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The CCO Dashboard [Part two of a two-part series*]

Tuesday, December 03, 2013

In this second of two blog posts, I discuss the final three out of seven measurements that should be on every CCO’s dashboard, in addition to the potential metrics for each of these areas.

Depth and breadth of customer centricity as part of the culture

How customer-centric is your company, and how do you know? The core value proposition for the CCO is that of creating competitive advantage from increased customer engagement. The impact upon customers should be considered at every strategic decision and incorporated into the stage gate processes.

Metrics: Consider the number of employees with customer-related metrics in their MBOs, or those with a portion of their bonus tied to customer centricity measures. The number of employees involved in various customer engagement programs is also an especially good metric.

Influence on overall revenue

The CCO has indirect and direct impact on revenue. Directly the CCO can influence new sales and retention rates if they have authority over those areas. CCOs can also improve customer-facing processes that have led to more efficient operations, which leads to overhead reductions. Depending on the span of responsibility the CCO may have other less direct opportunities to influence profitability and revenue.

Metrics: Measures will vary by corporation, but some measures might include tracking changes in spending by account based on loyalty scores and customer engagement as these metrics have been shown to impact revenue. The CCO's involvement in the sales process and changes in deal closes and up-selling should be considered as well.

Influence on the key performance indicators of other members of the C-Suite

Initiatives of the CCO should positively affect the Key Performance Indicators (KPIs) of peers. Every executive should be able see improvements in their metrics if the CCO is effective.

Metrics: The influence of customer centric initiatives on KPIs of other departments is a way of evaluating CCO effectiveness. Improvement in the sales cycle, close rate, new sales due to CCO activities are examples of dashboard metrics.

Given the scope and breadth of the business areas to be monitored and measured, the role of the CCO is not to be entered into lightly. When the CCO is successful, the company is successful. CEOs and Boards of Directors must understand and commit to provide the CCO with visible and continuous support, provide appropriate resources and develop metrics to demonstrate the value of the CCO. There are many such resources available to CCOs to guide them through challenges to success and to keep them from experimenting at the expense of their customers. The CCO Council itself with additional research and peer networking guides many CCOs in their mission.

*This series has been 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 | Customer Insight

The CCO Dashboard [Part one of a two-part series*]

Tuesday, November 26, 2013

There are seven measurements that should be on every CCO's dashboard. I cover four in this blog post and the remaining three in next week's blog post.

First, an important word about metrics. Because these metrics represent "proxy" measures for revenue and profitability, securing buy-in from the corporate level that these metrics are indeed tied to revenue and/or profitability, albeit indirectly, is critical to their credibility and the CCO's authority. Without this consensus the dashboard cannot demonstrate value for the CCO. The metrics are presented in order of data readiness and access; the easiest measures are listed first.

Key account relationship health

On a weekly basis, account relationship managers should post the status of key accounts; those in green have no issues, those in yellow have some emerging issues not of a critical nature, and red accounts are those in greatest jeopardy. The CCO must take personal responsibility for resolving the issues for accounts with red indicators.

Metrics: The number of accounts in green or successfully migrated to green, or elapsed time between identification and improved account status are potential metrics for the dashboard.

Overall and key customer engagement

It has been shown that more engaged customers spend more money. The degree of customer engagement can be measured based on rates of participation in customer programs such as executive forums, product development, and participation in corporate strategy initiatives. One large technology company has over 70 customer engagement programs and they have been able to document the positive relationship between customer engagement and spending.

Metrics: There are several metrics to be considered: The number of customer engagement programs and their growth, the level of involvement of customers in customer engagement initiatives, and especially the spending patterns of customers at different levels of engagement.

Loyalty measures

Academic research has proven that the higher the level of customer loyalty the greater the spend level.

Metrics: A number of commercially available survey instruments can be used to measure customer loyalty. As well, combining a customer's spending over time and customer loyalty makes a good proxy measure.

Progress toward resolution of critical customer issues

Identifying and focusing resources on resolving critical customer issues is an important role for the CCO. One large technology company annually identifies its chief customer concerns that represent a combination of technical, operational, and process issues.

Metrics: The time it takes the CCO to identify the components and drivers of the issue, the timing for a resolution plan, and time to resolution are appropriate measures for the dashboard.

This covers the four of the seven areas recommended for the CCO dashboard. The remaining three measurements and their potential metrics will be discussed in next week's blog post.

