By Curtis Bingham

For the past year, Jeb Dasteel, former chief customer officer of Oracle, and I have been interviewing and surveying top executives, asking them how much they have reduced effort, or improved Ease of Doing Business for their customers. And we’ve asked executives at companies who consume products and services how much easier to do business with their top suppliers have become.

A comparison of the results is shocking.

52% of sellers admitted they had reduced hardly any or no effort at all in the past year. Which is certainly alarming, given the massive investments in CX improvements and digital transformation.

The remaining 48% of sellers said they’ve eliminated a moderate amount of effort. Sounds a lot more promising, right?

Buyers strongly disagree. 90% say their top 3 suppliers have eliminated hardly any or no effort at all in the past year.

It gets worse.

First, a little context. In our previous article, we wrote that improving Ease of Doing Business is the single most important thing that organizations need to work on to create value not only for their customers but also for their own business.

The most critical component of Ease of Doing Business is reducing customer effort, or the burden placed on your customer that creates no intrinsic value for them but is an inescapable aspect of how they’re forced to interact with you.

Gartner states that reducing customer effort can reduce costs by 37% and induce customers to spend 88% more. In fact, 96% of customers with high-effort experiences are disloyal, compared to only 9% with a low-effort experience.

Effort is a gating factor preventing loyalty gains. High effort experiences have to be remediated before customers can become loyal.

Clearly, focusing on reducing customer effort in order to improve Ease of Doing Business yields huge dividends in terms of loyalty, profits, and revenue.

In our many discussions with executives and our 2019 CCO Council meeting, it is clear that CX is often nebulous. How many employees know exactly what constitutes a great experience? Effort, however, is intuitive. Employees often know exactly how to make it easy for customers to do business with us.

Ease of Doing Business is more concrete and resonates more strongly with the CEOs, COOs, and other c-suite executives we’ve talked with, as compared to CX.

The Process

To gather these data, we targeted top-level executives typically of B2B companies offering a product or service (sellers), and executives who purchase products/services from B2B sellers (buyers). We interviewed many CMOs, chief customer officers, and other customer strategy executives. We invited our customers, contacts, and LinkedIn colleagues to participate in the survey. (Note: The survey is ongoing. We would love to have you take three minutes to contribute to it. If you do contribute, please don’t let these conclusions sway your answers!)

We asked sellers, “How much customer effort has been eliminated today versus a year ago? In other words, how much easier have you made it to do business with you today versus a year ago?”

We asked buyers, “How much customer effort has been eliminated on average by your top 3 most strategic providers today versus a year ago? In other words, how much easier have they made it for you to do business with them today versus a year ago?”

We also asked both sellers and buyers to rank order a list of 10 of the most common drivers of Ease of Doing Business from most to least importance.

How Much Easier are you to do Business With?

A handful of sellers were rather honest: they acknowledged they had eliminated no effort at all during the past year. Based on our experiences, we wouldn’t have been surprised if respondents had said it had actually gotten worse. We’ve seen so many initiatives launched that have poor consequences for customers because companies sought operational efficiency without considering the net impact on their customers.

Forty percent of respondents said they have eliminated hardly any effort.

Forty-eight percent of sellers said they had eliminated a moderate amount of effort and have become easier to do business with. This one is important: hold this thought.

Interestingly (and sadly), nobody said they had eliminated a great deal of effort.

When we asked buyers the same questions, we were surprised. Buyers told a very different story than the sellers. In sharp contrast, 90% of buyers said their top 3 most strategic providers have eliminated hardly any or no effort at all.

Thankfully nobody said effort has actually increased.

What does this tell us about the massive investments in CX improvements, digital transformation, omni-channel integration, and more? Were they wasted? Or overwhelmed by high-effort experiences? It is certainly possible that the innovations of a handful of companies such as Uber, Amazon, and others are increasing the expectations of all customers everywhere, making it impossible to “finish” Ease of Doing Business improvements. But that doesn’t explain these results.

Net, there is a significant disconnect between buyer and seller perspective on how easy they are to do business with. Sellers aren’t listening to customers, or they aren’t asking the right questions. And they certainly aren’t keeping up with a rapidly changing set of industry expectations.

What are the Biggest Drivers of Ease of Doing Business?

We asked sellers to rank order 10 of the most common drivers of customer effort that they believe have the greatest impact on their customers (1 being most impactful and 10 the least impactful).

If you examine the top 5, do they make sense to you? If you’re like most, you’d probably tend to agree that these should be the highest priority.

It makes sense that customer onboarding should be #1, especially for a SaaS or other product/service company with a complex process for adoption and value realization. Streamlining interactions so customers aren’t calling repeatedly or multiple people aren’t unnecessarily involved makes absolute sense. And of course, we want to resolve customer issues, ideally without escalation.

We asked buyers essentially the same question and were quite surprised to find that there is absolutely no overlap in the top three most critical priorities between sellers and buyers. Customer on-boarding, the highest priority for sellers, is fifth for buyers. The highest buyer priority, “Better ways to collaborate”, is the seventh priority for sellers.

