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Highlights of the 2009 CCO Study

Wednesday, February 03, 2010

Nearly 6 years ago when I first began to study the relatively unknown role of Chief Customer Officer (CCO), I found fewer than 20 in the world and I spent time with half of them, including Marissa Peterson of Sun Microsystems, Doug Allred of Cisco, and Jeff Lewis of Monster.com. The insights these luminaries shared were incredible, and were included in the Predictive Consulting Group Executive-Level Customer Champions Report I published through 2006.

Fast-forward to today: there are now over 200 officially-titled Chief Customer Officers in the world, and hundreds more with similar titles, and I’ve worked with or interviewed nearly 30% of them. The role is evolving dramatically and spectacularly, with some particularly impressive results. Companies as large as Oracle, Cisco, SAP have Chief Customer Officers as do many mid- and small-cap companies. For these companies, the CCO role is crucial to establishing and executing an effective customer strategy. CEOs of companies large and small are recognizing that customers are truly their most valuable asset and are exploring the possibility of appointing a Chief Customer Officer to help nurture and grow this asset.

Here are some of the fascinating highlights from CCOs around the world:

  • The CCO role is growing in popularity at an increasing rate, particularly in the mid-cap market. It is surprising to see how many CCOs there are in the industry today.
  • CCOs are becoming more generalized: The demarcation between the three types of CCOs that I identified in my 2005 Business Strategy article (http://predictiveconsulting.com/articles/HBS-2005-Hottest-New-Title2.html) is blurring. Many CCOs are no longer focusing solely on customer satisfaction and retention, and are beginning to focus on leveraging customer insight to drive the customer acquisition activities as well.

While the reasons are varied, CEOs hire a CCO for one of three primary reasons:

  • Address unresolved customer crises: They are experiencing unresolved customer crises that they have not been successful in fixing on their own, such as extremely dissatisfied customers due to chronic product issues, customer lawsuits arising from unmet expectations, etc. larger companies tend to fall in this group.
  • Create Competitive Advantage: In small- and mid-cap companies, CEOs recognize that they need to differentiate themselves from their (sometimes larger) competitors and appoint a CCO to prove to their customers and prospects that they are singularly committed to customer success. Many a deal has been inked after a visit from the Chief Customer Officer.
  • Retain existing customers: Customers were defecting, revenues were plummeting. The Chief Customer Officer was able to provide operational stability by focusing on retaining customers to protect revenue.
  • Big differences between CCOs in small vs. larger companies: CCOs in small- to mid-cap companies typically have line ownership of customer-facing functions including marketing, sales, support, and professional services, whereas those in larger companies have vast matrix authority and limited line ownership.
  • Interestingly, numerous CCOs were hired by a newly-appointed CEO that had come from a highly customer-centric company. These CEOs wanted a partner to change culture and help them reach their growth goals.
  • An increasing number of CCOs have a sales or technology background: When I first began this research I was adamant that someone from sales or IT had no place in the CCO role. I’m pleased to find that I’ve been proven wrong! There are a number of CCOs that have come up through the sales organizations and are being very successful. Charlie Isaacs of Kana is also the company’s CTO and is unique in his ability to advocate for the customer with his in-depth understanding of their technology needs.
  • There is a proliferation of Executive Advisory Councils and Customer Advisory boards: Some companies have numerous executive councils and hundreds of customer advisory boards. The challenge for some companies remains in ensuring that the advisory boards are more than focus groups and provide significant input to the overall strategy.
  • One finding that surprised me was the number of public utilities that have a CCO, including PG&E, Arizona Public Service, 407ETR in Canada, and others. In a later blog article I’ll talk about the reasons why a near-monopoly would want to embark on such a journey.
  • The vast majority of CCOs are tied in some fashion to either the creation or preservation of revenue. When I first started the research six years ago, many CCOs were embroiled in a battle with their Utopia and reality. They quickly realized that focusing on the customers simply because it is the right thing to do cannot survive an economic downturn. Thankfully, most of the CCOs I’ve worked with recently are tied to revenue and therefore more immune to cuts than before.
  • A number of similar titles are cropping up that aren’t truly meaningful, like Chief Experience Officer, Customer Satisfaction Officer. These job functions are subsets of the Chief Customer Officer and focus too much attention on customer satisfaction/retention and not enough on the overall customer strategy.

There are many, many more insights yet to come, so stay tuned for future updates!

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