Introducing the Chief Listening Officer


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God provided a great model for communication when he gave us two ears and one mouth.

Take a look at the marketing department’s budget. How much is spent on the different activities of research, advertising, direct mail, sponsorship, PR and events? If yours is like most companies I have met, the marketing function and the associated spend is dominated by marketing communication: getting the message out to the prospective customers.

Communicating your message is, of course, a vital activity: Even the best product/service in the world is of little value if people don’t know about it. It is also true that reaching that elusive audience is increasingly difficult and expensive. It is estimated that people are exposed to 4,000 marketing messages each day of their lives from companies trying to influence their buying intentions. And this is just a small part of the 50,000 thoughts we each have every day.

To stand out from the crowd in this deluge of marketing and mind games, companies resort to ever more sophisticated and expensive campaigns. These are less and less effective. Research by BT and the Future Foundation (see the chart below) shows that family and friends are much more influential than advertising in shaping consumer’s buying activities. Their recommendation (good or bad) is much more likely to be based on first hand experience than on the adverts they have seen.

Who influences consumers?

Source: BT/Future Foundation (2002)

This is not to say that advertising does not work; it does. Lord Leverhulme (the Victorian businessman who founded Lever Brothers) knew that half of his advertising spend was effective; he just didn’t know which half. But just how effective is advertising, compared with other approaches? What would be the effect on sales revenue of reducing advertising by 20 percent and investing that savings into improving the customer experience? What if, instead of bombarding customers with more advertising, we listened more to them and used their feedback to improve the service provided? Are companies listening enough, or is marketing too much of a monologue?

Recognize also that, while customer needs have always changed, they are now changing more rapidly, fueled by significant changes in social and working patterns and shorter product life cycles. Globalization provides customers with greater choice, and the growth of the Internet has made it much easier for customers to access that choice. The global reach of the Internet means that customers shop outside their locale more often and more easily. In the run up to Christmas 2004, Britons spent £3.5 billion shopping online (not all with U.K. companies), and 10 percent of all credit card transactions now involve online shopping. In some industries—travel and books, for example—the Internet is the preferred shopping venue. This choice and access shifts the power from suppliers to customers.

People—our consumers and employees—are also changing. Consider the change across just three generations.

Need for trust

My father worked for the same company, doing basically the same job throughout most of his life, using skills that changed relatively little over his 50-year working life. For most people, a job involved hard, physical work. He knew exactly when he would retire and he did not worry about his pension because politicians and financial institutions could be trusted. For Dad, technology was a telephone that was plugged into the wall and a TV with four channels.

My children, on the other hand, may well live to be over 100 and move in and out of work for 70 years. They will choose jobs that suit the type of lifestyle they want, which will change according to their situation. Retirement will be when they want it to be, and probably might not be permanent. They might retire more than once, flitting in and out of retirement and work as money and their whim dictates. They know that they will have to look after their own future and will trust people and institutions based on their performance, not their words. They will exploit the massive choice they have to their advantage, remaining loyal only to those who demonstrate that they value their relationship.

In this chaotic and complex life, trust will become more critical, and companies that can earn and retain a customer’s trust will be in a privileged position. They will have the edge in selling to that customer.

Trust spans the rational and emotional element of a relationship with a customer. At its most basic, trust is about having confidence in the quality, availability and reliability of the product or service. But it goes beyond that. It embraces mutual respect, openness, honesty and similar shared values. We prefer to do business with companies we have an affinity with, companies we like.

In an uncertain world, those companies that gain and retain our trust will have an edge, as results from the Global Future Forum’s Pulse Survey (March 2005) illustrates:

As consumers select one supplier to be their trusted advisor, and invest time in communicating their personal data and needs with that supplier, the barriers of entry to competitors significantly increases.

This scenario is based on research by the Global Future Forum. I sit on its European advisory board.

In a rapidly changing world, particularly one where the power in relationships shifts to the customer, understanding customers is ever more vital to success. Listening is set to become more crucial in the marketing mix.

Much of the work currently done by market research departments is about informing strategic decisions—identifying customer needs and expectations; sizing market opportunities and understanding what shapes the buying decisions of customer groups. This information is vital in shaping product strategies and routes to market, and more will be needed as the needs and expectations of people change rapidly.

