How Much Time Should CEOs Spend with Customers?

10
1,135 views

Share on LinkedIn

A new study out from Harvard Business Review shows that the average CEO spends only 3% of their time with customers. (For those doing the math, that’s less than two hours a week.) Regardless of company size or industry – this seems extremely low. Even if the company has an executive with “customer success” in their title – all CEOs should be spending more than 3% of their time with customers.

CEOs set the tone and priorities for any company. If they’re not making time for customers, it’s hard to see other employees feeling empowered to do the same. The only way to understand customers is by spending time with them and deeply understanding the problems they want to solve and how these are evolving over time.

So, how much time should CEOs spend with customers?

Like most things, it really depends. There are no hard-and-fast rules, but here are a few principles some of the most successful CEOs I’ve worked with and admire live by:

1. If you’re a startup, spend at least 50% of your time with customers in your first year.

Think of it this way: the CEO should serve as the Chief Customer Officer until they hire someone for that specific role. The CEO of a startup wears many hats, but arguably the most important is understanding the buyer, product-market fit, and what it takes to get a customer successfully using the product and having a great experience. The only way to effectively do those things is to meet with customers and prospects (those companies with a problem that you are trying to solve).

For example, Sage Intacct is always looking to leverage technology as a competitive advantage, which means we often engage with early stage companies to evaluate technology. In these early stage companies, I Iook for a CEO that is actively involved in prospect and customer discussions. An engaged CEO will ask probing questions to truly understand our requirements and align them with not only with their current offering, but with their mid-long term vision and roadmap as well. If the CEO is not engaged with us at this level, we move on, as it’s a clear indicator they are not focused on truly understanding their customers. What’s more, if they aren’t engaged at this stage, the likelihood of them being engaged as they continue to grow is very low.

Commitment to customers doesn’t end with meeting with prospects and customers.

From the time you sell your first real customer, the CEO should be building a framework for customer success. That means spending a good portion of the remaining 50% of their time building a vision for how each company function plays a role in making their customers’ journeys nothing short of phenomenal. It might be just that – a vision – for awhile, but it’s essential to have a plan from the beginning that answers questions around what customers need to be successful and how to build for that within the organization. Even if the CEO isn’t in charge of rolling it out, they need to own that vision until they get to a scale to hire someone to lead the charge.

2. After the first year, continue to spend at least 25% of your time with customers and allocate more of that time to behind-the-scenes customer strategy.

As a company grows and proves its business model is sustainable, CEOs should continue to be deeply involved in all customer activities and strategies. I can tell you from personal experience that a hands-on CEO can make a huge difference to both new business acquisition and customer retention. At Sage Intacct, our CEO Rob Reid (now managing director, following our acquisition by Sage) has always been incredibly active both in our sales cycles and even more so in our customer success efforts. To this day, he continues to act as an executive sponsor with key customers and provides input into messaging, processes, and prioritization of resources to ensure that the success of our current customers remains our top priority.

For example, Rob participates in weekly customer success meetings designed to triage and rapidly resolve customer issues. He also spearheaded the development of a customer advisory board a few years ago, regularly listening in on customer feedback to ensure we are prioritizing investments that provide maximum value back to our customers. Additionally, since Sage Intacct has a multi-channel distribution model, Rob is equally engaged with our partner community to ensure that we are not only focused on driving customer success, but on our driving our partners’ success as well.

3. Find real ways to hold all employees accountable for successful customers.

Of course, CEOs are just one person. If you’re going to build a company that focuses on creating successful customers, everyone within the company must feel responsible for making that a reality. If the entire company isn’t invested in customer success from outset, it falls flat.

How do you actually do that?

I’ve seen it done successfully a few ways. Some companies take a tactical approach, such as holding their entire employee base accountable through a portion of their bonuses tied to key customer KPIs. At Sage Intacct, we’ve had a percentage of everyone’s bonus tied to our retention numbers and our Net Promoter Score (NPS) each year, which measures satisfaction levels of a company’s customer base. We believe everyone has a role to play in retaining and attracting customers, so, for us, it makes sense to tie compensation to it. We’ve found that it’s essential to our ability to consistently go above and beyond for customers – and that our employees really love it.

On a larger scale, I’ve also seen Amazon’s CEO Jeff Bezos have every new employee across all levels of the organization attend two days of call-center training. This ensures that everyone in the company is committed to listening and acting upon the needs of their customers – not just front line customer service employees. Truly understanding customer experience and feedback will drive more frictionless processes and a better customer experience. I, for one, am willing to pay a little more to buy something from Amazon because I know the experience will be frictionless and the company will stand behind every purchase I make.

Perhaps one of the most effective approaches to make sure employees are invested in customer success is the one employed by Four Seasons’ Founder & Chairman, Isadore Sharp. Mr. Sharp’s philosophy is based on the Golden Rule: “In all our interactions with our guests, customers, business associates and colleagues, we seek to deal with others as we would have them deal with us.” In other words, ask employees to treat customers the way they themselves would like to be treated. It’s a simple, but easily understood and effective philosophy that can empower any employee, from the lowest level employee all the way up to those in the senior ranks, to address and turn a negative customer experience into a phenomenal one.

Of course, all of this begins with the acknowledgement that happy customers are what make companies successful. Whether you’re a founding CEO, just starting to think about what “success” means for a customer and your business, or a longtime CEO at an established company with thousands of customers and employees, I’ve seen a CEO’s actions make all the difference. When CEOs not only lead by example, but also instill customer success into their company culture, they inspire employees to do whatever it takes to delight customers.

