It may be argued that the role of the CEO of an organization is to preside over its growth and ongoing success. My simplistic view of the world leads me to conclude that, acquisitions aside, organic growth really comes only from three possible sources: keeping our current customers as long as we can, so they continue to buy from us and to recommend us to their friends; selling more to those customers and, so, increasing our share of their wallets; and attracting new customers, in part based on our reputation for delivering value. In all cases, we are talking increasingly about customer-led growth.
The role of the CEO is to manage customer-led growth, ensuring that appropriate investments are made in the customer, not leaving it to individual departments to manage the firm’s interactions with its customers, both existing and prospective. Sadly, some companies continue to operate as if marketing, customer service and sales departments are individual silos, each with certain responsibilities for customer growth. I recently discussed customer strategy with a company in which those three departments independently prepare annual plans and budgets.
What results in such a situation, of course, is a series of disjointed, unconnected touch-points, contributing to high levels of customer frustration and defection, rather than a coordinated holistic approach to the customer. The first step in building a customer strategy is to ensure that all departments have a consistent, coordinated view of the customer. That’s where the CEO comes in.
‘The payoffs include lower employee turnover and high customer satisfaction scores.’
I suggest that the most important role of the CEO today, in this age of customer centricity, is to ensure the delivery of meaningful customer experiences and the successful execution of the brand promise. To play that role, the CEO must create an understanding within the organization of the importance of the brand or reputation of the firm and of the factors that contribute to an attractive brand image.
The customer experience is an integral component of what constitutes the brand. For the most part, companies today take a holistic view of the brand: It is everything that has the potential to affect how customers view the company and the regard in which it and its products and services are held. Despite the recent focus on branded customer experiences—the notion that some companies are able to create customer experiences that are unique to their brand (Disney and Starbucks come to mind, as they always do)—I am of the opinion that every interaction between the company and its customers constitutes an experience that has the potential to enhance or destroy a brand.
My recent blog on the “tripping point” provides some examples of seemingly ordinary customer interactions that went wrong and damaged the reputation of the company and the likelihood of customers returning.
Customers and employees
Customer-centric CEOs understand that the customer experience is inextricably linked to the employee experience; that how the employee is treated connects directly to how customers are treated—their experience—and that both contribute to how customers see the company and the regard in which it is held—the brand.
The CEO’s office is where it all comes together. This is where a comprehensive, holistic view of customer experience, employee experience and brand comes together. In a study that CustomerThink’s Bob Thompson and I collaborated on a few years ago, we looked at those companies whose customer relationships were strongest, as determined through a survey of several thousand CRMGuru (now CustomerThink) members. Across five business sectors (airlines, banking, computers, supermarkets and hotels), brands including Southwest, HSBC, Dell, Costco and Accor came “top of the table” in terms of the strength of the relationships they enjoy with their customers.
As we studied how these companies and strong competitors like Royal Bank of Canada, Hyatt, HP, Publix and Lufthansa have achieved their enviable position vis-à-vis their customers, it became obvious that one of the most important distinguishing factors was that they are led by CEOs who are passionate about people, both customers and employees. And they get the connection and the fact that customers and employees come together at the point of customer experience.
I’m reminded of a quote from Costco CEO Jim Sinegal, whose commitment is to paying his employees well by retailing standards. As he explains, his employees “are entitled to buy homes and live in reasonably nice neighborhoods and send their children to school.” By treating his employees well, Sinegal creates a culture of respect. The payoffs include lower employee turnover and high customer satisfaction scores. The best CEOs, from a customer strategy perspective, have an abiding interest in, and passion for, the customer and an innate understanding of the factors that drive customer loyalty. One of the distinguishing features of the most successful companies in our survey was that they spend a larger amount on employee training than do their competitors.
I come back to my earlier point that CEOs must avoid situations where departments are allowed to act independently on matters that affect customers, both directly, as in sales and customer service, and indirectly, as in human resources.
Most decisions that companies make are customer decisions. Whether to open a customer contact center in Des Moines certainly is a customer decision, as is whether to raise prices 10 percent to cover rising costs. But so, too, is the decision to cut back on sales training or to replace the fleet of service vehicles after seven years rather than five. I did a series of customer insight sessions a couple of years ago for a retail client when female customers railed against the company’s use of single-ply toilet tissue in its washrooms. Since when is the decision on toilet paper quality a “marketing” or consumer decision? In most companies it isn’t, but it certainly had an impact on customers’ perception of the client’s brand.
The point is that virtually everything a company does has the potential to affect customers’ regard for its brand, and the most important activities are those that influence the customer’s experience in dealing with the company. Successful CEOs know this and ensure that their companies have a single-minded view of the customer, one that ensures consistency of approach in delivering effective and meaningful customer experiences.
In my experience the best CEO’s who incorporate the role of Chief Customer Officer are in retail. The CEO who is always in the stores talking to customers and staff sees a lot and learns a lot. Therefore all the managers who works for the CEO do exactly the same thing. It’s the only way to either know as much as the boss or get things fixed before he/she sees it.
The attention to detail such as turning the lables on tins to the front and checking on product sell by dates are automatic reactions to top CEO’s in retail. When the CEO sets the example everyone follows and the business is sucessful. My own personal experience is at Tesco but watch managers in Sainsburys and Waitrose and you’ll see the same thing.
Malcolm Wicks
Whether it’s the CEO or the CMO or a separate executive focused on the Customer, the key in my experience is that most companies aren’t organized to support a true customer focus at all. Most companies are still locked in fundamental systems and structures that are far more “product-centric” than they are “customer-centric”, from sales to marketing to finance to IT to delivery.
You correctly state that the source of organic growth is from acquiring customers, growing the value (and share of wallet) of existing customers, and retaining customers and their value over time. Yet the finance and accounting systems most companies use are based on product sales, category sales and market share, often by groups in separate silos. That represents a huge barrier to most organizations in moving from the product-centric focus to a customer-centric focus.
Another indication of this focus is the industry’s portion of total spending that is allocated to customer acquisition programs, mostly as product selling programs, versus customer value or retention programs. Numbers I’ve seen place the portion of marketing dollars invested in growing share of wallet and customer value, or increasing the retention of existing customers, below 10% of the total marketing dollars spent.
As a result, the industry generally approaches customer value and retention programs with the same methodologies used to acquire new customers. Programs such as cross-sell and up-sell programs are slightly better targeted product selling programs . . . asking just what is the next best product to offer to this customer? In my experience, programs designed to build the value of EXISTING customer relationships, or retain those relationships, are much more effective when they use a different approach than that used to acquire new customers from an anonymous audience.
That different approach, as you suggest, should be based on value and share of wallet metrics. High ROI is achieved by providing multi-product solutions to individual customer needs . . .and as every good salesman knows, needs-based selling is not the same as product-based selling . . .neither is true customer-centric marketing the same as product-based marketing. And solution-based marketing almost always leads to a highly preferred customer experience over that provided by product-based marketing.
I do agree with the conclusion that this evolution must be supported at the top. It’s not nearly as simple as making the CEO the customer experience officer, but having the CEO committed to a true customer-centric approach is certainly the first key step.
Robert Viney
Interactive Commerce Solutions