CCO Council Blog

By Curtis Bingham

The CCO role – today still relatively new and underrepresented – is a lonely place. Yet the impact CCOs have on a company’s bottom line can be profound. They address customer centricity in its primary forms – customer satisfaction, customer retention, and customer loyalty – and they help develop profitable customer strategies that work for your company because they work for your customers.

CCOs have mastered the following three key elements of corporate survival:

Driving profitable customer behavior

Boosting customer satisfaction, retention and loyalty are terrific as goals of your customer-centric culture. But just achieving these goals won’t ensure success. You need to encourage customers to behave in a way that maximizes profits. That requires repeat purchases as well as upselling and cross selling within your product/service portfolio. CCOs have proven adept at establishing loyalty programs that reward purchases of the most profitable products/services based on incentives such as “membership points” that can be redeemed for merchandise, gift cards, etc. This approach builds add-on sales and provides a sense of identity as a “member,” which strengthens a feeling of customer loyalty due to entitlement.

Create a customer-centric culture

The commitment to customer satisfaction, retention and loyalty should be part of the identity – the DNA – of an organization. But adding customer centricity to a company’s mission statement is the easy part. Implementing it throughout the organization entails some heavy lifting. CCOs are developing performance metrics to verify that customer-centric processes are in fact being followed. They are creating incentives for employees at all levels to comply with best practices for their positions that promote customer satisfaction, retention and loyalty. Some even review hiring practices to ensure that qualities associated with customer service orientation are part of the screening process for new hires.

Demonstrate your value 

All CCOs worth their salt have developed a methodology for verifying their contribution to revenue and cost savings. For the former, they can point to increasing sales year over year among existing customers, the increased rate of newly acquired accounts, and reduced churn among the overall customer base. For cost containment, all CCOs can point to fewer calls from unhappy customers, fewer poorly handled onsite customer visits, etc. The more skilled CCOs also provide data from customer surveys that show high levels of satisfaction and loyalty, which serve to increase brand equity and lifetime customer value.

Armed with these strategies and tactics, CCOs not only survive, most are thriving…and getting their fair share of compensation increases by recognizing that keeping customers happy is always a good business decision.

By Curtis Bingham

A little while back I noticed a flashing warning indicator on my car's instrument panel telling me that it was time service my brakes. I thought, "I'll call tomorrow when I have more time." Tomorrow turned into next month... and then the grinding started. When I finally got the brakes repaired, the repair bill was more than four times what it might have been had I heeded the warning light and not procrastinated.

Business leaders often procrastinate establishing or updating their business strategy. Refining strategy is uncomfortable because you have to acknowledge the goals that weren't met or the activities that slipped by the wayside. As well, it is sometimes less tangible than the metrics on your dashboard. For many busy executives, it seems impossible to take the time away from a hectic schedule filled to overflowing with customer fires, internal crises, delivering for customers, or closing new business. But what are the consequences of NOT stepping off the runaway train and spending time preparing for the future?

• Customers grow tired of inadequate service and take their business elsewhere. If you're lucky they don't take their friends with them.
• You are so busy serving existing customers that you don't have the capacity to bring in new customers, forestalling growth.
• Without new customers, you have no way to compensate for inevitable customer churn.
• Your employees are ineffective at best, and at worst, begin to burn out and leave. How much would it cost you if 50% of your employees were ineffective 10% of the time? For 200 employees, you may be losing a minimum of $1.5M each year!
• Your competitors pass you by.
• Worse yet, you burn out yourself.

Postponing the development of strategy may be a short-term strategy in and of itself, but it is ineffective. Unfortunately, the treadmill you're on keeps running, dragging you with it, until you choose to get off and re-adjust. For your business to succeed, you need to allocate time each year to evaluate and update your long-term strategy. In addition, you also need to set aside a smaller amount of time each month to test and refine it. By ensuring that you are regularly evaluating and refining your strategy, you ensure that your customers, competitors, or the market don't leave you behind.

This time for strategy must be sacrosanct; otherwise, it gets put off like my brakes until the penalty is much greater than the prevention. During the month of December, many customers are unavailable and you may find that you may be able to create opportunities to evaluate your business strategy. Schedule the time and "Just Do It!”