And it takes a lot more than a couple hours each week to do all of that.

10 COMMENTS

  1. IF we agree that as finaly stated: “all of this begins with the acknowledgement that happy customers are what make companies successful” . CEO walk the talk this way gives a chance for company and team that customer is great source of feedback, chance to improve and at the end of the day the only way we can test the ideas on extrenal world and connect. Big corporates tend to forgett that world outside of the company walls is so important. Thanks for starting questons “how much time” rather than IF ?…

  2. Point #3 is the most critical point here. One of the core elements of ambassadorship is that employees, irrespective of function, level, or location, are committed to customers, the enterprise, and the product and/or service value proposition.

    Re. the question posed in the title, the short answer is “as much as possible.” No dataset or report can substitute for in-person customer engagement. We’ve seen too many situations where enterprise execs schedule little to no time in direct contact with customers, so they have only a superficial sense of value delivery problems and/or opportunities.

  3. Great article, Kathy. Sadly, in the industry I work in (Integrated Resorts and Casinos), CEOs tend to hide from customers. Also, inherent respect for the customers, the ones who pay the CEO’s salaries, is missing.

  4. I like the word, hide from customers, Sudhir.
    Try reaching a CEO or at least get someone in his office or associated office, it is impossible. The attitude is keep away. I will be in touch when I want to not when you want to

    We are all insignificant as customers

  5. CEO is part of the team and in fact he is the person to be led by example. CEO has two type of Customers: 1- External and Internal and both are improtant for CEO, therefore, in my opinion the CEO should for the 3 years maintain the same percentage of the first year. Customers either Internal or External are changing and moving to different criterea and CEO should (even he has his own team to act), be in touch with customers directly.

    Keeping this equation of the first year will allow CEO to be updated always in the market and inside the company as well. This is in my opinion the idele CEO.

  6. Hi Kathy: it makes sense that by spending time with customers, CEO’s can more effectively learn about their needs and wants, and then leverage that insight into more effective strategy. In that one sentence, I have made at least three assumed logical leaps. But Porter and Nohria’s article confirm that executives were “dismayed” over how little time they spent with customers, and they felt that 3% was too low. That tells me that they believe more time spent with customers provides them an advantage.

    The question is how much time? – and that is a great opportunity for further research. As far as I know, we can’t conclude with certainty that companies whose CEO’s spend greater than 3% of their time with customers out-perform companies whose CEO’s spend less time. (And because CEO workweeks vary, I’d prefer to see the finding expressed as a total number of hours, rather than a percentage of total time). We can only guess, or point to anecdotal information.

    When it comes to allocating executive time, everything is a trade-off. More time spent with customers is less time spent with HR, Legal, Finance, Operations, and direct reports. Is that effective? Or valuable? Or the best use of executive time? Maybe. But day-to-day, week-to-week, month-to-month, situations change, and executive time gets reallocated in response to the most pressing matters. For me, that means I can’t adequately prescribe the best or optimum ratio of time spent with customers.

    On this matter, Porter and Nohria are enigmatic regarding their recommendation. But they tiptoe around a common-sense guideline: Quoting from the HBR article you mentioned,

    “The CEO’s single most powerful lever is ensuring that every unit—and the company as a whole—has a clear, well-defined strategy. Strategy creates alignment among the many decisions within a business and across the organization. By spending time on strategy, a CEO provides direction for the company, helps make its value proposition explicit, and defines how it will compete in the marketplace and differentiate itself from rivals. Strategy also provides clarity on what the company will not do. A compelling strategy—if well understood throughout the organization—is motivating and energizing. And without clarity on strategy, the CEO will be drawn into too many tactical decisions.

    We have found, again and again, that many have a hard time shedding the COO or president roles they may have previously held. Some also forget that their senior team should bear the primary responsibility for many reviews and keep the CEO informed on a regular basis.”

  7. This was a quote in one of Bill Marriott’s blogs in 2010. “Every year, I try to make it to about 250 hotels, but this year, I worked extra hard and got past the 300 mark.” In 2010, Bill was 78 years old and worth $2B. If he takes two weeks vacation it means he works about 250 days a year. That translates to visiting more than one hotel everyday. So, how much time should a CEO spend with customers. That depends on how important customers are to the enterprise and Bill thinks they are super important. Today Bill is 86, Chairman of the Board of Marriott International, and still visiting a helluva lot of hotels!

  8. I’d like to echo the importance of Chip’s anecdote, and add one to it. By visiting 250-300 hotels a year, Bill Marriott was not only in direct contact with guests but also with employees, whether customer-facing or not. Sam Walton, another iconic businessman, was noted for doing much the same thing. Even when ill with cancer, he still hopscotched the country in an old passenger plane making customer and store visits. This was the stuff of company legend and had a great deal of impact on the field culture of Walmart: http://www.lakenewsonline.com/article/20120309/NEWS/303099838

  9. Great article Kathy! The figures are quite shocking – bat sadly they do not surprise me.

    There can be no ‘standard’ answer to this – but as other commentators have already said, a CEO who does not understand the customer, is not one that can effectively lead an organisation. In my opinion, ideally, a CEO should be interacting with customers every single week. However, at a minimum, they should be doing so at least once a month. Any less than this and they are, again in my opinion, neglecting to truly understand whether their organisation is able to meet the needs and expectations of customers. Taking others word for it is not sufficient. Additionally, again as others have pointed out, they MUST be interacting as much with EMPLOYEES at all level of the organisation as much as they are with customers!

LEAVE A REPLY

Please enter your comment!
Please enter your name here