You have a Chief Customer Officer or a CX department in the business, but everyone in the organisation is tinkering with all things ‘customer’. Another area may own product or proposition development and customer strategy may sit elsewhere. There is a raft of customer-oriented initiatives, but they’re owned in organisation silos and the original strategic ambition ends up getting watered down or it doesn’t gain traction within the business.
Does any of this sound familiar? It’s likely that changing the business structure to focus on and accommodate a ‘customer’ or CX function has created yet another silo or worse a decentralised function that isn’t empowered to act because it isn’t recognised as a P&L. Many CX challenges are often the result of a company’s operating model and the inability to translate new customer-centric strategies into distinct operational tasks.
Gartner defines customer centricity as “the ability of people in an organization to understand customers’ situations, perceptions and expectations.” Makes sense but this alone isn’t enough to make an organisation successfully customer centric. Guess what: 64% of organisations are underperforming when it comes to customer-centricity.
The cross-functional nature of effective customer strategy and management efforts needs a well-thought-through governance framework that works within the idiosyncrasies of the organisation. This means clearly defined roles, responsibilities, interaction model, and metrics need to be in place. To realise the ability to “understand customers’ situations, perceptions, and expectations”, all parts of the business need to work in unison with an enterprise-wide customer focus. Without this coordination, it is extremely difficult to drive collaboration and engagement around the customer.
So-What Customer Centric?
According to a large-scale study by CX Partners looking at the State of Customer Centricity, the 36% high-performing organisations who focus on the customer with a governance model that drives and supports truly customer-centric working practices see tangible benefits compared to their peers.
- Their revenue is growing 9x faster year on year than their underperforming counterparts i.e. an estimated yearly revenue growth of £80m if you’re a £1bn company.
- They are 4x more likely to have employees who feel highly satisfied.
- Organisations with customer-centric operating models are faster to adapt – 65% could change business processes within weeks or months, responding quickly and decisively to market shifts. Whereas low maturity organisations can take years to change.
Having a CX owner has in some cases created a new silo
For those of you who were around to remember, there were debates about how CX should be owned in the organisation. Should CX be ‘owned by everyone’ given it’s a discipline rather than a department, should CX or ‘customer’ be a dedicated function reporting directly to the C-Suite or a mix of the two? In reality what has happened in many cases is that businesses have created another silo which often isn’t empowered to make change happen.
Many customer-oriented initiatives are developed in separate cross-functional and project-based teams. This means that in practice, management and the wider business often have no transparency which can turn these projects into ‘orphans’ within the organisation. This often results in misaligned activities, a waste of already scarce resources or unclear or incorrect prioritisation. More and more organisations’ clients are recognising the need for a coordinated portfolio of customer-related activity that benefits the whole business as well as the customer – and which has a clear line of sight to business strategy.
Indeed, in the customer-centricity study identified above, in high-performing organisations it was found that managers were dedicated to making sure teams were first aligned to business strategy, rather than promoting ideas of how to solve customer problems themselves.
Being customer-centric and making CX work for an organisation isn’t about organisation charts and structures, to be successful, it’s more about having the right governance model or framework because governance can bridge those organisational gaps or silos.
What is Governance – in this context?
Gartner defines governance as “the set of intentionally adopted formalised internal processes, policies, and agreements designed to ensure the effective management of the customer experience across the business”.
What’s more, 93% of leaders claim to already have some form of CX governance in their organisation, according to the Gartner 2020 Customer Experience Innovation Survey. I wager these are organisational structures or ad hoc working parties, rather than true customer-centric governance and operating models.
In my experience, the difference between an internally centric and a customer-centric governance model, is that the former stems from the company’s traditional organisational structure and the latter is built around how the organisation coordinates its efforts and collaborates around a convergence of the following 3 elements. How do these 3 capability areas (whether dedicated or subsumed into a more traditional functional structure) coexist in a coordinated and collaborative manner?
I believe that it is possible to look at an organisation chart and make an initial appraisal as to how customer-centric it is.
Where to start?
There are a number of fundamental questions that need to be considered and mapped out to land on the best governance framework for an organisation:
- What are the customer-facing activities and roles that exist?
Establish all of the activities that fall both within these 3 areas and also within the more traditional customer-facing functions of marketing, sales, and service.
- What are your design principles or considerations? Establish this by engaging key stakeholders within each business area to understand their issues and any guidelines for the governance model
- What are the possible role and responsibility scenarios to deliver the above?
Explore where these things best sit, who has responsibility for what and how do the different areas of the business come together to ensure an aligned approach.
- What’s the interaction model that will promote new cross-business ways of working? The governance solution needs to promote collaborative ways of working and consultative decision-making amongst the different elements of the business
- What are the right metrics to drive the collaborative working environment for the customer-centric governance model? The often quoted Peter Drucker said, “What gets measured gets managed.” This one is a subject in itself!
According to Gartner, most large organisations with revenue of $1 billion+ have more than 50 CX metrics and some as many as 200. Unsurprisingly, these metrics are owned and managed by different people in different parts of the organisation.
I still observe organisations where department silos own different customer metrics (if any exist). This in itself is perpetuating competing agendas within the organisation. It is important to put in place the correct metrics that are critical for aligning typically siloed units into effective cross-functional teams. Metrics and targets are one of the most powerful ways to gain commitment to collaboration that in turn supports the continuous delivery of superior customer experience. Collaboration is especially central between CX and the “line organisation” e.g. marketing, sales, and service.
To ensure success, true customer-centric strategy requires fiefdoms and agendas to be left at the door and a shared common purpose where the benefits of customer-friendly working practices, ownership, and metrics are clear.