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2014 CCO Tenure Study Preview

Wednesday, April 16, 2014

I'm putting the finishing touches on the CCO Council 2014 Tenure Study and am excited to share a sneak preview. For the last four years, I have examined the role of the Chief Customer Officer to understand the context within which CCOs are functioning and the future of the role, specifically as these relate to the development and execution of potential CCO career strategies.

The CCO Council defines a chief customer officer as the customer-facing executive who is ultimately accountable for customers and who is driving customer strategy at the highest levels of the organization. This eliminates middle-level to senior-level executives who may be customer centric and even responsible for customer experience within their organizations, but who don't appear to possess sufficient authority to act and influence across organizational boundaries.

The average chief customer officer tenure increased again to 34.5 months, up from ~23 months four years ago. The lengthening tenure reflects in part the fact that mobility was severely restricted during the years following the recession. As well, enterprise CCOs weathered the recession far better than those in small companies.  Most importantly, this increasing tenure speaks to the growing recognition of the value of the CCO role and its increasing stability. Nevertheless, as the newest member of the C-suite, it remains the most fragile role, trailing the CMO by ten and a half months. As a side note, there is an interesting flaw in the way that Spencer Stuart computes the CMO tenure. If the CCO tenure were computed in the same fashion the average CCO tenure would be 3.2 months. Look for more detail in the upcoming tenure study results.

One of the more exciting findings is the lengthened tenure of members of the CCO Council. Where average enterprise tenure is 34.5 months, tenure of Council members is a whopping 54.2 months. CCO Council members are demonstrating significantly greater ROI as they elicit greater executive commitment and involvement, demonstrate a clear impact on executive objectives, and incorporate customer strategy into the overall corporate strategy. As well, they enjoy significantly greater influence over the rest of the organization as they balance business and customer needs.

Another significant finding of the study is that for the first time, CCOs are enjoying an unprecedented mobility. When I first began the study, the CCO role was terminal-they retired in the role and there wasn't a career path available. Now, however, the CCO is being promoted to COO, CEO, or president of a business unit. This is indicative of the increased importance companies are placing on their customer strategies in requiring that executives have substantial customer roles. Executives and boards are beginning to recognize the value of the chief customer officer as a stepping-stone into roles of greater responsibility and authority. This will be covered in greater depth in the forthcoming study.

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Categories: CCO Council | Chief Customer Officer

The Tweet Heard 'Round the World

Tuesday, April 08, 2014
Reflect back with me to April 19, 1775... 
 
With the might of the British Empire behind them, the British infantry believed it was utterly invincible. Imagine its surprise when it became surrounded by the Minute Men and later, many more of the American colonists. In the tension that followed, one nervous British infantryman fired upon the colonists, which started an exchange of fire from both sides. With this one shot that later became known as the shot heard 'round the world, the revolutionary war had begun.
 
Slightly more recently, in September of 2013, Chicago-based business owner and Twitter user Hasan Syed made history after British Airways lost his parents luggage on a flight from Chicago to Paris. Syed did something nobody has ever done before: he bought a series of promoted tweets on Twitter to express his frustration and displeasure.
 
Don't fly @BritishAirways. Their customer service is horrendous 
 
Checkout @British_Airways state-of-the-art baggage handling system [with photo of horse and buggy]
 
@British_Airways is the worst airline ever. Lost my luggage and can't even track it down Absolutely pathetic
 
A full 7 hours later, @British_Airways responded:
 
Sorry for the delay in responding, our twitter feed is open 09:00-17:00 GMT. Please DM [direct message] your baggage ref and we'll look into this.
 
By any account, Syed is no social media powerhouse. As of February 2014, he still had only 1,129 followers and 436 tweets. The sponsored tweet, however, for which he spent $1,000.00, yielded 76,000 impressions and 14,000 engagements (replies, retweets, etc.), all of which sided with him against the brand or broadcast their own, similar stories. Syed's tweet also quickly entered the news cycle, where his story appeared on BBC News, Time, Fox News, the Guardian, NBC News, Mashable, Huffington Post, and others.
 