Would you have ever guessed at this disparity?

The disparity in the drivers of Ease of Doing Business results in a significant waste of resources.  An executive for an agency operating a government-funded passenger railway said, “We’re undergoing a modernization effort. Engineers want to add WiFi in the rail cars and improved online ticketing. But we can’t even effectively communicate with passengers that the train is delayed! We have to fix the core system before we start examining engineering marvels!” 

How you do YOU know that you’re solving the problems that customers actually care about?  If you were to ask your top customers these same questions, would they be in perfect alignment?

Conclusion

The survey results match Jeb’s 20-year experience at Oracle, and Curtis’ experience in working with hundreds of customer strategy executives.

As customer strategy executives, we need to figure out how to become easier to do business with. And we need to ensure we’re anchored in and guided by our customers’ priorities.

We need to understand the customer’s drivers. We need to have a formal Ease of Doing Business metric we can baseline and benchmark against every year. We need to ensure the whole company is engaged in making it easier for customers to do business with us—not just in the call center, but throughout the entire customer lifecycle.

We’ve created an Ease of Doing Business Accelerator, a 1.5-day workshop designed for senior executives from marketing, customer care, services, other critical customer-facing roles, AND their cross-functional teams. It enables you to work on real customer strategy challenges & opportunities for you plus 3-4 members of your cross-functional team. You’ll walk away with a clear definition of Ease of Doing Business/effort drivers, an explicit linkage of drivers to operational and financial metrics important to your CEO, and a detailed plan to resolve the highest priority Ease of Doing Business obstacles.

If you’d like to learn more or join us at the accelerator, please select a convenient time to talk further on a brief call.

Curtis Bingham Founder & CEO, Chief Customer Officer Council	Jeb Dasteel Former chief customer officer, Oracle

By Curtis Bingham

Customers with the best experience generate 140% more revenue. Digital transformation enables greater customer engagement, and therefore greater revenue.

What is the business value of an improved customer experience? CEOs have never responded well when chief customer officers (CCOs) say “Trust me, this is the right thing to do.” In fact, the average tenure of a CCO is only 27 months (recent CCO Council research). Why is this so low? One reason is that some customer executives struggle to demonstrate quantifiable ROI for customer initiatives. When the CEO and CFO are making priority decisions they simply can’t compare the returns for investing in CX improvements with hiring another salesperson.  Or worse, when the company hits a revenue road bump, the CCO’s initiatives and sometimes even the CCO herself are the first to be cut because their value cannot be quantified.

According to research published in HBR by Medallia, customers with the highest CX scores generate 140% more revenue than those with the lowest.

Medallia examined in depth two companies, one transactional and one subscription based. Transactional companies typically measure return frequency and average spend per visit. Subscription-based companies typically measure duration of repeat business, typically through retention, cross-sell, and upsell. They examined customer feedback and experience scores at a point in time, and then actual behavior for the subsequent year. This is important, as one of the downfalls of NPS measurement is that it measures nebulous intent and not actual behavior.

After controlling for other factors that drive repeat purchases such as affinity or natural consumption cycles, Medallia found a strong correlation between CX and revenue. Revenue generated by each customer increased significantly with higher CX scores. The customers with the best past experiences generated 140% greater revenue than customers with the worst past experiences.

For the subscription business, customers having the poorest experience stood only a 43% chance of being a member a year later, and were only likely to remain a member for a little over a year. Conversely, those with the best experiences were 74% likely to remain a member a year later, and were likely to remain a member for six years.

Done right, digital transformation promises improved customer engagement, a better experience doing so, and decreased costs to serve. And that’s a compelling argument.

How are you demonstrating the ROI of your customer initiatives and CX programs to your CEO?

P.S. Next question: Would it be valuable to have a discussion about where you need to go next in your digital transformation?

I've created a comprehensive digital assessment that benchmarks against the world's leading companies in six critical dimensions and gives you a prioritized roadmap going forward. I've partnered with Bob Taylor, former CCO of Samsung SDS and present CDO of from.digital, a digital transformation agency to bring this to you.

If you'd like to discuss, please call me at 978-226-8675 or email curtis@ccocouncil.org.

By Curtis Bingham

A recent HBR article described a 2016 study examining the forecast rate of digital disruption. Executive search firm Russell Reynolds surveyed 2000 C-level executives in 15 industries, asking them to describe the expected rate of digital disruption during the coming 12 months.

Executives expect digital disruption to be the most severe in B2C industries, particularly in media. 57% of Technology execs expect moderate or massive digital disruption. My personal conversations with chief customer officers (CCOs) confirm that B2B industries are not far behind. Oracle, facing considerable pressure from SaaS providers and other competitors, recently moved 90% of their business to the cloud.

The research indicates that industries most vulnerable to digital disruption are those that have low barriers to entry and are comprised of large companies with legacy business models. Digitally agile competitors gain greater economies of scale and capture greater value by automating expensive processes. A recent McKinsey survey of 1,000 B2B decision makers said that approximately "86 percent of respondents said they prefer using self-service tools for reordering, rather than talking to a sales representative." Thus, many digitally agile competitors are providing self-service re-ordering and saving money while providing a better customer experience.

