this can only be temporary. 

3. In absence of growth, the CCO may help prevent a slide 

In some industries that experienced negative growth, the presence of the CCO helped stem the decline suffered through competitors and maintain revenues/profits through stronger customer relationships and trust.

Recommendation: The CCO must "bank" customer trust and loyalty to protect customers against hard times. CEOs need to take a less transactional view of activities that may pay dividends at a later date. 

4. Everyone says they are customer centric... 

Every company claims to be customer centric, but fewer actually are. Many publicly-stated company policies remain company centric rather than customer centric, and in the end, those whose actions are aligned with their customer needs are more successful.

Recommendation: The CCO should, with the support of the CEO, examine the policies, actions, and restrictions to ensure that customer needs are met on balance with business needs.

This study clearly shows one thing: CCO's are adding value to the bottom line. While growing steadily from fewer than 30 in 2003, CCOs are the newest, and by far the smallest, component of the C-suite. Many companies look at the CCO position and question if they can afford to add it to their C-Suite team, but the numbers turn that question on its head and ask how they can afford NOT to do so.  

Whether you are a company looking to create a CCO position or currently a CCO looking for resources, we invite to you to explore the CCO Council (www.ccocouncil.org) to give you and your company a true competitive advantage.

*This article is the second in a two-part series excerpted from The Impact of the CCO, available for free download from the CCO Council website here.

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Categories: Chief Customer Officer | Customer Centricity | Customer Engagement | Customer Loyalty | Customer Retention

The Impact of the Chief Customer Officer, Part I

Tuesday, June 17, 2014
Today's customers require access to a company's offerings through many forms of media in order to meet their preferences and lifestyles. Furthermore, they also require a consistent customer experience across these channels since they can easily choose to change vendors if they do not receive support that meets their expectations. So multi-channel accessibility and consistency of experience across those channels have become essential components to winning the competition for customers. More and more, companies are recognizing the financial benefits of customer satisfaction and its proportionate relationships with loyalty and profitability.

With accessibility and the consistency of customer experience in mind, many companies have turned to creating a chief customer officer (CCO) position in the C-Suite. This still-emerging and evolving role can be defined as: the executive responsible for the total relationship with an organization's customers. The challenge has been to tie this position to financial gains and losses to clearly justify the investment. A recent study conducted by the Chief Customer Officer Council has shed some light on the effectiveness of CCO's over a two year period and the numbers are compelling.

This research shows that 67% of evaluated companies saw positive fiscal effects during the tenure of the CCO, with an average growth excess of industry of 5.98%. Given the minimum threshold of $1B annual revenue, this represents a difference of hundreds of millions of dollars. On the flip side, 33% of companies experienced an average of 5.2% decrease in growth excess of industry. Clearly, not all positive or negative results can be attributed to the CCO. It is equally clear however that the influence of the CCO is positively correlated with improved company fiscal performance.

In an effort to identify the impact a chief customer officer has on company financials, the Chief Customer Officer Council researchers narrowed a population of more than 300 companies to a sample of 51 CCOs at 46 separate companies with a CCO in place for at least two years and with nominal revenues of one billion dollars (US) in 2010. For each of these companies, sales revenue, operating margin, and industry sales data were gathered. Where possible, data were gathered from five years prior to the CCO's appointment up to the current time or end of the CCO's employment, whichever was shorter. To eliminate overall industry effects from altering the analysis of the companies' effectiveness over a period of time, company growth excess of industry was computed by subtracting industry from company growth for each year evaluated. 

Here are four key findings from this research:
1. Customer Centricity is a two-year investment
2. The CCO must show contribution to long-term revenue and profitability improvements
3. In absence of growth, the CCO may help prevent a slide
4. Every company says it is customer centric but few truly are

Stay tuned for part two of this two-part series, wherein I'll elaborate on the findings above and offer recommendations for managing them.

*This article is the first in a two-part series excerpted from The Impact of the CCO, available for free download from the CCO Council website here.

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Categories: Chief Customer Officer | Customer Centricity

WHEN Do You Need a Chief Customer Officer?

Wednesday, June 11, 2014

I am often approached by senior level executives and asked whether their company really needs a chief customer officer. Their idea seems to be that some companies need a CCO and some don't. My answer is often in the form of a correction. Hiring a chief customer officer is not an issue of if, but of when. Every company needs a CCO. However, timing is essential if the role is to be successful. Here are six key criteria to help answer the question, "When?"

