By Curtis Bingham

Some years ago, Raytheon CEO Bill Swanson wrote a booklet of 33 short leadership observations called Swanson's Unwritten Rules of Management. I could go on and on about the knowledge packed in this small booklet, but one of my favorite "rules" is number 32. - A person who is nice to you but rude to the waiter, or to others, is not a nice person. (This rule never fails).  There is a great deal of wisdom in that rule and I've always thought that you can tell a lot about someone's character by how they treat subordinates and especially children. And sometimes you meet truly great people who are an inspiration to all.

Council member Jeb Dasteel forwarded to me this video showing Sean Tucker's interaction with a youth with cerebral palsy and you can clearly tell the caliber of man he is by watching the video.  We're pleased to welcome Sean Tucker as our special guest speaker to our 2011 CCO Summit.

Sean is a National Aviation Hall of Fame inductee and aerobatic pilot for Team Oracle, he is the only civilian performer ever to be allowed to fly close formation with the Blue Angels and the Thunderbirds. Tucker has flown more than 1,000 performances at more than 425 airshows, in front of more than 80 million spectators. At the Summit, he will share his view of leadership, passion, and thrill.

In addition to Sean's inspiration, we've got other great speakers from JetBlue, Nationwide, Oracle, and more. There are a huge number of best practices waiting for you! Can you afford to miss it? We look forward to having you join the conversation!

By Curtis Bingham

Once upon a time, Netflix was an innovator and a giant slayer.  They offered a great product, enormous selection and a unique delivery system for DVDs.  By allowing customers to rent DVDs online and have them mailed to them, they put Blockbuster and video stores in general, out of business.  Next, Netflix wowed customers by offering a selection of movies to stream online via the same account.  No hidden fees, problems were addressed early and customers were loyal and excited about the product. 

They were once a company that “got it right” with their customers, but in the last three months, they have managed to squash 7 years of good will with some bad decisions that were poorly executed by the company.

I do a great deal of writing about companies and Chief Customer Officers that get it right, creating superb customer experiences that drive loyalty which in turn drives revenue and profits. While this can be instructive on how to be successful, sometimes it’s better to know what NOT to do to avoid complete and utter catastrophe.  Netflix is a study in both extremes, and whether or not it survives its own blunders time may only tell.

Early last summer Netflix announced a price increase…not just any price increase, but one that raised rates as much as 60% depending on the plan a customer was subscribed to.  The reaction was immediate and pervasive.  Angry customers blogged, tweeted, Facebooked and used every communication vehicle they could find to voice their disgust.  Netflix was silent.  After a short period of being ignored, the customers did what dissatisfied customers always do: they voted with their feet and left Netflix in droves. Still Netflix did nothing. 

Customers are never fans of unjustified price increases.  Netflix showed a complete disregard for their customer base when increasing the price of the service without a justifiable increase in value.  Price increases of this magnitude force customers to reevaluate decisions that used to be automatic.  They used to happily pay their bill every month and now they were determining if it was worth the price.  Many decided it was not.

Months later, CEO Reed Hastings came out with an apology, but it was several months overdue and it included a new bombshell: instead of the traditional online and DVD service found in the same convenient site, he was splitting the company into two entities.  Netflix would only stream video and Qwikster would continue in the spirit of Netflix’s original intent of DVD rentals.  Neither site will communicate with each other, so you will have to have separate queues for your movies and your credit card will be charged twice by two different companies.  Wait…what?  So, he is sorry for the price hike, but the price hike remains AND he is taking the most convenient part of his service and making it considerably more complicated?  How does this make things right for the customer? Does this sound like a company that cares about customers?

Companies are in business to create value for customers.  The price they charge is derived from the value provided.  When the value erodes, the price can’t be expected to remain the same or even increase without a backlash.  In 3 months, Netflix managed to destroy their service value and instituted a price increase.  Netflix is paying for these blunders both in a dropping stock price and in reduced Wall Street guidance as they lower customer acquisition expectations for Q4.   

Where is the customer in all of this?  Leaving, but it doesn’t have to be that way. 

Netflix could institute some changes to quickly bring departed customers back and save face with current disgruntled customers.  How?  By taking it all back.  Clearly, they have a strategic direction to split the company into two entities so they can pursue different customer segments.  Not all people who stream videos also watch DVDs and vice versa.  However, they can make the two services talk to each other to maintain consistent history, ratings, and recommendations. They could also go back to a single charge for those who use both services.  Small changes, but they reflect the biggest issues customers have with splitting the services up.

The largest gesture Netflix can make is to own their pricing miscalculation.  Reed Hastings belatedly apologized for the mistake and admitted it was quite a gaff, but he didn’t make it right.  Take action and correct the pricing scheme.  Grandfather current customers and make it an offer to those that left that they can return for their pre-June pricing plans.  It would energize the customer base, regain a percentage of lost customers and it would be a positive PR boost to a company that desperately needs one. 

Will Netflix do this?  Sadly, no.  They have stated publicly that they won’t recover the customers they lost.  Instead, they are rolling out announcements regarding new content agreements to justify their price hike.  This just increases the customer disconnect and will make them only too happy to jump on a number of very promising competing services such as Amazon and Apple that have gladly stepped into the breech. 

