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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

Seven Strategies to Streamline Customer Centric Culture Change [Part one of a two-part series*]

Tuesday, December 10, 2013

A single, disgruntled employee can sabotage the work of hundreds, even thousands, in a single destructive customer interaction. An uninformed policy change can destroy loyalty in a heartbeat. Successful chief customer officers recognize that efforts to improve customer experience are meaningless without a considered effort to change company culture. One company identified that only 6% of a measure of customer centricity was attributable to customer service; the other 94% came from other activities such ease of deciphering bills, cleanliness and maintenance of company vehicles, and understandability of contracts. Customer centricity is much more than customer service or customer experience. It requires a significant change in attitude and culture across virtually 100% of the company.

There are seven strategies for making successful culture change far less painful. In this week’s blog, I touch upon three. I’ll cover the other four in next week’s post.

Obtain executive leadership and support

Executive support for the CCO and cultural change must be constant and visible. Only the CEO has the sphere of influence to mandate change across all facets of the company, and the effective CCO will leverage this Borrowed Authority to open doors and encourage people to listen. With the executive team, CCOs should create a clear definition of what customer centricity means, how the company plans to implement the concept, and how it will be measured.

Identify desired behaviors and measure their adoption

CCOs must clearly define, articulate, and gain consensus around ideal behaviors of a customer centric organization. Behaviors should be demonstrated from the top down, and those who consistently exhibit desired behaviors should be recognized and rewarded. Clear and shared expectations and feedback will help employees understand the process and adoption of culture change.

Create direct and indirect incentives

Time and time again studies across multiple industries have shown that incentives drive behavior change. Employees can be rewarded directly and indirectly. Direct impact comes through a financial bonus and through inclusion of metrics as part of his or her MBO. Indirect incentives include personal recognition through programs like Employee of the Month or assignment of a special parking space. Incentives can effectively be used to reward employees for embracing customer centricity. It is human nature for individuals to respond positively to both financial and personal acknowledgement.

*This two-part series on customer centric cultural change has been excerpted from The Bingham Advisory: Eight Imperatives for the Chief Customer Officer, available for free download from the CCO Council website here.

View Curtis Bingham's profile on LinkedIn

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Categories: Chief Customer Officer | Customer Centricity