CCO Council Blog

By Curtis Bingham

A couple of weeks ago there was an article in the Wall Street Journal that describes Sears’ attempt to sell Lands End and other assets in an effort to improve the company’s liquidity. On the surface this might seem like yet another corporate divestiture, but let’s rewind a bit for context.

Sears Chairman Eddie Lampert purchased via his ESL Investments a controlling stake in Sears in 2005 and embarked on a strategy that was lambasted widely in the financial press. At the time, Sears had a very strong brand, valuation, and stock price. Lampert’s strategy was to slash expenditures and focus solely on superior financial returns. Lampert dismissed industry best practices and experts saying in a NY Times article, “[W]e do not subscribe to the view that more is better, or that there is a certain amount that must be spent on cap ex every year. The question we ask at Sears (and I believe every business should ask) is: ‘What is the most productive way to allocate the capital that we have on hand and the cash flow the company generates?’”

For all the hubris, Sears stores now stand out as worn-out. The company has lost touch with younger customers, and dilapidated stores where lights flicker, carpet is worn, and traffic is nonexistent are the norm. Sears lost $3 billion in 2011, and despite buybacks of nearly $6 billion, share price is less than half what it was when Lampert took over.

What happened?

Three things:

1. Hubris: Eddie Lampert decided to stand the industry on its head and ignore best practices, convinced that he knew better than anyone else how to maximize profitability. Some rules are made to be broken, and the real innovators are those who break more than others. However, innovation that ignores customers simply isn’t sustainable.
2. Wrong Metrics: Eddie Lampert focused solely on financial returns at the expense of customer returns. When customers are removed from the value equations of business, the precipitous slide to ruin begins. One of the greatest challenges facing business today is that businesses are following the wrong metrics and driving themselves off the cliff and out of business. Executives are measured nearly exclusively on financial metrics, yet as Drucker said, “The purpose of business is to create and keep a customer.” Where is the impact on the customer considered in strategic decisions?
3. The CFO Running the Show: There are too many Eddie Lamperts in the CEO or CFO position in the company and they have entirely too much power. The stereotypical CFO is trying to minimize risk and maximize (short-term) financial gain. But adding the customer into the strategy is messy and sometimes wreaks havoc on carefully laid plans. Think recalls, or credits for lousy service. More importantly, changing customer needs, competitive threats, and other strategies to grow customer base or penetrate markets are less easily quantified, but imperative. You simply cannot shrink your way to growth.

In modern business, any technology- or service-based competitive advantage can be copied or stolen in less than six months. The only sustainable competitive advantage is the company’s ability to deeply understand and profitably satisfy customer needs and desires. To expand, you cannot shrink your way to growth. As Sears has shown, that strategy precludes deeply understanding customers and certainly doesn’t enable profitably satisfying customer needs and desires.

To be successful, every company must ask at every major decision point, “What is the impact of this decision on our customers?” If it is a positive impact, then leverage it. If it is negative, then find a way to mitigate or lessen the impact. Only by incorporating the impact on customers into strategic decision-making can companies avoid the near-certain demise currently faced by one of America’s household brands.

By Curtis Bingham

In today's video, I discuss the value and the benefits of creating and socializing a list of top customer challenges your company faces, in order to overcome them and to gain greater authority in your role.

Video Transcript

Over the past decade, I've had scores of chief customer officers ask me—what are the most important things for me to really get right as a chief customer officer?

There are a number of CCO essentials. And, today, we're going to talk about the top 10 customer dissatisfiers. No matter where you are in your journey, whether you're brand new to the role or you're very experienced, you could always create a list of the top handful of things that drive your customers crazy and, worse, may drive them away.

Oracle uses a top 10 list, and this list is gathered from the annual loyalty survey; it's gathered from sales people; it's gathered from the call centers and a number of other sources. And it's all bubbled up into this top list that is presented to Larry Ellison.

Nationwide has the top five by complaint volume, but it also includes the top five kudos, or the top five operational issues that need to be addressed as well.

As I've said before, the number isn’t truly important; but the fact that it exists and that it is recognized as an authoritative view of the top dissatisifiers is what's truly important here.

These top priorities should be collected and prioritized based upon an agreed-upon strategy. It could be complaint volume. It could be the key drivers of customer defection. It could be the big issues that are causing public or social media backlash. It could be anything that's preventing sales or hampering profits.

What do you do with this list?

The most important thing is to get the CEO to adopt this as his or her metric. This is a huge way of borrowing greater authority within the organization because the CEO is now championing your cause and banging the drum towards customer centricity.

At Oracle, Larry Ellison uses the top 10 list on the agenda for many of his staff meetings. He goes through and reviews this and asks for progress and status updates from those people who are accountable for fixing these problems. And, believe me—you do not want to be on that list for more than a quarter.

The thing that's very important is to assign ownership for the resolution of some of these dissatisfiers. Somebody needs to be responsible for making these problems go away. You need to set a time frame, typically, one quarter or less.

There are some issues that will certainly take longer than one quarter to resolve. But, by and large, most of these issues should be targeted for resolution within one quarter; and then, other issues that are bubbling up to the top could be used to replace these on this top 10 list.

The other thing that you need to do is to make it available to employees. It's incredibly valuable in helping you earn authority if you are socializing this information and making it available to all employees so that they know how they can impact some of these top 10 issues.

One thing that's incredibly valuable here is going to the executives who are going to be responsible for resolution of some of these issues before sharing it with the executive team. That helps them prepare for the sit down with the CEO that inevitably comes when they see a new item on the list. The executive here can then say, “I got it. It's under control. We're working on it, and here's the strategy for resolution.” You help them save face and you help you earn significant authority within the organization.

I encourage you over the next number of months to think about how you can go about identifying and helping the organization adopt the top customer dissatisfiers within your company. Whether it's top 10 or top 5, it doesn't matter. Find out what it is that's driving your customers crazy or driving them away; and figure out what you can do to help the organization focus on solving those issues.

By Curtis Bingham

In this tenth and final video of a ten part series filmed on location at IQPC's CMO Exchange in London, July 2011, I highlight some of the powerful results companies are enjoying from creating customer centric cultures within their organizations.

By Curtis Bingham

In this ninth of a ten part series of videos filmed on location at IQPC's CMO Exchange in London, July 2011, I talk about the use of promotions and incentives to advance customer centricity.

By Curtis Bingham

Some thoughts on upcoming trends in customer experience, from an interview filmed on location at IQPC's Customer Experience Change in Berlin last November.

By Curtis Bingham

In this eighth of a ten part series of videos filmed on location at IQPC's CMO Exchange in London, July 2011, I share examples of communication methods that help organizations embed customer centricity.