Research to identify what the customer thinks about doing business with a company is, perhaps, even more important. Where retaining customers and building relationships based on trust matter, understanding how they perceive the company and its products and services is vital. Remember, people remain loyal and recommend a company because they have had a good experience, and that is down to operations: It’s about products, processes, systems and, most importantly, people.

In many companies, research into the customer experience is simplistic and ineffective, based on what I call the annual “Do You Love Us?” survey. To be effective, experience-based research has to gather feedback at all the key stages where a customer does business with you, as well as the overall relationship. Monitoring customer interactions provides valuable information on how the company is doing: actionable data to drive continuous improvement. It is this cycle of feedback and improvement that underpins many companies’ success in building a loyal customer base.

Where relationships are important for securing loyalty, customer feedback has to go beyond the rational elements such as speed of response, quality of the product and ease of doing business. Understanding the emotional connection with the customer will help to strengthen the relationship. While operational performance will affect a customer’s view of your efficiency, the customer’s emotional view is what really shapes his and her buying decision. Integrating experience and relationship data with operational performance measures provides insights into the changes that will drive retention and advocacy. Customers will rarely recommend a company where they have had a bad experience or that they do not trust to family or friends; their reputation and friendship is worth more than that.

To achieve a meaningful understanding of their customers, companies will have to significantly increase the amount of listening they do. Marketing must become much more of a dialogue, with the customer an active player. This richer understanding of the customer is then used to improve operations and tailor the content and timing of marketing messages delivered to the customer. Providing actionable data (about individual customers and segments) is the key.

Research suggests that individuals will increasingly only share their personal information with those companies that enable them to make the best buying decisions. Companies that do not act in customers’ best interest will be locked out of the opportunity to supply. Again, consider the results from the GFF Pulse survey:

Concerns about privacy mean that more and more people refuse to share information with suppliers.

Hand in hand with privacy is the issue of security. Companies that have the right intentions but lack the systems to secure customer data will fall foul of customer’s concerns.

Privacy and security of data are important but basic issues. In the future, “customer first” will take on a whole new meaning. Welcome to the world of

Customer Managed Information

€”CRM in reverse: for the customer, not the supplier.

In the not too distant future, customers will hold their own buying records electronically and use this to negotiate special deals with suppliers. Imagine shopping online for an MP3 player. You insert your smart card or send a message from your smart phone with your enquiry purchase request. Attached is your personal purchase history for this type of product, with this and competitor companies. The supplier’s system recognizes you as a regular buyer of this type of product, with a history of recommending companies to friends and colleagues. Of course, this information is shared only with companies that have an exemplary record of trust.

From the information on your card,, for example, as a trusted provider, knows your record of buying electronic products from all companies. Your customer record is used to generate a special deal in recognition of your loyalty, lifetime value and advocacy. Your latest transaction, coupled with knowledge of your visits to Amazon’s web site triggers a satisfaction survey, part of which asks you for information about whom you have recommended Amazon to in the last two weeks. With your approval, these people are contacted, in your name, with information about special offers. Once the transaction is complete (including experience/satisfaction feedback), the smart card is updated, ready for the customer’s next inquiry.

Technologies to exploit this new world are here already. Smart cards have the potential to store significant amounts of data about the holder and their purchase history. Providing customers with data about their purchases, competitive offerings and giving them the tools to exploit this knowledge is a strategy already being developed by some companies. In the not too distant future, the ability to store and update our personal buying records on mobile devices will provide the infrastructure this concept requires.

Significantly, customers choose which companies can share in this information exchange. Companies that are not trusted or who do not fit with a profile of the customer’s design are excluded. Imagine members and sympathizers of special interest groups choosing to exclude companies which, in their opinion, do not share their values and world view. It happens already; technology will make it easier, more personal and more effective.

Powerful agents

Two types of companies will benefit from this growth of customer power. First are companies that truly put the customer first and develop innovative ways of delivering the right mixture of product and service at a competitive price. Second are a new breed of trusted intermediaries that offer a secure home for customer data and share this with companies that fit the customer’s profile of a “preferred supplier” and meet some independent assessment of data privacy and sharing. Such intermediaries will become powerful agents, possibly acting as brokers in the online market place. They will provide the technology to manage and exploit the customer’s information.

Imagine picking up the best deal for your savings product via eBay, with suppliers approved by the customer bidding for business with full knowledge of your purchase history. What if a price comparison site such as Kelkoo could get better deals for some customers based on their past purchases and attractiveness? Amazon and eBay already rate suppliers and buyers based on their track record and recommendations from other users. It is not such a big leap to see this applied more widely.

