Super-powered CEM: Does your company need a chief customer officer?

29th Sep 2011

Forrester's Harley Manning addresses six questions you need to ask yourself about the increasingly popular role of chief customer officer.

There’s a new breed of executive walking the halls of power in a growing number of the world’s leading companies – and according to experts it’s only a matter of time before you start to consider this job role for your own organisation.
In recent years, Forrester Research has been one of several observers to note the proliferation of the role of chief customer officer (CCO) – a single executive that spearheads customer experience efforts across either a business unit or the entire organisation.
Businesses as diverse as Oracle, USAA and Dunkin’ Brands have all recently implemented a CCO, with the mandate to design, orchestrate and improve customer experiences across every customer touchpoint. And there are no signs of the trend slowing down.
“It’s the classic tipping point situation in that the role of the chief customer officer has been around for at least 10 years, but all of a sudden we’re seeing more of them,” explains Harley Manning, VP, research director at Forrester. “In fact, we saw the number of them almost double between 2009 and 2010.”

Why is it becoming more popular?

It’s no coincidence that CCO’s gathered pace during the recent downturn. With common ways of doing business falling flat and trying to be the lowest cost provider an unsustainable model for most firms, companies were looking to find a competitive advantage. Customer experience management (CEM) has emerged as a popular focus for those looking for such an advantage – Forrester suggests that the overwhelming reason given for embracing CEM is to gain a competitive advantage and differentiate. Therefore, giving an executive the power to coordinate customer experience efforts across the organisation seems like a logical progression for those organisations.  
Nonetheless, even those businesses that have been buoyed by better-than-expected results have shown growing enthusiasm for a CCO role – financial services firm USAA had enjoyed one of its most successful performances the year it decided to implement a chief customer officer. While the ailing economy was the catalyst for installing a CCO for some firms, for most it appears that a chief customer officer is the natural evolution for those serious about customer experience management.
“In most cases, the decision to appoint chief customer officers mostly seems to do with a company having an effort to improve customer experience and getting to a certain point in their journey and realising that the efforts need to be coordinated and systematised if they are going to go beyond simple ad hoc initiatives,” explains Manning.
In conversation with CCOs, Manning says that specific motivations included wanting to “take a big leap forward and not just make incremental improvements” (USAA), demanding “a common vision about what a great customer experience was and working across different groups” (Boeing) and needing to “coordinate information that is coming in and what to do with it on a systematic basis” (KeyBank).

What do they do?

Research into the role of the CCO has revealed many commonalities in their duties relating to overseeing the customer experience strategy. At the core of this is putting key programmes in place to develop customer experience from a series of ad hoc practices to a systematic programme for improving it over time.  This can either take the form of creating systematised efforts, such as a design process that ensures everything starts with customer research before mapping the intended customer journey, or overseeing a portfolio of customer experience projects.
“It is very much hands-on,” says Manning. “They are addressing what we’re doing, when we’re going it, why we’re doing it. They will say let’s measure the results, let’s tune it, let’s get process in place for systematic improvement.”
And the other key role of the CCO is to be an evangelist for the customer experience within the organisation, with the aim of creating a culture that performs CEM practices as part of the standard operating procedure, with employees having an instinctive understanding of what makes a good customer experience.
“They spend a very significant percentage of their time meeting with people in the company and talking to them about what customer experience is, why it is important and specifically how it will improve business performance and what those employees can do to improve customer experience.,” continues Manning. “Ultimately, what these people are trying to do through the evangelisation and processes, is change the culture.”

How do they fit into the structure of the company?

While all CCOs are charged with these common goals, two different variations of the role have emerged: operational and advisory.
The operational archetype has marketing, sales, support and distribution channels reporting back to him/her, and has direct authority over employees. The advisory archetype, meanwhile, works on more of a ‘tiger team’ basis, where he/she works with heads of business units to implement, manage and measure results from customer experience management projects.
This CCO will have a much smaller team and budget but is presently more common than an operational CCO because it does not require a reorganisation of the company.

How is their performance measured?