By Curtis Bingham

One of my favorite stories to illustrate the costs associated with lost opportunity centers around a major market research firm that decided to scuttle what was initially an eagerly anticipated new practice area. The firm decided that there wasn't a market for this new area and the associated research. A few years later, however, this firm’s biggest competitor had a booming practice – its largest by report volume and revenue – in this very same area. Not only that, but the competitor's most widely read analyst was writing about this area exclusively. Somehow, the competitor created a very successful business in the same market that was deemed unprofitable and unfit for entry by the first firm. How could one firm fail where a competitor succeeded so completely?

From a business perspective, it may make sense to scuttle a project when sales are lackluster and the new product or service simply isn't gaining traction. Yet, in this case and with the benefit of 20/20 hindsight and a competitive outlook, that was exactly the wrong decision. How could this research firm have made a different (and more profitable) choice?

In talking with executives, I identified three problems. First, their initial foray into the marketplace was too general; they didn't investigate and so couldn’t address the specific needs of their customer base, which they spent no time up front attempting to understand. So, the product they delivered didn't provide sufficient, immediate, and practical value. This oversight created their second problem: a marketing issue. Although undertaking a new practice area, targeted to a different role within existing client organizations, the marketing department didn’t equip the sales team to identify the right buyers. Nor did it equip sales with the right messages to effectively convey the new product’s value. This resulted in the third problem: poor sales execution. Because the sales team was uncomfortable and ill prepared, they gave up prematurely. Their rationale was, "We can't figure out who owns the function in the company that corresponds to this practice area, therefore we can't sell the research."

So the company scuttled what could have been a $100M opportunity. If they had spent time up-front to find out who would actually buy the new product and what specific research these prospective buyers were looking for, they could've avoided this disaster and saved a huge amount of money.

There are two lessons to be learned from this story: You need to clearly identify prospective purchasers and you need to spend time with them to understand how your product/services address Customer Purchase Drivers. As I've written elsewhere, customers base their purchase decisions on the attributes of a product or service that enable them to do four things: 

1. Make more money 
2. Reduce costs 
3. Mitigate risks 
4. Satisfy an emotional need

Only by understanding these Customer Purchase Drivers can you develop products and services that are guaranteed to be successful in the marketplace. Only by spending time with customers beforehand can you avoid making a $100M mistake.

By Curtis Bingham

Last January T-Mobile announced that it would do away with the two year contracts on its phones. The last weekend the new pricing plans showed up on their website.  To lure customers away from others, T-Mobile is offering unlimited voice and data for between $50-70/month. What is notable, though, is that now they are doing away with the two-year contract that everyone loves to hate, along with the very steep early termination fees that everyone loves to hate even more.

The question?  Are long-term contracts anathema to customer loyalty?

According to the American Consumer Satisfaction Index for May, 2012, mobile carriers such as AT&T Mobility, Verizon, Sprint and others have scores in the 69-70 range, whereas the no-contract carriers such as TracFone have a score of 76.  By way of reference, Apple’s score for their iPhone is 83.

Cell phone carriers tease you with a discount on the phone and then lock you into a two-year contract in exchange.  The penalties for early termination are ~$200. Rather than subsidizing a $650 iPhone and charging higher fees for the duration of the subscriber’s tenure, T-Mobile is breaking ranks with the industry and allowing you to either pay up front the full cost of the phone, or pay an additional fee above the data plan for two years until the phone is paid off at which time the monthly fee reverts to the lower amount for service.  In essence, you pay the exact same if you pay up front or over time.  The biggest difference is in captivity and penalty.

Loyalty is an attitude of allegiance, and is most accurately measured by a history of repurchase, especially in the face of competition.  When you have no competition, enforced long-term contracts, or even legislative mandate, you don’t have loyalty, you have captivity. Dissatisfied captive customers will often exit given the first opportunity, such as a new competitive offering, expired contract, or legislative revolt led by other captive customers. Software as a service (SaaS) companies are providing strong and favorable alternatives to long-term software and service agreements. Lawsuits have been successfully settled against VISA and MasterCard for their anti-competitive clauses in their merchant agreements. 

