Walking the Walk When Putting Customers First
Some of the Savviest Businesses are adding a new Customer Experience Function to their Organizations…. Should Yours Be Next?
As the digital revolution continues its relentless transformation of our lives, every business has had to adjust, or risk watching their business models implode. Digital tools and lifestyles offer consumers and businesses an explosion of choices. But many companies also struggle to properly deliver on their brand promises as the number of customer touchpoints increases.
Amid all this disruption, companies often reflexively return to a focus on the customer as the starting point of their marketing efforts. While every company talks about putting the customer first, fewer take the necessary steps to really understand their customers’ buying journeys and how they might improve the overall customer experience with their brand.
For some of the savvier organizations, that has led to the rise of management roles variously called customer experience managers, directors or officers.
At Torch Group, we’ve recently had success in helping a large global F500 industrial manufacturing client–in fact, one of our oldest clients–find, recruit and hire such a professional to supplement its management team. We expect it will not be our last such engagement.
While some are C-level professionals, in many companies these roles are structured at a vice president or director level. It requires a wide range of skills. The individual must be comfortable with numbers, familiar with analytic tools and of course fluent in the language and methodologies of marketing and business strategy. But most crucial of all, they must know how to marshal all this data to make solid strategic suggestions to the management team.
Not Entirely New
This management role isn’t an entirely new phenomenon. At least a dozen years ago, a handful of pioneering organizations were hiring such professionals. The JWT ad agency in New York, part of the giant global WPP agency, hired a chief experience officer in 2006, declaring that it wanted to look at advertising “from the customer back in.”
Some of that early interest in such a position was perhaps touched off by a 2004 report from the influential trend-watching firm Forrester Research, which highlighted the fact that only about one in four companies had a person in charge of the customer experience, at a time when finicky customers had an increasing number of choices.
But with the rise of Big Data, cheaper cloud computing power, along with other emerging tools to better sift and analyze those mountains of data and to better tailor the customer experience, the trend has grown significantly in recent years. According to the Chief Customer Officer (CCO) Council, a trade group, 10 percent of Fortune 500 companies now have such a management role, and 20% of Fortune 100 firms do. Those numbers will continue to increase.
The council also notes that it can be challenging to prove a definitive return on investment from the customer experience role. Thus, it suggests that companies adding such a management role should create a “dashboard” with metrics that actually measure an organization’s customer-centricity and customer engagement, so as to better prove the value of such a manager.
The Amazon Effect
It is not hard to discern the Amazon effect in some of these hires. The online giant is famous for its ruthless focus on customers, and its enormous success has no doubt influenced many companies to follow suit. Last year, for instance, Amazon’s archrival Walmart added a chief customer officer to its C-level suite, saying it was intent on “keeping the customer at the center” of all its operations.
Many other companies have done the same. Mastercard recently added its first chief experience officer, as did the upscale retailer Neiman Marcus. Carnival Cruise Line has a chief experience and innovation officer. Discount airline Jet Blue has a vice president of inflight experience. Among the industries the Chief Customer Officer Council cites as more prone to have such management roles are software, technology, healthcare, insurance and public utilities.
The 2010 changes in federal healthcare policy, popularly known as Obamacare, have been especially catalytic in stimulating interest in this role. The law significantly changed incentives for healthcare providers from mere care inputs to actual patient health. For the first time, hospitals, doctors and other providers are now being compensated by the quality of their patient outcomes, not just the quantity of healthcare services rendered by them. That greatly boosted hospitals’ interest in gathering insight about the quality and efficacy of their care, and even touched off a movement around patient experience.
Between following Amazon—among the most admired but also most feared companies in America—and the fundamental change in incentives in healthcare, which represents about one-seventh of the U.S. economy, these changes have trickled down through the rest of the economy.
The importance of this role is also driven by an age-old truism of business: that it is far less costly to retain existing clients than it is to acquire new ones. Research conducted by the consulting firm Bain & Company, for instance, showed that in the financial services industry, a 5 percent increase in customer retention led to a 25 percent bump in profits. “Return customers tend to buy more from a company over time. As they do, your operating costs to serve them decline. What’s more, return customers refer others to your company,” wrote author Fred Reichheld. “And they’ll often pay a premium to continue to do business with you rather than switch to a competitor with whom they’re neither familiar nor comfortable.”
The Czar Syndrome
Some have noted that by elevating the central importance of the customer in this way, naming a chief customer officer represents the same kind of management tactic a president might employ in appointing a cabinet-level “czar” for various key troubleshooting roles, like cybersecurity or AIDS policy. It is a tangible signal from the top about the fundamental importance of that topic to the entire organization, a way to concentrate attention and resources on solving a particularly central challenge, and to vest accountability in a single person.
But there is no one right way for companies to pursue this path.
A look at the prominent job site Indeed.com shows how many forms this position can take. If you enter “customer experience director” in the jobs database, you will find a range of job titles. They include chief marketplace officer, director of customer insight and vice president of customer success. The State of New York is even searching for a chief experience officer, to oversee its healthcare delivery.
In many organizations, the role reports to the chief marketing officer. In some organizations, such as The Ohio State University, the customer experience officer reports to the chief information officer. That’s also the case in such successful data-centric companies as Facebook, Google and Airbnb. In others, it’s a C-level position reporting only to the CEO.
After helping to initially introduce this notion of customer experience officers to the wider business audience a decade and a half ago, the Gartner organization has since helped to cement this niche into wider popularity. Among the research group’s strategic advice of late:
- Rather than focus on delighting customers and exceeding their expectations, companies would be far better off making their customer experience consistent, and effortless for the customer.
- Instead of always striving to construct a unique customer experience strateg/y from the ground up, study what has already worked in your industry, and consider the possible benefits of imitating others’ innovations.
- Rather than simply studying customer data and trying to make correlations to drive higher spending, examine the various needs that arise during customers’ lives, and consider how to better meet those needs.’
In the end, Gartner says, those who will come out on top in these initiatives will “clearly focus on customer emotions and not just the numbers.”
We have seen over and over in our search work that the velocity of change in marketing–its rapid digital and analytical transformation and the increasing number of touchpoints customers now have to experience a brand–are forcing companies to go outside their four walls to find the appropriate talent. That is true for chief marketing officers, and perhaps even truer for the emerging field of customer experience.
The good news is that as the tools and methodologies of these niches increasingly converge, it is perhaps far less important than it once might have been to have experience in a particular industry or economic sector. Experience leading digital transformations is often widely applicable, across many industry sectors and types of businesses.
The aforementioned CCO Council survey reveals that one offshoot of increasing corporate respect for this position is the higher incidence of upward mobility among its practitioners. “In earlier days, the CCO role was a terminal position. Most CCOs retired from their jobs…For the first time, however, CCOs are experiencing upward mobility, receiving promotions to COOs, presidents of business units, and even CEOs.”
In the end, if your organization is not looking to boost its management fitness in this area, your competitors soon will, or perhaps already have. Can you really afford to hesitate?
- Posted by Stuart Glassman
- On February 13, 2019
- 0 Comments