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Six Key Challenges for the Chief Customer Officer

Tuesday, March 11, 2014

The CCO Council identified six of the greatest challenges CCOs face and recommends the following approaches to overcoming them. 

1. Customer centricity is not widely viewed as a strategic imperative and the CCO's contribution to this imperative is poorly defined. As a result, CCOs spend more time explaining and defending their value than they spend with customers.

Recommendation: The CEO and Board must recognize the growing body of proof that customer-centricity is the new basis for competitive advantage with demonstrable business results, and then make the CCO a part of this strategic imperative.

2. The most successful CCOs recognize and leverage three sources of CCO Authority, starting with either Positional Authority or Borrowed Authority and quickly earning authority of their own. Without such authority, cultural resistance to change, conflicting priorities, and a host of other obstacles prevent CCO success.

Recommendation: The CEO must provide to the CCO significant Borrowed Authority. The CCO must "earn" authority rapidly by providing value, demonstrating results at all levels, and effectively communicating the business impact of those results.

3. Not surprisingly, there is often limited understanding of the type of resources required to successfully convert an organization to customer centricity. The CCO of one enterprise company chose to report into Marketing as a strategy to gain greater access to staffing and expertise.

Recommendation: CEOs and Boards of Directors must have realistic expectations of the resources required for a CCO to be successful and make a commitment to supply those resources. 

4. Gathering customer data is easy, but converting it into action is much harder especially as the complexity of customer purchases and interactions increases. Many CCOs struggle to move beyond the voice of the customer and triage to create and implement customer strategy.

Recommendation: Implementing customer triage and issue resolution processes are critical first steps for CCOs. But then the CCO needs to make powerful allies and initiate cross-functional initiatives to create workable customer strategy that cuts across business units to improve the overall customer experience.

5. Implementing change is challenging for most organizations and resistance to change is human nature. Traditional methods for cultural change including bonuses and penalties help mitigate the resistance. Actively engaging employees in the process of change will move the culture from compliance to engagement.

Recommendation: The CCO must accurately evaluate the company's appetite for change and adjust expectations and program design accordingly. 

6. Many organizations are adept at measuring transactions but customer emotion and behavior are harder to measure and correlate to results. This difficulty is perhaps the single greatest reason for the CCO's role being the most fragile in the c-suite.

Recommendation: The CEO, Board, and CCO must agree upon metrics and measures that balance revenue, profit, and customer loyalty. The CCO must effectively communicate and market the value of customer-centric change to the organization to gain further support and adoption. 

Whether you are an experienced or new CCO, addressing these challenges head-on can help you drive more profitable customer behavior, create customer-centric cultures, and increase the value you deliver to your customers.

*This article is excerpted from The Bingham Advisory: Eight Imperatives for the Chief Customer Officer, available for free download from the CCO Council website here.

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Categories: Chief Customer Officer | Customer Centricity

The Bingham CCO Authority Model

Tuesday, February 18, 2014

Authority is the currency of the C-Suite. Greater Authority means greater ability to influence the organization to take a desired action. But even as direct reports to the CEO, customer loyalty executives may be challenged to obtain the Authority needed to get the job done. Because they typically do not own all customer-facing resources they must lead by influence to effectively resolve customer issues or enhance the end-to-end customer experience and ultimately increase revenue and profits. There are three types of Authority for the CCO or other customer executive: Positional, Earned, and Borrowed Authority.

Every CCO or loyalty executive has some Authority derived from the position and title they hold within the organizational hierarchy. Using Positional Authority the CCO can point to his or her direct reports and say, “make it so” in order to address specific customer issues. In order to grant sufficient Positional Authority, the CCO is ideally positioned as a direct report to the CEO or perhaps one level below with a strong dotted line to the CEO. Title is crucial in granting Authority, inviting respect, and opening doors to influence other executives and departments to solve cross-boundary customer challenges (see The Bingham Advisory: 8 Strategic Imperatives for the CCO available at the CCO Council website). After the initial bump in influence following the appointment to the role, Positional Authority tends to be static and may even wane over time unless increased through a promotion. 

