Co-author The Customer Catalyst
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How the customer is killing the CEO

The Customer Economy will lead to the demise of CEOs who continue to focus on short-term profit and traditional business models, as Chris Adlard explains. 

8th Jan 2020
Co-author The Customer Catalyst
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CEO killed by customer
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Following reports that companies are advertising on Facebook for users willing to post fake reviews, a recent Which? investigation revealed that popular comparison sites like TripAdvisor are plagued with reviews posted by hotels trying to boost their online ratings to drive bookings. These incidents emphasise not only the importance of customer reviews for businesses today, but also how dramatically the role of the customer has changed in the digital age. 

In a world of social media influencers and online reviews, customers have usurped the traditional salesforce, with their testimonies proving more persuasive for fellow customers than regular advertising or sales techniques. Wielding this considerable power, the individual customer has become more influential to businesses than traditional priorities such as shareholders and corporate structure, and CEOs are beginning to take notice.

In August 2019, The Business Roundtable, made up of CEOs from nearly 200 major US businesses including Apple, Amazon and Bank of America, issued a statement committing to a more customer-centric focus. In this statement, they redefined the ‘purpose of a corporation’ as investing in employees and delivering value to customers, rather than serving shareholders and maximising profit, underlining the new customer-centric direction in which the business world is moving.

Nowhere is this focus more evident than in US video conferencing firm Zoom, which has created a corporate culture centred entirely around the customer. The San Jose based tech company is constantly adapting its business model based on customer feedback. It uses systems designed to be intuitive and simple, and invests heavily in its Customer Success team to improve user experience and resolve issues. This approach hasn’t just boosted customer loyalty, with annual revenues in the last year of over US$330 million, it has had a positive impact on employees. Zoom’s CEO Eric Yuan has been named as the highest-rated CEO on employee review site Glassdoor, with an employee approval rating of 99%.

Zoom is not alone in reaping the benefits of adapting to the newfound power of the customer. Signify (formerly Phillips Lighting) recognised the influence of its customers, collaborating with them on the research, development and design of the Philips Hue Outdoor Light strip, a completely new smart lighting product, in 2018. This consumer lighting innovation proved a worthy investment, winning numerous design awards and garnering Signify its highest ever rating on Amazon. And this revolution is not isolated to the tech industry; even traditionally profit-focused sectors such as finance are reinventing themselves to prioritise the customer.

Starling Bank set itself apart from traditional retail banks with an innovative, digital platform which provided an intuitive customer journey, based on their actual usage. This approach proved to be highly effective, with Starling Bank gaining just under a million customers within three years and being voted Best British Bank by the public at the British Bank Awards in 2018 and 2019.

Clearly a customer-centric approach not only benefits the user; it also allows businesses to thrive. Recently, Forbes reported that customer-led companies which had invested heavily in improving and simplifying​ their customer experience outperformed those who had not. Those investing in the Dow Jones Index during the 10-year period from 2009 ​to 2018, would have seen their portfolio increase by 184%, those investing in the S&P would have experienced an increase of 207%. In contrast, if you had invested in the 10 companies ranked in Siegel+Gale’s​ World’s Simplest Brands report, you would have outperformed​ the average of the major indexes by a staggering 679%. Putting the customer first is no longer just a PR exercise; it makes business sense and drives profitable growth.

But if the benefits of prioritising the customer are so clear, why are all companies not following the example of Zoom?

The current make-up of many corporate organisations represents an obstacle for growth. According to the Global Accounting Network in 2018, 51% of the FTSE 100 CEOs had a background in finance, meaning that many leaders have limited exposure to existing and prospective customers, focusing instead on the finances of the business.

This theory is supported further by Peter Cheese, CEO of global professional body The Chartered Institute of Personnel and Development (CIPD), who argues that “Part of the problem is that too many businesses have lost sight of their purpose and their customers with a singular focus on financial outcomes and the financial stakeholder. Understanding all of the organisation’s stakeholders is critical, and in particular, the employees who ultimately are responsible for delivery of the value to customers.”

We have seen many companies struggle to prioritise customer experience and suffer for it. Thomas Cook and HMV are recent examples of businesses not understanding customer journeys, ignoring customer expectations when it comes to service and products, and finding themselves shunned for it. Even John Lewis, famous for its positive customer experience, is falling behind on key areas of customer-centric growth strategy, particularly digital, which is becoming increasingly important as shoppers migrate online. When businesses ignore important areas of customer experience, growth falters and customers are more likely to go elsewhere.