With Hasan Syed's "tweet heard 'round the world" on September 2, 2013, the revolutionary war for customer control of your brand had begun. That same day, Andy Witt (@designingWell) tweeted:
 
What if patients were more forward and public with their frustration with hospitals like Hasan Syed was with @British_Airways?
 
Just like the British regulars, big companies have long thought they were utterly invincible-they controlled the messages, the media, and the conversations with their customers, when they bothered to have them. But to Andy Witt's point, what if one (or more) of your key customers - by size, revenue, influence, or other criterion - broadcast their frustration with your company to the public and to your other customers? What would the impact on your brand look like? Would it be inconsequential? Or could it cost millions of dollars in advertising to rectify?
 
Let's be honest. The age of cool products and feel-good service has come and gone. Social media, with all it empowers, is here to stay and still growing. It is not enough to listen to and pacify customers. Now, more than ever, reputations and relationships with customers can be tarnished, if not destroyed, with a few simple keystrokes. Customers are taking charge. They clearly want a voice.
 
We've entered the age of engagement. Today we have to engage the Hasan Syed's of the world: collaborate with them to help fix our problems and enlist them as our sales force to dramatically grow our businesses. In the days ahead, the most successful companies will grow only as they engage customers in customer acquisition, retention, operations, innovation, and even strategy.

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

Key Characteristics of the Successful CCO

Tuesday, March 25, 2014

Where does your company stand on customers? Does the voice of the customer make its way up the executive level and influence strategic direction? Have you determined that you need a C-Level position dedicated to creating a customer experience and driving customer strategy throughout the organization? If you don't know or have had concerns regarding these important questions, then it might be time to consider adding a chief customer officer (CCO) to your C-Suite.

One cannot just post a job listing and hope for the best. In this case, the lack of a standard definition of the roles and responsibilities of the CCO creates hiring challenges for CEOs and Boards of Directors. Additionally key characteristics of successful CCOs are still emerging. In order to create the right career path, it is critical for the CCO to understand what is needed to be successful. CEOs and Boards of Directors should use these characteristics as part of hiring criteria.

The CCO is the company's change agent and as such spends most of his or her efforts "selling" customer centricity. The ability to influence both internal and external stakeholders is the single most important characteristic of the CCO. The CCO spends her or his time convincing others that changes being proposed will positively affect the success of the company. Until the CCO has a track record of achievements, the ability to influence others will determine the ability to increase revenue and profitability.

Skills
Above all else, the CCO must have leadership skills, including the ability to influence others. Confronted with limited resources and some skepticism it is critical that the CCO be action oriented, have analytic skills to evaluate data, make conclusions, and turn them into programs. Negotiating agreement on initiatives requires good listening skills; solutions must be collaboratively developed in order to ensure buy-in across the organization. The CCOs' advocacy for the consumer must be unwavering. Putting the customer front and center while balancing fiscal responsibility will keep the CCO focused on his/her mission.

Experience
When asked what experience a CCO should possess, one of the most successful CCOs stated that her broad understanding of business, especially operations, is her greatest asset. It gives her credibility and the ability to identify opportunities for customer improvements. Often organizations promote the "head of customer service" into the CCO role and while that individual may know customer service it is only a small part of creating a customer centric organization.

Personality and Fit
A critical criterion for CCOs is personality and how it fits within the culture or the desired culture of the organization. At the executive level of the corporation, CCOs must be able to leave their egos at the door. Collaboration with colleagues and department heads and the ability to influence them will be critical to success. Strong-arming or using Positional or Borrowed Authority will marginalize even the best formed programs. This collaborative approach must be balanced with the ability to project a strong presence and authority. The reality is that until the CCO is able to "demonstrate value" there are skeptics who will constantly challenge the role of CCO. A CCO must be "thick skinned," able to de-personalize the skepticism, and defend a position that may not be popular or have negative short term financial implications. For example, if a product release is known to have significant flaws, the CCO must be willing to delay the release even though it may result in a negative cash flow.