Borrowed Authority is that which is borrowed from others with greater influence. It is best gained through the strong, vocal, and very visible support of the CEO. The appointment of a loyalty executive tells the organization, including peers within the C-Suite: “Customer centricity is our strategic imperative.” 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. As the CEO of Nationwide said when he introduced newly appointed Chief Customer Advocate, Jasmine Green, to his organization, “This is Jasmine. She speaks for me.” Executives without strong Borrowed Authority report spending nearly 50% of their time justifying their existence and soliciting support instead of serving customers.

Borrowed Authority is imperative in the early days of the CCO’s tenure as any culture naturally resists change. The voice and Authority of the CEO is often necessary to overcome organizational inertia and enable a more complete customer-centric transformation. Leveraged correctly, this halo effect can be used to gain significant early momentum. Borrowed Authority may be strong in the early days but tends to wane as the attention of the CEO turns to other initiatives. If the drop is precipitous, the CCO can be rendered ineffective. Thus, while leveraging both Positional and Borrowed Authority, it is critical for CCOs to develop Earned Authority.

Earned Authority is the most powerful and sustainable Authority that can be wielded within the C-Suite and the organization, but it is the hardest won and typically in the shortest supply in the earliest days of CCO tenure. This is the type of Authority that comes with results. It is earned as the CCO leads peers, executives, and employees to recognize how customer insight and customer centricity can be valuable aids in achieving their own business, department, and personal goals. It is earned as CCO-led initiatives are seen to be successful both internally and externally. Because Earned Authority can grow over time, it eclipses all other forms of Authority. It is the strongest and most powerful form of Authority, and wielded correctly, can also enhance Positional and Borrowed Authority in a virtuous upwards cycle. The most successful executives with the longest tenure quickly earn this type of Authority.

Increasing Authority to solve customer issues, drive customer centricity, and thereby create sustainable business growth needs to be a core strategy of every CCO who doesn’t wish to relegate the tenure of his/her role to chance. Using the Bingham CCO Authority Model, you can gain, increase, and leverage your power and influence over your organization on three fronts at once.  

*This post is the first in a three-part series excerpted from The Bingham Advisory: Powerful Influence on Customer Centricity, available for free download here.

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Categories: Chief Customer Officer | Customer Centricity

Innovation Must Begin with Customers

Monday, February 10, 2014

The new reality is that innovation must start with customers. To effectively leverage innovation to fuel customer-centric growth, companies need to do three things:

Develop and regularly refresh an extraordinarily deep understanding of customers’ needs, wants, desires, and attitudes regarding their products, services, and the company itself

It isn’t too hard to find out what customers need, want, and are willing to pay for these days: customers are demanding to be heard, across an unprecedented proliferation of channels and platforms. Unfortunately, not nearly enough companies make sufficient effort to systematically capture and utilize available customer insight, choosing instead to operate “from the gut”, or rely upon outdated third-party research.

To effectively listen, you must speak with and learn from customers, vendors, partners, and others, wherever they can be found. You need to scour the social web, public forums, and user communities to woo influential users, bloggers, exemplars and advocates who can meaningfully contribute to your growing body of knowledge. Of course you need to solicit information about product issues, too, but there is far more than that to be gained. You must delve deeper into customer attributes, perceptions, dissatisfiers, and how they reflect upon your business processes. That data will enable you to quantify, justify, and defend the value you provide. It will also help you fortify customer purchase and retention drivers, as well as to discover new, profitable opportunities.

Assign executive champions for innovation initiatives

Great leaders are those who can recognize significant innovation and successfully evaluate it, vet it with customers, and commercialize it. Executive leadership alone has the ability to understand potential, forswear risk, fund great ideas, and remove obstacles. Companies must create executive-level support for well-qualified initiatives so they see the light of day and have a chance to contribute to the company’s bottom line. As well, these contributions must be formally measured and rewarded to ensure that the desired results are achieved. 

The CCO Roadmap identifies innovation as one of the key responsibilities of the chief customer officer (CCO). The CCO is in a unique position from which to identify, evaluate, and refine customer-centric innovations to ensure the greatest success. World-class CCOs have at their fingertips data identifying the most valuable and profitable customers whose needs are most important to consider. In addition, these CCOs have the strongest B2B customer connections and the greatest B2C credibility to garner participation in customer listening activities that discover, test, and refine innovative ideas. Leveraging their in-depth customer understanding, CCOs can effectively ground the most promising innovation efforts in reality.