The CCO’s performance is measured via a number of different metrics. Traditional business methods such as member growth, growth of the customer base and depth of customer relationships (i.e. how many products customers are buying) are deployed by some. Other common CEM metrics are also used, such as member satisfaction and advocacy, with Net Promoter popular amongst the companies that Forrester spoke to.
In the case of the operational CCOs, cost is also a very important metric. “What is interesting about this approach is that yes it has customer satisfaction measurements which people tend to associate with customer experience, but they have also got hard dollar and cents metrics, because what customer experience means to these companies is a business discipline - they are not doing it for humanitarian reasons, they are doing it because they feel it equates to business success,” says Manning. “And that’s how they have to look at it. If you show up trying to get a CEM project funded and you don’t have a cost and benefit model and then someone who is competing for the same funds can show that model, then they will get the funding instead of you.”

Does my company need one?

With most businesses yet to implement a chief customer officer, many will be asking themselves how they can tell whether they need one or not. But this isn’t the right question to ask, according to Manning.
“We believe that most companies can very much benefit from having a CCO - when they get to the point in their maturity that they are ready for one,” he explains. “There are very few exceptions. If you happen to be fortunate enough to work for a company like Zappos or Apple, then you have a visionary leader who really gets that customer experience is important and just sort of drives intuitive level decisions across your organisation that ultimately deliver a superior customer experience then you can probably get away without a CCO - right up until the point when that visionary leader leaves.
“But if you are at the vast majority of today’s companies, and you want to actually have customer experience maturity, which means you actually want to institutionalise customer experience practices so that a great customer experience isn’t an accident of who is in charge this year but is actually a part of your culture and goes on to be something which is going to be a standing advantage to your company over time… then at some point you probably want to appoint an executive in charge of overall customer experience - whether you call that person a CCO or not.”

Is my company ready for one?

But despite this ringing endorsement of a CCO installation, Manning does add that not all firms are ready for the role and that trying to shoehorn a chief customer officer into an organisation as an empty gesture will do more harm than good. But how do you know if you’re ready?
Firstly, you have to have a culture that is willing to accept a CCO. “If you have been ignoring your customers and you haven’t had any CEM programmes in place, and maybe don’t even have a voice of the customer programme to find out what customers thing of you, don’t think you can put a CCO in and he’s going to wave his magic wand and all of a sudden the company is going to transform into a customer-centric organisation. It is just not going to happen.”
But also, if your company is not willing to give the CCO a seat at the executive table and have him/her report to the CEO or COO, then your company is not ready for a CCO. If you are not willing to give them real authority such as the power to veto projects, then you are not ready. And if you are not willing to give them staff and funding to actually effect change, then you are not ready. 
“It doesn’t have to be an enormous amount of money if you go for this advisory structure instead of the operational role, but there needs to be a clear commitment by the organisation as evidenced by who that person reports to, or just decision making authority,” says Manning. “Otherwise they’ll come in and be doomed to failure and the company will decide well maybe customer experience isn’t that important and then it will do more harm than good.”
In a recent blog, customer experience expert Jeanne Bliss provided a checklist for businesses to determine if the time is right, and if you have the support required to make the role a success. It asked readers to consider the following questions:
  1. Is there someone in our company who clarifies what we are to accomplish with customers?
  2. Is there a clear process to drive alignment for what will be accomplished?
  3. Do we have a roadmap for the customer work and know where progress will be measured?
  4. Do clear metrics exist for measuring progress which everyone agrees to use?
  5. Is there real clarity of everyone’s roles and responsibilities?
  6. Do peoplereally participate and care about the customer work?
  7. Are appropriate resources allocated to make a real difference to customers?
  8. Is there an understandable process for people to work together?
  9. Is the work considered attainable?
  10. Does a process exists for marketing achievements to customers and internally?
  11. Is recognition and reward wired to motivate customer work?
But irrespective of the necessary cultural and strategic milestones needing to have been reached in order to successfully implement a CCO, Manning is convinced that the role will nevertheless continue to proliferate in the coming years, as more and more organisations come around to customer experience management – and the importance of a chief customer officer.
“It makes so much sense for companies to focus on improving their customer experience and it makes so much sense to then ultimately have a CCO that it seems amazing that companies haven’t already run out en masse and made that happen,” he concludes. “It is becoming increasingly clear to companies that there are real business benefits associated with improving customer experience and that one of the ways you can accelerate it is by appointing a CCO. But leaders lead and laggards lag and the mainstream tends to follow in the middle - and that is what we’re seeing right now. We are just starting to see the beginning of the adoption of customer experience as a business strategy by the 80% in the middle. “

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