C-Suite executives and board members must carefully consider the characteristics of the successful CCO. The key is not to just put a warm body in the position with a goal of driving customer strategy. Careful consideration of personality and skill sets with reasonable expectations and timelines will put a new CCO in a position for success. Without incorporating the characteristics discussed above the potential for hiring the right person diminishes.

*This article is excerpted from The Bingham Advisory: Eight Imperatives for the Chief Customer Officer, available for free download from the CCO Council website here.

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Categories: Chief Customer Officer

Critical Success Factors for Chief Customer Officers

Monday, March 17, 2014

CCO tenure often falls casualty to the "Results right now!" syndrome that ignores a critical fact: like great wine, strong relationships take time to develop and grow more profitable with age. Many of these relationships cannot take root without a strategic plan to transmit the voice of the customer into the c-suite, thereby positioning the company to succeed and the CCO to thrive. Based on my ten years of work with more than 150 CCOs, here are seven critical success factors that will ensure CCOs meet or exceed strategic plans for their careers and for their customers.

Authoritative title and reporting structure: Title and reporting structure of the CCO are powerful signals of the company's commitment to customer centricity. The successful customer executive will have the title of CCO and report to the CEO or to an individual no more than one level below the CEO (e.g., chief marketing officer, chief operating officer, etc.).

Unwavering executive support: Continuous, vocal, and visible support from the CEO, the board, and the c-suite is critical to growth and stability for the CCO. The leadership team cannot abdicate involvement in customer centricity just because the company hired a CCO.

Earned Authority: Above and beyond positional authority derived from the job title and borrowed authority derived from the explicit, visible support of the CEO, CCOs must earn authority and credibility of their own. They do so by leading peers, executives, and employees to recognize how customer insight and customer centricity can be valuable aids in achieving their business goals.

Alignment with the CEO: By aligning priorities with the CEO and the rest of the c-suite, CCOs secure visibility at the highest level of the company and maintain involvement in key strategic corporate decisions.

Metrics that tie customer centricity to revenue growth and profitability: It is critical for CCOs to correlate customer centric programs to revenue growth and profitability, as challenging as that may be. There is growing evidence that customer loyalty and degree of customer engagement are tied to revenue. CCOs must lead their companies to determine and validate the evidence for themselves.

Support from internal and external allies: Without the support of peers, community leaders, industry analysts, and the customer, CCO initiatives will have limited results and impact. Critical to the future of the CCO is developing these alliances and being explicit about defining and communicating successes.

Compensation commensurate with customer centricity: All executives and senior leaders should have customer measures (e.g. satisfaction, loyalty) as part of their Management by Objectives (MBO). As part of this process, CCOs need to lead managers to recognize the impact their department has on customers and customer centricity.

These critical success factors are guideposts on your path to realizing your career goals as a CCO. Create a plan around those goals and use these success factors as self-evaluation criteria to maintain focus and improve your chances for success.

*This article is excerpted from The Bingham Advisory: Eight Imperatives for Chief Customer Officers, available for free download from the CCO Council website here.

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Six Key Challenges for the Chief Customer Officer

Tuesday, March 11, 2014

The CCO Council identified six of the greatest challenges CCOs face and recommends the following approaches to overcoming them. 

1. Customer centricity is not widely viewed as a strategic imperative and the CCO's contribution to this imperative is poorly defined. As a result, CCOs spend more time explaining and defending their value than they spend with customers.

Recommendation: The CEO and Board must recognize the growing body of proof that customer-centricity is the new basis for competitive advantage with demonstrable business results, and then make the CCO a part of this strategic imperative.

2. The most successful CCOs recognize and leverage three sources of CCO Authority, starting with either Positional Authority or Borrowed Authority and quickly earning authority of their own. Without such authority, cultural resistance to change, conflicting priorities, and a host of other obstacles prevent CCO success.

Recommendation: The CEO must provide to the CCO significant Borrowed Authority. The CCO must "earn" authority rapidly by providing value, demonstrating results at all levels, and effectively communicating the business impact of those results.

3. Not surprisingly, there is often limited understanding of the type of resources required to successfully convert an organization to customer centricity. The CCO of one enterprise company chose to report into Marketing as a strategy to gain greater access to staffing and expertise.