Where are you at? I'd love to hear how would you answer the same question: In your industry, what level of digital disruption are you expecting during the coming year: none, low, moderate, or massive?

P.S. Next question: would it be valuable to have a discussion about where you need to go next in your digital transformation?

I've created a comprehensive digital assessment that benchmarks against the world's leading companies in six critical dimensions and gives you a prioritized roadmap going forward. I've partnered with Bob Taylor, former CCO of Samsung SDS and present CDO of from.digital, a digital transformation agency to bring this to you.

If you'd like to discuss, please call me at 978-226-8675 or email curtis@ccocouncil.org.

By Curtis Bingham

Last week I called my bank, entered my account number into their automated system, then my pin, then my zip-code, then the last four numbers of my social security number.  Having properly identified myself as the real Curtis Bingham (or at least a sufficient facsimile), I proceeded to check my balance and then transfer a balance to another account. I realized that my car payment was being deducted twice. So I pressed “0” to speak with an agent.  The agent then asked me to provide all the same information, again. 

This is my biggest pet peeve in dealing with banks and their IVR systems:  despite having proven my identity enough to make payments on a loan or even completely zero out my account, every agent makes me provide the exact same information. Some want additional verification, some say they didn’t receive it from the IVR. Making customers provide the same information all over again creates friction. And how many times have you gone to a doctor’s office and been asked to fill out three forms, only to find that you have to enter in all the same information on all three. Or been stuck listening to an agent read, verbatim, a three-minute long legal disclaimer before confirming a change you’ve made to your life insurance plan?

Someone created these processes to meet a business need—to verify identity, get information, or fulfill regulatory requirements. But like many processes, they neglect the customer. You’re predisposing someone to be irritated with you before you even begin the human interaction. Too much friction creates dissatisfiers which, if left unchecked, can lead to churn.

Despite significant efforts to improve the customer experience, many NPS programs have plateaued and customers complain even louder on social media. Chief Customer Officers (CCOs) are stuck in groundhog day: dealing every day with an endless stream of apologies, billing statement credits, and service recovery efforts. The focus is on remedial efforts to reduce detractors. And they are often “lipsticking” bad processes—making inherently business-centric technology and processes more palatable to customers. But this only takes you so far.

The goal of many customer experience (CX) initiatives is to make many of these business processes more palatable to customers. The goal of design thinking is to determine how to do away with some of these processes altogether and recreate the rest on balance between customer tasks and business needs. The value and application of design thinking in the enterprise was described in the September 2015 issue of the Harvard Business Review. This issue included a very good summary of how Pepsi applied design thinking not only to product design but also to culture and customer experience. Design thinking brings disparate stakeholders, disciplines, and expertise together to first listen and intimately understand the customer’s tasks to be completed. Instead of immediately converging on a solution from a narrow set of options, design thinking allows us to create new choices, explore new alternatives, create new options that didn’t exist before.

There are a couple of core principles of design thinking: 

1. Begin with people, culture, and context: understand human needs deeply enough to know where to begin design—the biggest challenge is ensuring that you’re asking the right questions
2. Rapid prototyping: learn rapidly by building, testing, failing, and honing 
3. Engage: enable participation of disparate stakeholders including customers, process owners, and even those outside the domain to build upon ideas and remove artificial domain constraints
4. Execute: change is hard—especially the type of transformative change realized with such a wholescale reimagining of the customer/company interface

What would your product/service/process look like if it were wholesale reimagined, not from an operational-efficiency perspective but from the perspective of the customer task to be performed? How much customer-company friction could be reduced? How might this decrease call volume? Or service recovery? How much more “easy to do business with” might you become? What would be the impact on churn? On revenue?

Design Thinking helps us go beyond the incremental to the transformative. Using design thinking we can examine products, processes, and experiences holistically from the outside in, starting from the customer’s work to be done/tasks to be performed and work backwards with few constraints to create fresh and transformative processes that actually solve real customer problems. In the near term, we want to minimize the friction in the customer interface. In the longer term we want to align the brand promise, business objectives, job functions, processes, around facilitating the customer tasks to be performed—balanced with critical business needs. 

Come join us at our April 12^th Chief Customer Officer Council meeting, where we’re going to be discussing how the discipline of design thinking can help us go beyond the remedial, incremental improvements that many CX initiatives may provide and help us align the business to solve real customer problems. Jill Herriott, former CCO of CIGNA and current CMO/CXO of the American Marketing Association (AMA) will be sharing her remarkable journey applying design thinking to create powerful end-to-end customer experiences that customers loved—and that promise huge ROI. And you won’t want to miss her discussion of customer archetypes that create emotional attachment and far greater customer engagement.

Steve Mescon, CCO of Riot Games (90 million customers!) is sharing how he used design thinking to create a powerfully customer-focused culture that enables them to bring in 83% of new business from word of mouth.

I typically reserve a couple of seats for guests. If you’ve missed your invitation, please contact info@ccocouncil.org to request an invite. 

By Curtis Bingham

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.