*This series has been 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 Insight

Internal Customers Are Not Customers at All

Tuesday, November 19, 2013

I recently had a conversation with an executive wherein he suggested that a large part of his focus was in helping employees better serve their “internal customers.” But the concept of “internal customers” is a logical fallacy that focuses attention inwards on policy and procedure, creates false success metrics, and derails strategy in the creation of customer value.

The concept of “internal customers” arose during the era of Total Quality Management as a means of distinguishing the consumers of output and has been transformed into a misguided attempt by HR and others to educate employees on basic human interaction in an effort to make people “play nice.” A customer can ONLY be someone whose name or company name appears on a check. Real customers pay for goods or services. Customers are the ultimate decision-makers in determining which goods and services are produced. They define your business future. Employees are not customers. Employees have no future in a business without customers, yet a business can still deliver customer value without employees (albeit in a limited fashion).

An “internal customer” approach or “employees first” culture statement derails strategy and tactics and creates a damaging, false sense of customer centricity as well as a sense of employee entitlement. If call center managers argue over whose needs are primary – the business units they support or the customers calling the center – the paying customers lose simply by virtue of the distraction of the argument. Focusing on internal customers results in a myopic view of policies, procedures, and metrics, often at the expense of customer service and customer value. IT departments worldwide are notorious for focusing on internal customers. They minimize risk and expense and hamper sales’ or marketing’s ability to serve real customers. Consequently, the marketing discipline is now on the verge of systemically co-opting IT departments in order to correct this damaging imbalance.

For example, a large Canada telecom company reduced IT staffing in order to cut costs. There were many unanticipated consequences, including one instance where a lead salesperson was locked out of customer account databases for 5 days and unable to generate quarterly revenue. So one of the company’s customer-focused executives then recast the IT mission to enable company employees to deliver outstanding value to customers. This simple shift energized and focused IT employees and insulated the department from future cost-cutting efforts.

In the “employees first” model, “internal customers” place themselves on equal footing with external customers, jockeying for position, resources, and status that may damage the company’s ability to serve paying customers. Employee expectations of quality and service cannot trump the mandate of external customer focus. If customers are a business’s raison d’etre, an employee’s existence must be predicated upon delivering outstanding and profitable customer value. Every employee’s purpose must be tied to some customer outcome. Otherwise, what real value does that employee serve? They must be tasked in such a way that they are partners in delivering customer value.

“Employee first” cultures have no place in business. Executives need to create a singular focus on profitably delivering increasing customer value and they must engage employees as critical partners in that delivery. The correlation between engaged employees and satisfied customers/increased revenue is well established. But their priority order must remain: customers first.

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Categories: Customer Centricity | Customer Insight

Social Media Has Thrown Companies Back to the Dark Ages

Tuesday, November 12, 2013

The advent of social media has thrown companies back to the Dark Ages. Customers have taken to the streets, complaining about anything and everything. Forward momentum has ground to a halt as companies spend an inordinate amount of time scouring social media sites, trying to find dissatisfied customers, putting out fires before they become conflagrations, and offering discounts to make up for mistakes. All these efforts are a huge drag on resources, time, and forward momentum.

Or is it really as bad as all that?

In truth, many of business’s ills used to be hidden from view. Customers didn’t complain; they didn’t have a venue. Posting a sign on a downtown NYC street corner saying, "Listen to me whine!" didn't do any good. Customers simply left. And companies didn’t really care, because even if disgruntled customers told eight people, it was only eight.

But now every customer has a megaphone and a Jumbotron to reach the largest, most crowded stadiums in the world. No longer can companies get away with ignoring customers who don't complain loudly enough or who don't know the CEO well enough to escalate issues to his personal attention. No longer can companies get away with ignoring customers they hold captive. Those customers now have channels to severely dissuade new customers!

Although painful, it is a wonderful thing that this dirty laundry is aired for all to see. Even though it slows forward momentum. Even though it causes a firestorm in the Twittersphere. Companies need to embrace this model fully as they halt the presses and fix the basics of their businesses. Only by resetting in such a fashion can they lay the foundation for forward innovation as they leave the Dark Ages of customer disregard and enter the Age of Engagement; where customers are heavily involved in every aspect of the modern business.

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Categories: Customer Centricity | Customer Insight

Will you allow your customers to trash your brand?

Tuesday, November 05, 2013

Let’s face it. The customer is not always right. And persisting in this belief can have consequences. Sometimes, the best thing you can do for a customer is to gently and politely tell them, “No.” 