Create a unified process for identifying and qualifying new opportunities for products, services, markets, or segments

With the seemingly unending supply of new business opportunities, how do you go about evaluating them all to determine which ones are viable? For Proctor & Gamble, the process was relatively straightforward: it identified the five biggest customer issues for each its divisions and then spent time with key customers to identify the desired experience around each issue. It then began to source solutions from innovation marketplaces, evaluating each according to potential profit contribution, strategic fit, and overall improvement to the desired customer experience. While your process may be different, the most important thing is to ensure that there is a unified process that everyone in your organization understands and can follow.

It is clear that sustained, profitable innovation must come from customers. Those companies that strive to intimately understand their customers’ needs, wants, and desires and profitably satisfy them better than their competitors are those who will win in the customers’ eyes and in the marketplace. Let your customers guide your next strategic move so you can grow profits as you attract more of the best customers and keep them longer. 

This blog post is excerpted from Curtis's full-length article, Innovation Starts With Customers. Visit our Exclusive Resources page for other articles by Curtis.

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Categories: Chief Customer Officer | Customer Centricity | Customer Engagement | Customer Insight | Innovation

Customer Engagement Models: Oracle

Tuesday, January 28, 2014

Oracle has hundreds of thousands of customers and dozens of customer programs. It measures customer engagement of its biggest accounts on an account-by-account basis. The company focuses on those top accounts that, combined, contribute the clear majority of Oracle’s annual revenue. The company has identified the eight customer programs that have the highest correlation to satisfaction, loyalty, referenceability, and revenue. The measure of engagement then is the number of these programs in which a top customer participates.

Overall engagement is measured along a continuum that begins with the transactional buyer (least engaged), increases through the buyer who is engaged in customer programs, further increases through the buyer who is partnering with the company on product roadmaps and strategies, and culminates in the buyer who is an advocate for the company (most engaged). Participation in only a couple of key programs places a customer at the transactional end of the continuum; participation in most of them places a customer at the advocate end. The company continuously measures revenue across key customers because it believes that it is easier to gain incremental revenue from existing customers than to acquire new customers and it has determined that there is a cause and effect relationship between engagement and incremental revenue. In fact, Oracle’s most-engaged are generating approximately three times the revenue of transactional buyers.

Oracle is actively partnering with their customers to improve the business. More than 7,000 of Oracle’s customers are involved in some sort of an advisory board. Some of them are executive level advisory boards, and some are product-oriented, defining product features and functionalities. Participants are expected to meet minimum meeting participation requirements. Should people be unable to participate, Oracle will allow the customer to retire from that board to make room for a more active participant.

At the advocacy end of Oracle’s engagement continuum, more than 600 Oracle customers were involved in a significant speaking engagement on the company’s behalf during fiscal year 2013. Those 600 are of the over 15,000 customers who are actively involved in referencing for Oracle under an agreed-on, individualized customer reference plan. Engagements range from Oracle’s own OpenWorld conference to participating in an advertising or product launch campaign or leading a best practices discussion with other customers and prospects. A significant segment of those speakers are senior level executives--influential people from influential brands.

Oracle also examines what content is created when determining how engaged its advocacy-level customers are. Content can come in many forms, including written and video content. During fiscal year 2013, in total Oracle produced almost 5,000 pieces of content with its engaged customers, including testimonials, case studies, fact sheets, videos, and advertisements. Furthermore, Oracle measures two facets of advocacy in its engaged customers. The first applies to customers that are even willing to engage in advocacy activities, whether or not they actually do so. The second applies to customers that are not only willing, but also actively involved in advocacy efforts such as developing content or speaking.

In summary, Oracle’s efforts are focused on engaging as much as possible those customers who are among the top contributors to annual revenue and who are already demonstrating a willingness to engage in customer programs. The company further targets customers on the basis of how much of what they spend is potentially attainable by Oracle. Finally, Oracle also looks at systematically increasing engagement with customers who represent the strongest brands in the world. Underpinning all of Oracle’s customer engagement efforts is the conviction that increasing the percentage of the customer’s spend with Oracle is more profitable than acquiring new customers.

*This post is excerpted from The Bingham Advisory: The Customer Engagement Trajectory, available for free download from the CCO Council website here.

