It's not who you think.
Things have come a long way since Fader introduced his Customer Centricity model in 2011. Spurring an industry mindset shift from product-first to customer-first, today there is universal acceptance of the customer being central to organizational growth. However, if we all agree, the mandate now is to move beyond a theoretical model to a structured way of delivering on customer centricity.
Most organizations acknowledge the reciprocal relationship between corporations and customers, yet many have not mastered how to put this into practice. Today’s sentiment leans toward “everyone owning the customer experience.” While well-meaning, this belief can lead to inaction and poor decision making. Without the internal discipline and leadership necessary to advocate for all customers, we run the risk of exploiting our highest-value customers—the industry’s parallel to the theory the “tragedy of the commons.”
Without a leader, organizations run the risk of fostering the tragedy of the commons.
It takes a strong internal champion to lead this charge – and organizations are just beginning to recognize this. While the Chief Customer Officer role is rapidly growing in importance, only 39% of companies either have one or more senior-level executives leading the charge on customer experience or have a similar “customer-first” mandate.
And while the role of the CCO is not fully defined from organization to organization, the immediate priorities of a Chief Customer Officer are three-fold:
Navigating cultural shifts
Fulfilling on a customer-centric vision requires a transformational change in how organizations operate and measure success. Beyond being a staunch advocate for the customer’s perspective, a customer experience change agent will have an intuitive sense of existing relationships amid once-disparate teams. This leader will form the initial connective tissue required to foster conversations between cross-functional teams; empower frontline employees to act on customer knowledge; and translate the vision of leadership. Ultimately, this will create an ecosystem to rally employees and open internal pathways to execute on this vision.
Balancing the internal and external
Customer-centered efforts often stall due to organizational barriers–not for lack of customer understanding. This finding is continually evidenced by customer experience, marketing, and insights leaders who have participated in our Decision Intelligence|Customer Experience (DICE) assessment. To ensure internal alignment on a customer-centric vision, leadership means taking stock of measures of internal employee engagement to identify gaps in the employee experience. Many times, these have a downstream effect on customers. While seemingly counterintuitive, investing in internal systems is a clear indicator of succeeding with customers externally.
Prioritizing long-term growth
All too often, organizations are nearsighted when assessing gains. This phenomenon is not unique to customer experience, yet it is particularly problematic. A dedicated leader must not only articulate the long-term plan, but also put in place short-term metrics to demonstrate wins along the way. Customer-centered growth is a long game that begs a champion in the face of skepticism, doubt, and short-term thinking. This requires fortitude and discipline to stay the course amid pushes from stakeholders – from sales and marketing to strategy and operations.
Quantifying the customer’s experience
Returning to the foundational aspect of Fader’s model, if we view customer-centricity through the lens of profitability, we run the risk of overlooking so-called ‘low’ and ‘mid-value’ customers. After all, we know that when organizations treat their customers well, they spend more, statistically speaking. After controlling for other factors that drive repeat purchases in transaction-based businesses, HBR contributor Peter Kriss cited that customers who had the best past experiences spent 140% more compared to those who had the poorest past experiences. Likewise, subscription-based business’ customers with similar poor experiences had only a 43% chance of renewal one year later. The research further showed that when organizations systematically resolve the source of poor customer experiences, they reduce their costs to serve them.
Simply put, customer experience is a significant driver of future revenue and cost reduction. And, that’s why customer centricity deserves to have an owner. It simply is too risky for it not to.
So, who is worthy of the role? The right leader won’t allow for short-sightedness, keeping all customers front and center, regardless of their financial worth today.
Ultimately, this transformation requires a leader not only to guide others to be customer-focused, but to build a customer-centric ecosystem. With this structure in place, an organization won’t allow for customer hierarchy. A strong champion will ensure that employees are cultivating a mutually valuable relationship with all customers—building up the customer base, not exploiting it for profitability. Lack of leadership results in lack of ownership, and the economics of the “tragedy of the commons” will impede individuals and teams from uniting under a common vision. When this vision is realized, responsibility transforms into purpose, and a leader is ultimately accountable for cultivating this purpose among every employee—and for every customer.
Sarah Tarraf is Director, Customer Experience & Analytics, Gongos, Inc.
About Sarah Tarraf
Sarah Tarraf has worked in research and analytics for over a decade, in both a market research and academic capacity. Since joining Gongos in 2010, Sarah has led the Analytics & Marketing Sciences group, while acting as Statistical Analyst and Statistical Consultant to clients. Today she leads the company’s Customer Experience practice, devising functional strategies that link to the entire ecosystem of customer insights. Sarah is particularly interested in leveraging methodologies and the intersection of technology and analytics to harmonize the ‘what’ that is happening on the ground with the ‘why’ that is impacting experience.