Airbus, one of the world’s largest jet manufacturers, is pushing back on the airline industry trend towards smaller seats. It used to be that nine-across seats were standard, and many airlines are moving to 10-across and thinner seats with less padding. Of course, the airlines are all about saving weight and adding more paying passengers to each flight. Last year nearly 70% of Boeing’s 777 planes had an extra seat squeezed into each row. But, this latest push to narrow the seat size from between 18-19” to 16.7” wide has caused a backlash amongst travelers.

Some claim that a "coffin has more shoulder room," or that "airlines might as well do away with seats altogether and use straps like on the subway." Travelers are complaining to the airlines and are even taking out their frustrations on Airbus and Boeing. Airbus, to its credit, is doing consumer research of its own and is advocating a minimum width of 18" as it improves passenger sleep quality by 53% over 17" wide seats (and I would expect 100% over 16" wide!). 

In a related vein, a financial services company manages the flexible spending accounts for a number of big employers. Yet each employer sets the standards on how strict to be in examining the employee expenses submitted for reimbursement. Some restrictions are very severe, causing a significant but misplaced customer backlash against this financial services company that might be spilling over and damaging its consumer brand.

You work very hard to build and protect your brand. You work hard to create a great customer experience. Why would you let your customers ruin the brand and experience for the consumers?

The most effective customer executives and brand marketers take ownership of their brand and customer experience all the way through the value chain to the end consumers. Even though it may not be popular (as in the case of Airbus) consider defining minimum service and experience standards. Demonstrate wherever possible the longer-term benefits of customer loyalty and engagement over short-term profits. Or perhaps you can show your distribution channels how to deliver even greater value that far outweighs cost cutting; for example, by putting in power outlets in each row, as Alaska Airlines is doing. Personally, I’ll pay a lot extra for standard seats AND power for all my devices, especially now that the FAA has allowed all devices to remain on throughout the flight!

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Categories: Chief Customer Officer | Customer Centricity | Customer Insight

The New Silver Bullet for Growth and Customer Loyalty

Tuesday, October 22, 2013

If you want to grow your business while simultaneously increasing customer loyalty, the chief customer officer (CCO) might just be the silver bullet you are looking for. The CEO is uniquely responsible for shareholder return, the COO for cost-efficiency, the CFO for the company's financial well-being, the CMO for market awareness, and the EVP of Sales for quarterly revenue. One executive must be held accountable for not only the strength of customer relationships but especially customer value (i.e., the value of a customer to your company as well as your value to the customer). This customer champion must be able to properly weigh customer needs against revenue, cost, and other strategic business drivers. As well, the role of customer champion must be an executive-level position to effectively gain trust in customer and prospect organizations as well as drive change throughout many different divisions.

The chief customer officer, or other similarly titled executive, is uniquely capable of fulfilling this role and of helping your organization achieve the following five objectives:
 
Grow Revenue
By establishing customer value metrics, the CCO can identify the most valuable customers and help marketing and sales find more prospects just like them.
 
Increase Customer Profitability
As I've written elsewhere, not all customers or prospects are created equal. In one extreme case, researchers found that 20% of a manufacturing firm's customers generated 220% of profits. Fully 80% of customers were marginally profitable or even unprofitable! With a CCO's breadth of customer insight, companies can effectively segment customers according to customer value drivers.
 
Increase Customer Loyalty and Retention
Because of the CCO's regular interaction with customers, consistent "health measurements," and early warning mechanisms, this indispensable officer is uniquely capable of identifying customer dissatisfaction and potential for defection.
 
Develop Sustainable Competitive Advantage
In this age of hyper-competitiveness where any feature or service-based differentiator is easily duplicated, the only truly sustainable competitive advantage is in-depth customer understanding. Under the direction of the CCO, companies that make customer insight actionable and drive customer-centric change throughout the organization will be successful. 
 
Decrease Costs
The CCO, by virtue of his/her position and breadth of involvement with current customers and the marketplace, is uniquely positioned to determine levels of support and attention given to customers according to customer value metrics. As a result, decisions and priorities will more likely maximize customer value to the company.
 
Your company can reap multiple benefits by establishing the role of chief customer officer. You will be able to maximize the profitability of current and future customers; increase customer loyalty and retention, and ensure long-term success as you develop the in-depth insight into what customers need, want, and are willing to pay for. Incorporating the CCO function leads to longer and more profitable relationships with key customers, which in turn leads to achieving the ultimate goal of increased and more profitable revenues.

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