 

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Categories: Chief Customer Officer | Customer Centricity | Customer Insight | Customer Loyalty | Customer Retention | Customer Survey | Customer Engagement

Customer Engagement Models: MetLife

Tuesday, January 21, 2014

Many companies today have developed paths to greater engagement and greater profitability through recruiting the involvement of their customers. To restate the definition of engagement: it is the extent of a customer's willingness to invest his/her discretionary time for a mutual benefit, and particularly for the benefit of a business.

MetLife sponsors and maintains a robust customer community with which it engages in many ways over time, from asking simple questions to testing ideas and products. In a simple yet powerful engagement exercise, the company asked community members to write a letter to a relative explaining why insurance is important. The customer stories that resulted from this exercise were deeply moving and very powerful. They described experiences that enabled the marketing group to understand where and to what emotional extent insurance is a welcome relief rather than a necessary evil. These stories continue to inform MetLife's understanding of what customers value. They also enable MetLife to humanize and optimize its marketing and sales efforts. 

MetLife has also leveraged stories that customers share with each other to drive advertising campaigns. In Poland, MetLife has low name recognition and market share but word of mouth promotion is unusually strong. One popular story customers were sharing there told of a claim from an elderly woman whose signature did not match the one on her policy. Normally such claims are denied, but in this case, an agent tracked the woman down, found her in a nursing home, verified her identity, and paid her claim. MetLife created a very successful television advertisement based on this story. And because real life customer stories like these increase authenticity and effectiveness, they give MetLife a significant edge over its competitors.

The insurance industry is replete with cumbersome product names such as, "Variable annuity with a guaranteed minimum withdrawal benefit," or "Immediate lifetime annuity with return of principal." The names attempt to describe function from a company perspective and end up confusing customers. In anticipation of a new product launch, MetLife turned to its customer community to share the product's purpose and benefits. Customers provided not only the name, but also the emotions to evoke and the messages to convey within the product's marketing and advertising campaign. In May 2013, MetLife launched the customer-christened "Shield" insurance product.

MetLife has successfully engaged customers in product development and in customer acquisition and retention. As well, MetLife has demonstrated such value in engaging customers in process redesign pilot projects that the CEO has mandated leveraging customer engagement in order to eliminate $100M in costs from the business. 

*This post is excerpted from The Bingham Advisory: The Customer Engagement Trajectory, available for free download from the CCO Council website here.

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Categories: Customer Centricity | Customer Loyalty

Engagement: The Key Metric for the Future

Tuesday, January 14, 2014

Customer engagement is properly defined as: The extent of a customer's willingness to invest his/her discretionary time with a company for mutual benefit.

For a description of the measurement of customer engagement and a discussion of engagement's two key components, see The Bingham Advisory: The Customer Engagement Trajectory.

Engagement is intuitive. If customers are accepting sales calls, participating in innovation processes, speaking at conferences on behalf of the company, pinning products on Pinterest, and advocating company products on Facebook, they are clearly more likely to repurchase, increase company share of wallet, with reduced price sensitivity.

Engagement is a more accurate measure of customer perception and is a leading indicator of loyalty. Loyalty is a subjective measure of an emotional state, whereas engagement is an objective measure of actual behavior. One of loyalty's greatest challenges is measurement of true loyalty. Loyalty is typically measured once or twice annually via survey. But surveys merely capture a snapshot of the customer's emotional well being at that moment. This snapshot could be adversely affected by factors outside the company's control. Survey granularity is often insufficient to discover crises in the making. In addition, customers are experiencing survey fatigue and response rates are falling, further masking potential crises from view.

By contrast, engagement is based on observable behavior: is a customer participating in relevant activities that lead to purchase/renewal? By structuring metrics with sufficient granularity, a company can tell how often and to what degree a customer participates across a range of platforms and activities over time. Waning participation is a leading indicator that loyalty and future revenue may be at risk.

Engagement is highly correlated with revenue. Oracle's most engaged customers generate 33% greater revenue. They are 4% more loyal and grant Oracle 12% greater share of wallet than transactional customers. PeopleMetrics found that companies focusing on customer engagement realize a 13% revenue reward, compared to a 36% revenue penalty for those companies obstructing customer engagement.

This is the Age of Engagement. Customers are demanding to be heard and involved. The most successful companies will grow as they engage customers in customer acquisition, retention, operations, innovation, and even strategy.

*This article is excerpted from The Bingham Advisory: The Customer Engagement Trajectory, available for free download from the CCO Council website here.

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Categories: Customer Centricity | Customer Insight | Customer Loyalty