Your "Chief Customer Officer"
Why this New Role in Your Company is Indispensable
by Curtis N. Bingham

Customer Services may learn one thing from a customer during the course of its daily interactions, your marketing department may pick up another. Yet another tidbit may be gleaned by your sales force during a sales call. Individually, all these tidbits may be meaningless but together they could spell significant opportunities.

Who is responsible at your firm for developing this kind of across-the-board insight that leads to new opportunities, new markets, and increased profits? Unfortunately, usually it is nobody's job. While most executives, managers and employees truly have the customer's interest at heart, they either don't have time or the clarity of focus to develop this insight. Nor will they typically possess the organizational clout to reach across and into divisional silos to effect change based on customer insight. In addition, C-Suite and board members too often get preoccupied with customer acquisition and cost reductions, leaving the gleaning of "customer insights" to the back-burner, rarely or never to be picked up again.

In my research of companies such as Sun Microsystems, Cisco, Hewlett-Packard, Unica, Monster.Com, Fidelity and others, I have found that the only way to guarantee increased revenues, as well as stronger, longer and more profitable customer relationships, is to establish executive level accountability for organization-wide customer insight by creating the Chief Customer Officer (CCO) role. Only through such a role will companies be able to a) adequately gather customer insight, b) make it actionable and c) deliver products and services that are guaranteed to succeed in the marketplace.

What is a Chief Customer Officer?

A Chief Customer Officer (CCO) is an executive-level customer advocate, uniquely accountable for maintaining and enhancing the strength of the customer base as an asset. Unlike other executives, this officer will embrace a broad view of the customer base, the marketplace, and future trends, using this view to drive both corporate strategy and organizational changes and initiatives, so critically necessary for profitably servicing customers and adapting to the marketplace.

In general, CCOs have four primary goals:

  1. To increase revenue: The CCO can help identify opportunities to secure new customers and a larger share of the customer wallet.

  2. To inject customer balance into executive decision making: CCOs can and must counter the C-Suite's and the Board's traditional focus on revenue growth and cost containment, two activities that frequently result in damaged customer relationships and diminished long term results.

  3. To View and manage customer relationships as valuable assets: Customer relationships must be managed as carefully as other assets when attempting to control costs and maximize effectiveness.

  4. To proactively gather customer insight and drive organization-wide change: A CCO will constantly be gathering objective knowledge on the needs of the firm's customers, prospects and the marketplace, using it to drive organizational change and initiatives, often cutting across departmental or functional boundaries.

What are the primary functions of the CCO? There are three:

  1. Service Revenue Driver: Focuses on increasing services and maintaining revenues by caring for the percentage of total revenue derived directly from existing customer relationships. The CCO reports to the CEO but usually has primary line management responsibilities for such service departments as customer service, technical support, field application engineering and consulting services.

  2. Generalist CCO: Instead of being tied solely to existing customers, CCOs are responsible to existing customers as well as developing new markets, customers, prospects and organizational divisions. They are also responsible for market sensing, customer segmentation, aiding marketing & sales, and managing and protecting existing customer relationships, while influencing service and maintaining renewal revenue.

  3. Champion by Committee. Customer advocacy committees are comprised of various "C" levels or VPs across product lines and share the responsibility of the aforementioned CCO types.

The choice of which CCO model to deploy in your company depends upon corporate goals, the maturity of the company and the size of the installed customer base. Stereotypically, younger companies focusing on new customer acquisition with a small installed customer base may be better suited to the Generalist, whereas companies with a larger installed base and whose primary focus is in servicing customers and maximizing existing customer profitability may be best suited to a Service Revenue Driver. Other companies with a very strong and pervasive customer centric culture that, for whatever reason, are not ready to create an executive level position may be able to leverage the Champion by Committee model.

What can the CCO do that no one else can?

There are many issues and challenges that an organization faces which a CCO can help resolve more effectively than other executives in the organization:

  1. Ensure a balanced focus on both customer acquisition and customer retention. It is clear that to grow, a company must actively strive to retain customers and maximize profitability. As well, it must continuously seek to identify who their best customers are and find more like them. The CCO is in a unique position to have this broad insight into both the existing customer and the most desirable new customers and prospects. The CCO can serve as a balance for marketing and sales strategies so that new customers are not acquired at the expense of existing customers.

  2. Help set priorities and settle disputes, armed with real customer and marketplace data. Let's face it, some people in the firm will have their pet projects while others feel very strongly that their product ideas, service directions or individual goals take priority. The CCO, by virtue of position and breadth of involvement with current customers and the marketplace, is uniquely positioned to settle these disputes and set priorities. As a result, decisions and priorities will more likely maximize customer value to the company, thus best leveraging a company's scarce resources.

  3. Create and manage a holistic set of customer value metrics. Companies must always be on the lookout to determine which customers are most valuable and thereby deserve the greatest attention and service. With a CCO's breadth of customer insight, he/she can create "customer value metrics" and help prioritize scarce resources. This insures that the firm's most valuable customers are profitably nurtured.

  4. Identify potential customer defections. Because of the CCO's (a) regular interaction with customers, (b) consistent "health measurements," and (c) early warning mechanisms, this indispensable officer is uniquely capable of identifying customer dissatisfaction and potential for defection. Once so identified, the CCO helps the organization fix these problems and make certain they never happen again.

  5. Develop a clear, consistent view of customer's needs. Customers buy for one reason and one reason only: to satisfy a need, or, in other words, to make a problem go away. Therefore, the CCO must develop a clear and consistent view of customers' needs that will drive product development, marketing, sales, and service strategies.

  6. Aid the organization in becoming customer-focused. The larger the company, the more separated its employees tend to become from its end user customers. In many cases, they may lose the vision of what impact, positive or negative, their daily activities are having on customers. A CCO can bring customers in for customer visits, share customer success stories, and communicate customer pain points with individuals throughout the company. This will enable employees to retain their focus when endeavoring to deliver actionable, meaningful products and services to real customers.

When you think about it, there are quite a number of benefits reaped by establishing a Chief Customer Officer function in your company. By doing so, you will be able to increase the strength and size of your customer base asset and more profitably service existing customers. In addition, you will grow your business by making your existing customers satisfied even as you explore new markets and customers without sacrificing your existing base.


Curtis N. Bingham, President of The Predictive Consulting Group, helps companies create and measure the CCO role to help companies grow without sacrificing their core base as they glean customer & marketplace insight, make it actionable, and drive change throughout the organization. Curtis can be reached at cnbingham@predictiveconsulting.com or by visiting www.predictiveconsulting.com .

Many more articles in Customer Service in The CEO Refresher Archives

   


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