How to benefit from the Customer Economy

In order to share in the benefits of the Customer Economy, businesses must genuinely understand the needs and expectations of the customer, and be willing to centre their organisations around them, with no areas off limits. Prioritising customers includes removing rigid departmental siloes in order for customer journeys to be made easier. This includes providing effective digital channels and creating business cultures that empower employees to assist customers directly without unnecessary complications.

Furthermore, this needs to be a real commitment, not just lip service, as customers will see through insincere pledges as soon as they are tested. This has been shown in recent months with the British Airways strikes, during which the company’s commitment to customer service was called into question as customers found themselves struggling to contact any helplines and being given misinformation about flights

Ultimately, it is up to individual businesses and their CEOs as to how they choose to ride the rising wave of customer influence. Those that think about their business from the customer experience and make real changes to how their organisations run are finding themselves reaping the rewards of the Customer Economy: improving customer experience and loyalty; and achieving sustainable growth as a result. Those CEOs keen to focus on short-term profit and stick to the traditional business models of a bygone age risk losing their customer base to more progressive, rival firms.

Consequently, there needs to be a C-change (with 'C' representing the customer) in which CEOs become customer-led and move away from the short-term, financially led goals which are not going to cut it in the Customer Economy. If not, those one-dimensional CEOs risk becoming obsolete, the latest victim of the customer revolution.

Replies (10)

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Sampson Lee, founder of Global CEM and creator of PIG Strategy
By Sampson Lee
09th Jan 2020 07:25

Hi Chris,

I agree with you that many CEOs are focused on short-term business result.

According to Forrester’s prediction (https://go.forrester.com/blogs/predictions-2020-customer-experience/), one in four CX pros will be fired in 2020 because they aren’t demonstrating business impact. The CEO is killing the CX pro.

What’s your advice to CX pros for saving their jobs?

Thanks (1)
Replying to Sampson Lee:
Chris Adlard
By Chris Adlard
09th Jan 2020 09:50

The role of Customer Experience pros may be questioned because their work is not obviously connected to the growth of the company. One approach could be to build a virtual team of customer-focused pros (including success, advocacy, tech, digital, health etc - we call out 10 disciplines in our C-change model), run a workshop with the combined customer-focused team and work out how the collective team efforts link to the business’ growth objectives. The resultant report should prove the ROI and critical impact on the bottom line and should be delivered to the CEO and executive team. If the CEOs rationale for CX staff reduction is that sales is the only answer to short and medium term growth, the collective efforts of customer-focused teams like this have not been properly recognised. If the CEO really wants to improve profitability, consider scaling back sales, not CX.

Thanks (1)
Sampson Lee, founder of Global CEM and creator of PIG Strategy
By Sampson Lee
09th Jan 2020 12:54

Chris,

Business drivers can be product features, product quality, pricing, advertising and promotions, etc.; they aren’t necessarily related to customer interactions.

For example, when your suggested combined customer-focused team discovered what drive business results is pricing or product, not service, then after they have presented the resultant report to management and let marketing to follow, most of the people in CX department would become redundant.

Can CX pros’ career be rescued when the business drivers are NOT about customer interactions?

Thanks (0)
Chris Adlard
By Chris Adlard
09th Jan 2020 13:14

We argue that, ultimately, all business decisions are becoming increasingly customer-led. Product decisions should be derived more and more by customer engagement and co-creation programmes. Every business decision in this, the customer economy, will increasingly rely less on traditional functional siloes, and more on cross-functional client-aligned teams.

Thanks (0)
Sampson Lee, founder of Global CEM and creator of PIG Strategy
By Sampson Lee
09th Jan 2020 13:52

Chris,

So, in order for a company to be customer-led – or being customer-centric – a CX transformation is needed.

Harley Manning, VP of Forrester Research, stated in his post “Why customer experience is coming under fire” (https://go.forrester.com/blogs/predictions-2019-customer-experience-come...), “CX transformations are massive, take years, and cost millions.”

Obviously, many companies can’t afford to take a CX transformation. Is customer-centricity merely for a minority of companies?