Does top leadership have an appetite for developing customer centricity?
I have seen CCOs hired for all kinds of good reasons. Yet most of them failed miserably. Why? Because they were out of alignment with company strategy and didn't have explicit support from the CEO. This criterion trumps all the rest.

Is there a recognized strategic business imperative for the CCO?
Customer centricity is often viewed as a "nice to have" rather than a strategic business imperative. What is your burning platform that will galvanize people to action? The CCO is going to be tasked with making huge changes in the organization, and entrenched cultures resist such change unless faced by a greater threat of upset.

Can strategy be driven across the highest levels to systematize change?
An army of one does not win the war, nor does it bring about customer centricity. Executives and employees cannot abdicate their shared responsibility for customers to the CCO. The successful CCO will cultivate strategic allies across every function, driving process change across the company that enhances the profitability of the broadest customer segments.

Is there a willingness to create, capture, and act upon customer data?
Companies need hard customer data to move from the realm of "touchy feely" to solid business decisions with quantifiable results. The organization needs to be willing to initiate customer data collection activities (surveys, transactions, behavior), turn these data into actionable insights, and ensure people are held accountable for taking action.

Can metrics be created that tie customer activities to revenue?
Revenue, profitability, ROI-these are all hard metrics by which priority decisions are made within the C-suite. Without the ability to correlate customer-centric activities to tangible business results, the CCO will be hamstrung.

Does the individual culture desire to serve customers?
Implementing change is challenging for most organizations and resistance to change is human nature. CCOs find this resistance to be their greatest challenge, requiring a significant amount of time and effort. Do your front line employees truly desire to serve customers? Can they be convinced to do so?

Buzzwords like Customer Centricity and Customer Experience can be entrancing and many companies are starting to jump on the chief customer officer bandwagon. The problem is that too many just as easily fall off the bandwagon if they hire a CCO at the wrong time. To ensure success, you need to make sure your company is prepared to make the CCO a core strategic imperative rather than a figurehead. Do your homework, decide on the right time to hire your CCO, and put him or her in the optimal position for success. Your customers will quickly reward you for your due diligence instead of punishing you for a knee jerk reaction.

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Categories: Chief Customer Officer | Customer Centricity | Customer Engagement

The Six Components to Customer Engagement Strategy

Tuesday, June 03, 2014

Customer engagement needs to be a disciplined strategy with ownership, accountability, broad reach, goals, accountability, measures, and a marketing plan of its own to communicate with employees, customers, and other stakeholders. Here are six essential components to a successful customer engagement strategy:

In order to devise an effective strategy, you must first identify what you want engaged customers to do for you. Do you want them to help resolve problems, inspire innovation, co-develop new products or services, generate market insights, improve operational efficiency, enable greater sales velocity, or something else? You need a purpose to give your strategy focus.

Engagement Opportunities
What are the most important collaboration activities that support the engagement strategy? What are the most important advocacy activities that support the engagement strategy? How do you determine each activity’s importance and priority? Once identified, what resources do you have to support these activities?

Customer selection and enticement
How do you identify the ideal customers to participate in an activity that achieves your business goals? What opportunities are best suited to the customers and the pursuit of your goals? How do you entice customers to participate? For some, it’s simply a matter of asking. But others may need incentives or a clearly articulated mutual benefit that makes participation worth their discretionary time.

Measurement and impact on business metrics
You need to find a correlation between the measure of engagement by activity and its impact on the business. How do you measure engagement and how do you demonstrate that correlation? Without it, investment in your strategy is not defensible or sustainable.

Organizational alignment to customer direction
While it’s great if you have customers collaborating and advocating, if the organization is not aligned around delivering improvements or outcomes from these activities, engagement will be short lived. Customers will realize, “Oh, they’re asking me for help but they’re not really doing anything about it, therefore, it’s not worth the investment of my time and energy.” 

Employee engagement
Similar to the process of selecting customers, how do you identify the ideal employees to participate in an activity that achieves your business goals? What opportunities are best suited to the employees and the pursuit of your goals? How do you entice employees to participate? Rewards and incentives, both intrinsic and extrinsic, may be appropriate and necessary to successfully engage employees in the business of engaging customers.

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Categories: Chief Customer Officer | Customer Engagement | Customer Insight | Customer Loyalty | Customer Retention