Can you have loyalty AND service contracts?  Or do the service contracts simply mask bad behavior that wouldn’t be tolerated by customers in the absence of the lock-in?  Or would your company be better off in the long run by foregoing the easy up-front money of the service contract and investing in creating an enjoyable customer experience that eclipses competitors?

What do you think?

By Curtis Bingham

1. Take owndership of Innovation at the highest level

Innovation is about risk, and only executives can take the kinds of risks required for truly transformative innovations; that is, innovations that yield the highest ROI and form the strongest competitive advantage.

2. Identify the “North Star” that focuses innovation on real customer needs and inspires employees

Executives complain that ideas for innovation are plenty, but too often unfocused or even useless to customers. What matters most to customers AND the business? Customer executives need to clearly set the opportunity bar and make transparent the scale and source of growth opportunities.

3. Form powerful alliances with both early and late-stage internal innovators

If company innovators aren’t asking for the CCO’s input before launching an innovation, the innovation failure rate will be needlessly high and customers will suffer. CCOs should share ideas borne from countless hours listening to, measuring, and analyzing customer needs, wants, and desires.   

4. Create conduits to customers to enhance innovation efforts

The CCO is uniquely qualified to identify customers with whom the company has strong, stable relationships; whose needs are relevant to the innovations in development; and who are most likely to provide candid insights and direction for those innovations.

Forming such alliances (3) and subsequently facilitating such customer connections to ensure that customers are involved at the earliest stages (4) helps focus and refine the innovations and dramatically increases the likelihood of their successful launch and implementation.

5. Inject the Customer into the innovation processes, including the innovation reviews, stage gates, and funding decisions

It is tragic how frequently critical decisions are made in a customer vacuum. CCOs need to insist upon and help define customer-centric valuation metrics as innovation success criteria. The metrics and the levels of customer involvement should be dependent upon the investment and most especially upon the customer impact upon launch

In summary, any innovation strategy that does not include customer participation deserves to fail. But because CCOs are uniquely positioned to incorporate customers into the innovation process and to do so in the earliest stages, they can provide opportunities for resources to be used more wisely and efficiently and for customers to receive greater value faster and with fewer relationship-damaging dissatisfiers.  And ultimately, the company realizes a much higher ROI on its innovation efforts.

By Curtis Bingham

CCO Council members Jeb Dasteel, Jasmine Green, Tammy McLeod, Alan Chow, and Lacey Grey and Advisory Board members Vicky Stennes and Scott Bennett share their many perspectives on the real value of membership in the Chief Customer Officer Council.

CCO Council members Jeb Dasteel, Jasmine Green, Tammy McLeod, Alan Chow, and Lacey Grey and Advisory Board members Vicky Stennes and Scott Bennett articulate their many perspectives on the real value of membership in the Chief Customer Officer Council.

Video Transcript

Voice of Jeb Dasteel: We’re communicating, of course, all day every day with customers but we don’t really spend much time talking to other people who have figured out how to be more customer centric. And in my view, the Council allows us to do exactly that.

Jasmine Green: You get a lot of rich information from your peers across many industries and you learn that you don’t need to go it by yourself. We can learn from others and take information from others and still do a wonderful job in our roles.

Tammy McLeod: We can go out and with a specific problem call in the members of the Council and see who has experience in a similar setting. We can ask them for feedback. We can find out what did and didn’t work. And hopefully we aren’t then going out and experimenting at our customers’ expense.

Alan Chow: It’s been a fantastic experience joining the CCOC, the Council. The type of knowledge that I get is just fantastic for building customer centricity culture. 

Vicky Stennes: From the moment I walked in the door I was struck by the openness, the transparency of the members, the quality of the discussions, the candor, and a sense of genuinely trying to help each other.

Lacey Grey: We can learn from other companies and what they've done and how it's been successful. We can think about other approaches that other companies have taken to accomplish the same tactics as those that we have to undertake.

Scott Bennett: I've got peers and others that I can talk to and work with and overcome challenges; like, a new CEO or an operationally-focused organization or a financially-driven organization. 

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