Posted by Paul Hagen on January 20, 2012
I recently updated our research on enterprisewide customer experience leaders, who we refer to as “chief customer officers” or CCOs. While they often don’t have that exact title, we identified around 600 individuals who carry a mandate to improve the end-to-end customer experience at their company. We did some deeper research on close to 200 of them in order to understand the general profile of these people as well as how their positions are structured within their companies.
Forrester has witnessed a marked increase in the position over the past six years. And for good reason: Competitive forces are shifting dramatically in what we call the “age of the customer” (from Forrester report "Why Customer Experience? Why Now?"). Firms struggle to compete on product innovation alone, as global outsourcing and cloud-based computing lower barriers to entry and create scores of substitutes. Customer power has grown, as 73% of firms trust recommendations from friends and family, while only 19% trust direct mail (from Forrester report "Consumer "Ad-itudes" Stay Strong"). Firms have turned to customer experience as a way to differentiate in this commoditized world, which has led to the surge in CCOs. In my new report, I profiled key characteristics of CCOs as well as models for the kinds of organizations they oversee.
At the same time, as high-profile firms like Fidelity, The Washington Post, and General Motors have put in place senior customer experience leaders over the past year or so, I’ve been struck by the wide assortment of reasons that firms use to rationalize NOT putting a chief customer officer in place.
First off, let me say that there are some reasonable rationales for companies choosing to forgo the appointment of a CCO. Among those reasons include: 1) They have some more work to do culturally to put this kind of position in place; 2) their CEO does not have the capacity to handle another report at this time; and 3) major change programs have typically worked better through federated structures rather than a top-down approach.
However, more often than not, I hear reasons that I would classify as putting your head in the sand.
Bad reason No. 1: Customer experience is everyone’s job, so we don’t need a CCO. Yes, it is everyone’s job to help deliver great customer experiences. The problem is the way companies are structured operationally makes it very easy for the customer experience to fall through the cracks between departments, despite each employee’s desire to do right by customers. In fact, often the success measures of different departments or business units can conspire to undermine the customer experience. Take, for example, financial institutions with different business lines for retail banking, insurance, credit cards, and wealth management. When each of those units is conducting its own marketing programs, investing in its own technology, and running its own contact centers, each may be very customer-focused, and yet the customer experience crossing those business lines remains completely disjointed. Without someone taking accountability for the customer experience and breaking down these silos, saying it is everyone’s business will result in business-as-usual.
Bad reason No. 2: Customer experience isn’t relevant to our company. This is a reason I hear most often from B2B companies that argue that purchasing decisions are made for a complex set of reasons other than customer experience or that, because of the relatively low number of accounts, they already provide a personalized experience through account management teams. The bottom line is that every company delivers an experience to its clients . . . intentionally or happenstance. If word of mouth is at all important to your company, then so is customer experience.
Bad reason No. 3: Ultimately our CEO is accountable for customer experience. Yes, that’s true. But, he or she is also responsible for the company’s financials, so should you not have a CFO. And, he or she is responsible for operations, so should you not have a COO. Every firm needs a chief advocate for the customer — someone who can bring decades-old user-centered design methodologies to bear throughout the company. Clearly, some firms deliver great customer experiences with a customer-obsessed CEO — such as Southwest Airlines, Costco, Apple, and Salesforce.com. But more often than not, these firms started with strong leaders who embedded this mindset into the DNA of the culture from the onset . . . they’re not trying to change an operational model midstream. For others, be careful of this reason.
I recognize that appointing a CCO can be a major shift and is potentially very disruptive within an organization. To alleviate growing pains, firms considering a CCO should establish three preconditions for success:
- Strategic mandate. Because CCOs need to create organizationwide change, executive management teams need to uniformly understand and support their efforts. This means that the executive team must have clearly defined the purpose for appointing a CCO, built customer experience into the company strategy, and adopted companywide customer experience metrics that correlate with key business performance outcomes.
- Cultural maturity. Customer experience teams typically build internal momentum that sets the stage for the CCO’s arrival. A portfolio of customer experience projects, engaged employees, and deep involvement by the human resources (HR) department signal that the firm is ready to appoint a customer experience executive.
- Viable position. To succeed, companies need to give a CCO the clout and tools to transform the way a company operates. To do this, firms need to create a position that has: power, operational linkage, and budget influence.
Related Forrester Research
- The Rise Of The Chief Customer Officer
- Conversations With Chief Customer Officers: USAA's Wayne Peacock
- Chief Customer Officer Playbook: Priorities For The First 90 Days
- Conversations With Chief Customer Officers: KeyBank's Trina Evans
- Conversations With Chief Customer Officers: Rosetta Stone's Jay Topper