John Woods said “The purpose of a business is to create a mutually beneficial relationship between itself and those that it serves.  When it does that well, it will be around tomorrow to do it some more.”  Will Netflix be around tomorrow?  It is too early to tell.  However the prognosis is not good. 

By Curtis Bingham

Chief Customer Officer: is this a job title you have at your organization? No? Well, it might be time to consider one.  More and more companies are, or need to be thinking about their customers’ experience and how to manage it.  Adding a Chief Customer Officer is certainly a big step forward in making that a reality.  Curtis Bingham, executive director of the Chief Customer Officer Council, recently hosted a podcast covering this topic with Kelly Hushin, Online Content Manager for WBR.  

The CCO role has evolved over the years from a Chief Customer Service Officer to a Chief Customer Strategy Officer. There are two basic definitions of the role today. First, they must be viewed as the ultimate customer authority for not just their division, but also throughout the entire company. The second is that they must drive customer strategy at the highest levels of their company. They must have the credibility and authority to make changes for and on behalf of the customer, no matter where that customer may be interacting with the company. The Chief Customer Officer should have three main goals: to drive profitable customer behavior, to create a customer-centric culture, and to drive customer and corporate strategy into the C-suite and then throughout the company. 

One might ask why a CCO is needed when a company is theoretically dedicated to its customers already. But according to my experience, it’s a position that companies have always needed, but may not have realized until now. One of the Chief Customer Officer’s most important roles is to put a human and personal touch on an often cold and impersonal entity that is the company.

The Chief Customer Officer Council recently did some research that looked at the CCO effectiveness, pulling from a pool of about 200 enterprise companies with CCOs in their role for at least two years. They found that, overall, 67% of the companies that had hired a CCO saw positive fiscal results during the tenure of the CCO. From this data it’s very clear that the Chief Customer Officer generates quantifiable business results, and is an incredible asset to the company. 

Is the Chief Customer Officer just a passing fad? The answer is no. In the same way that a company that is doing very well financially wouldn’t dream of getting rid of their Chief Financial Officer, the CCO is a needed aspect of the company. The CFO is there to help the company stay focused on fiscally responsible strategies. The same thing applies to CCOs. Just because a company has a handful of customers that are happy and satisfied, doesn’t mean that the company doesn’t need a CCO. The Chief Customer Officer is there to help everyone in the organization maintain a singular focus on the customer.

Don’t just take my word for it.  Listen to the podcast and decide for yourself!

By Curtis Bingham

Authority is the currency of the C-Suite. I’m not talking about the chest-beating, testosterone-laden, “hear me roar” type of authority. Instead I’m speaking of the “Our customer has a problem, let’s everyone work together to resolve it and make more money in doing so” type of authority. Most chief customer officers or similarly titled loyalty executives do not own all customer-facing personnel and therefore must lead by influence to effectively resolve customer issues or enhance the end-to-end customer experience and ultimately, increase revenue and profits.

Even as a direct CEO report, the chief customer officer or other loyalty executive may be challenged to obtain the authority needed to get the job done. There are three types of authority for the CCO: borrowed authority, positional authority and earned authority.

Every CCO or loyalty executive has some Positional authority derived from the position and title they hold within the organizational hierarchy. CCOs relying upon positional authority may own many if not all customer-facing personnel such as service, support, consulting, and sometimes marketing and sales. Using positional authority the CCO can point to his or her direct reports and say, “make it so” in order to address customer issues. Beyond the initial bump in influence when the CCO catches people’s attention as something new and unexpected in the organization, this form of authority tends to be static and may not carry the weight of either borrowed or earned authority. Borrowed authority is gained through the strong, vocal, and very visible support of the CEO. The more prominently the CEO advocates for the CCO and reinforces customer-centric imperatives, the stronger the halo-effect and the greater the influence the CCO has over the organization. Borrowed authority is strong in the early days of a CCO’s appointment but tends to wane as the attention of the CEO turns to other initiatives. Earned authority occurs when CCO led initiatives are seen to be successful both internally and externally. Authority is earned as the CCO leads peers, executives, and employees to recognize how customer insight and centricity can be valuable aids in achieving their own business, department, and personal goals.

Many CCOs begin with positional authority and borrow heavily additional authority from the CEO. The most effective CCOs with the longest tenure are those who quickly earn their own authority. Ultimately, such earned authority can eclipse both positional and borrowed authority in power and value. Earned authority is the strongest and most sustainable type of authority, enhancing both positional and borrowed authority as it increases.

How can a CCO effectively earn greater authority within the organization? There are three ways to do so:

1. Own actionable customer insight
2. Develop strong relationships with management, peers, employees, and customers
3. Demonstrate quantifiable results tied to revenue and profitability

The 2011 CCO Council Summit to be held on October 18-19 in NYC is entirely focused on accelerating the development of this earned authority. Regardless of whether you are new to the role or very experienced, you owe it to yourself to attend! It isn’t too late—click here to register.

Note: This article is excerpted from the Bingham Advisory, a ground breaking publication designed to define and clarify the role of the chief customer officer in today's global business fabric. Authored by Curtis Bingham, the worldwide expert on CCOs, The Bingham Advisory is scheduled to launch at the 2011 CCO Annual Summit and will enlighten, instruct and drive important conversations for the valuable role of the CCO.