Friday, May 24, 2013
In a recent LiinkedIn discussion, a new CCO asked about the characteristics of loyal customers. The definitions of loyalty are legion. They include willingness to forgive missteps, reduced price sensitivity, increased repurchase, profitability, etc. Some of the measures are increased willingness to recommend (NPS), increased share of wallet, and others.
Just like loyalty is a leading indicator of increased revenue/profits, there is a leading indicator to loyalty that is more powerful, even easier to measure, and easier to influence: customer engagement.
Customer engagement is the measure of customer's involvement in your business, be it in in the customer acquisition process (ie. serving as references, making referrals) or the business operations (sitting on advisory boards), or even in defining the future of the business by participating in innovation activities. An engaged customer is by definition loyal, even if they are upset. An engaged customer sees value in helping you improve products, services, and operations. Oracle, a member of the CCO Council, has found that engaged customers are 7% more loyal, and 33% more profitable than similar counterparts.
Let's not worry about loyalty. Let's focus on customer engagement instead. Loyalty will follow, as will increased profitability.
Friday, May 03, 2013
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.