Thanks (0)
Replying to Sampson Lee:
Chris Adlard
By Chris Adlard
09th Jan 2020 14:02

I feel like your question is beyond rhetorical! :-) But to labour the point in the spirit of vocalising our agreement: The world's best and most financially successful companies are truly customer centric and embody everything we advocate in the Customer Catalyst - across the entire 10-part C-change growth engine. Examples include Zoom, Amazon and Starling Bank. Other companies exhibit some brilliant customer-centric leadership in few of the C-change areas - examples include Ritz Carlton, Virgin Media, Advanced, Finastra, Signify etc. Right now, this is the few not the many. In short, successful companies today are truly customer-centric. Unsuccessful today may be successful now, but probably not in medium-term. We're now in the Customer Economy - its that simple! :-)

Thanks (0)
Sampson Lee, founder of Global CEM and creator of PIG Strategy
By Sampson Lee
09th Jan 2020 14:13

Chris,

Beyond Amazon, Apple, Southwest Airlines, Starbucks, Virgin Atlantic and Zappos are the most frequently quoted legendary brands in customer-centricity, and they have one thing in common: either their founders are customer-obsessed or they have built a customer-centered culture since they were startups.

Despite the discipline of customer-centricity being extensively promoted and practiced for decades, how many companies – who weren’t born with a ‘customer-obsessed’ gene – have successfully changed their DNA and developed into well-recognized customer-driven brands? You probably won’t be able to quote more than a few names.

Really, it shouldn’t take much to realize that transforming the mindsets and behaviors of people and entire value chain of a well-established organization to be customer-centric is unbelievably hard! :-)

Thanks (0)
Replying to Sampson Lee:
Chris Adlard
By Chris Adlard
09th Jan 2020 14:29

Agreed... it is hard. But check out the case studies in the Customer Catalyst. Many of them are examples of just this! It can and HAS to be done - for survival and growth. Advanced software in the UK is a brilliant example of that

Thanks (0)
Sampson Lee, founder of Global CEM and creator of PIG Strategy
By Sampson Lee
11th Jan 2020 04:32

Chris,

But it shouldn’t be that hard.

In my biased view, the belief “it always take a CX transformation to become customer-centric” is fallacious. Because customer-centricity is obsessed with customer success, for all companies and drives repeat customers.

1) It’s Obsessed with Customer Success

Joseph Michelli, chief experience officer of The Michelli Experience, “Customer-centricity is a commitment or a strategy to assure the success of your customer.”

Michelli’s definition may not be the perfect or ultimate one, but it’s much closer to its original intention – creating values for customers/helping customers achieve their desirable goals – than the most common definition “putting the customer at the center of everything you do”.

Though none of the CX experts would admit, most of them interpret customer obsession as “obsessed with customer interactions”. It’s just plain wrong.

2) It’s For All Companies

It’s a strong belief that companies have to take a CX transformation in order to be customer-centric.

This “Serve Customers Better” approach generally includes (the terminologies might differ, but their meanings are similar): culture transformation, emotional engagement, employee engagement, and service improvements.

Customers have different needs/wants – e.g. inexpensive prices, prestige feeling, great products – not only being well-served. It makes NO sense to take a CX transformation – to bear its huge manpower, time and financial costs – if your companies aren’t service-focused.

Every company, no matter big or small, whatever your focus (pricing, product or service), can be customer-centric as far as they help customers achieve their desirable goals. It’s not merely for a minority of companies.

3) It Drives Repeat Customers

CX pros have long been criticized for failing to achieve business results. But they are innocent.

CX pros believe that what they are doing is driving business results. Industry experts and authorities keep on telling them “improving customer experience will improve business results”.

It’s untrue. Because when customer experience is always referred as customer interactions, improving customer interactions may create “happy customers”, but not necessarily repeat customers.

On the contrary, when you help your customers obtain their objectives, it drives acquisition (first-time purchase) and retention (repeat purchase).

Personally, I truly appreciate the original noble idea of customer-centricity (obsessed with customer value) and admire the passion of customer-centric enthusiasts, and I strongly believe “obsessed with customer success” is a better option than “obsessed with customer interactions” in driving CX success and transforming more companies to be customer-centric.

Your thoughts?

Thanks (0)
Gangadhar Krishna customer service delightingcustomers.com
By Gangadhar Krishna
19th Jan 2020 08:08

A very good article and quite true with CX gaining traction.
However, I noticed in some parts of the world which has transit employment-population it is quite different. Here competitive price, discounts, sales and freebies are priority over customer experience. The CEO is posted for a short period of three years and given the time he has to show results. He has to increase sales. And he does it by enamoring the gullible customer who accumulates freebies he never wanted or landing up with a great deal but poor after-sales service. In such scenarios, CX takes a backseat.
Heart of hearts the CEO is convinced the customer runs the business, but he does not have the time to wait for that to happen. Because quick gains and move on becomes the order of the day.

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