Recommendation: CEOs and Boards of Directors must have realistic expectations of the resources required for a CCO to be successful and make a commitment to supply those resources. 

4. Gathering customer data is easy, but converting it into action is much harder especially as the complexity of customer purchases and interactions increases. Many CCOs struggle to move beyond the voice of the customer and triage to create and implement customer strategy.

Recommendation: Implementing customer triage and issue resolution processes are critical first steps for CCOs. But then the CCO needs to make powerful allies and initiate cross-functional initiatives to create workable customer strategy that cuts across business units to improve the overall customer experience.

5. Implementing change is challenging for most organizations and resistance to change is human nature. Traditional methods for cultural change including bonuses and penalties help mitigate the resistance. Actively engaging employees in the process of change will move the culture from compliance to engagement.

Recommendation: The CCO must accurately evaluate the company's appetite for change and adjust expectations and program design accordingly. 

6. Many organizations are adept at measuring transactions but customer emotion and behavior are harder to measure and correlate to results. This difficulty is perhaps the single greatest reason for the CCO's role being the most fragile in the c-suite.

Recommendation: The CEO, Board, and CCO must agree upon metrics and measures that balance revenue, profit, and customer loyalty. The CCO must effectively communicate and market the value of customer-centric change to the organization to gain further support and adoption. 

Whether you are an experienced or new CCO, addressing these challenges head-on can help you drive more profitable customer behavior, create customer-centric cultures, and increase the value you deliver to your customers.

*This article is excerpted from The Bingham Advisory: Eight Imperatives for the Chief Customer Officer, available for free download from the CCO Council website here.

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Categories: Chief Customer Officer | Customer Centricity

Four Ways to Increase Earned Authority

Tuesday, March 04, 2014

Positional Authority doesn't change. Borrowed Authority may have a limited lifespan. The remaining Authority - Earned Authority - is gained through a sustained history of delivering positive, visible results for customers that also benefit the business; and by proving to other executives the business value of acting in the customer's best interest. Here are four ways to earn Authority.

Own Customer Insight and Inject it into Strategic Discussions

The CCO's value is in interpreting data and devising strategy but not necessarily in owning customer data, as this can be a time-consuming distraction. CCOs must be the definitive Authority on customer needs, wants, and desires and accurately represent customers in strategic decisions; always in balance, of course, with business needs.

Build Relationships With Peers, Employees, Management, Customers, And Outside Influencers

By definition, Earned Authority results from the recognition of the value of the CCO's efforts. Most CCOs do not own all customer-facing resources and must lead by influencing relationships. These relationships help drive customer centricity throughout the organization and change the business landscape. 

Engage Employees

The CCO cannot afford to be the only customer champion. All employees must be actively engaged as part of a pervasive, customer-centric culture so as to ensure that customer needs are consistently and profitably met. Engagement can mean something as simple as employees understanding individual impact on customers or employees actively seeking to understand and deliver more for customers. How can the CCO best engage employees in the service of customers?

Demonstrate Results

CCOs need to demonstrate and publicize their results in order to earn greater Authority. Of particular importance is the correlation with revenue and profits. Oracle's CCO found that Oracle's most engaged customers generate 3x greater revenue than similar customers who are not as engaged in customer programs. Another CCO found that extremely loyal customers were five times more likely to repurchase, and that by moving 1% of their customers into this top loyalty box, the company generated an additional $33.3M in annual incremental revenue. A low-cost airline found that a one point increase in NPS score generates between $5M and $8M. These data are extremely powerful. They draw a clear line from CCO initiatives to increased revenue and demonstrate inarguable results.

Increasing Authority to solve customer issues, drive customer centricity, and thereby create sustainable business growth needs to be a core strategy of every CCO who doesn't wish to relegate the tenure of his/her role to chance.

*This is the final article in a three-part series excerpted from The Bingham Advisory: Powerful Influence on Customer Centricity, available for free download from the CCO Council website here.

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Categories: Chief Customer Officer