The information-enabled customer will drive further improvements in service excellence. Profitably winning and retaining customers better than the competition will require a much richer understanding of customers and innovative practices for delivering personalized products and services. Understanding the customer like never before may well be the difference between success and failure. It will require a whole new approach to listening to the customer€”far beyond what most companies do today.

So what does a chief listening officer (CLO) do? Well, she is a key member of the marketing leadership team and increasingly the marketing director. She is the focus for all information about the customer with responsibility for:

  • Segmentation.

    From the insights generated by a rich feedback and listening system, the CLO will define customer segments upon which the company will build and tailor its value propositions. Segments will be context based, with customers moving in and out of segments as their circumstances and needs change.

  • Measuring the customer experience.

    Customers look beyond the product when making their buying decisions. As product life cycles shrink and companies can replicate a competitor’s product quickly, the broader experience will become even more important. In the customer-managed information world, the complete customer experience takes on a whole new significance. In the world of customer-managed information, customers will rank suppliers on criteria they set. Failure to deliver a great experience may lead to a firm being demoted or even removed from a list of a customer’s preferred suppliers. Measurement of activities across the customer journey is, therefore, a vital element of the CLO’s toolkit.

  • Intentions management.

    “Past performance is no guarantee of future returns.” What is true of investments holds for customer intentions. Understanding the customer’s intentions is the key to being able to focus marketing and face-to-face interactions on the issues and opportunities each customer presents.

  • Data integration and mining.

    Insights come when different data is integrated. The CLO will lead the way in mining understanding from the different seams of information gathered about customers and the operations that serve them. Looking for causal links will be top of the list.

  • Early warning systems.

    The information generated will be used by the CLO to develop predictive algorithms and track buying intentions and customers at risk. This information will be shared with frontline staff to enable them to sell effectively and, where appropriate, take the action needed to retain a firm’s preferred customers.

  • Campaign management.

    The information and insights gleaned by the CLO will be used to personalize the content and timing of marketing messages to each customer based on the integration of data about intentions, campaign responses, satisfaction and past activity. To respond to the power of customer managed information, these campaigns will be truly dynamic and individual. This goes beyond one-to-one, requiring true context-specific marketing.

Customer managed information, where customers are equal partners in the marketing dialogue, requires a significant change in the culture of many organizations. Here again, the chief listening officer will be a leading player. Marketing and the rest of the organization has to throw out some of the beliefs that have driven their

modus operandum

and begin to rethink how they operate. The listening organization will have at its heart a number of simple but vital beliefs:

  • Respect.

    Financial service providers must recognize and respect the desires and aspirations of customers and deal with them in an adult-to-adult relationship, not talking down to them as has been the case.

  • Trust.

    Companies that cannot gain and retain the trust of their financial service providers cannot hope to win and retain customers. Given a choice, would you put your future in the hands of a company you cannot trust?

  • Mutuality.

    Whether member-based or not, only providers that seek to balance their needs with those of customers can succeed when information has shifted the power to the customer.

  • Personalization.

    Whether it is the core product or the interactions across the customer lifecycle, personalization must increase. In fact, contextualization is probably a better description of what is needed.

  • Dynamism.

    The future is about bringing together a rich picture of the customer and using it to inform and shape every interaction.

The job of the chief listening officer will not be easy. They will face two significant barriers to success: fragmented marketing and feedback systems and legacy attitudes. The latter will be, by far, the biggest challenge.

Few marketers or their chief executives will want to give power of choice to their customers. Raised in organizations used to paying only lip service to customer needs, many will not make the intellectual or attitudinal leap required. “New” companies such as First Direct and the One Account lead in this world because they do not have the millstone of legacy cultures. Companies that have built their business model on service excellence, particularly in a real-time or online environment, have had to face some of the issues discussed here from the start.

Legacy systems will also be a barrier. Customer-managed information requires the integration of disparate systems. Close links will be required between systems for marketing management, customer feedback, transaction management and management information. These systems will have to reach a much broader audience, presenting a holistic view of the customer at each and every touch-point.

Integration of data is at the heart of the responsibilities of a CLO. The future for many companies will require a much quicker and more sophisticated response to opportunities that customers present. Few organizations today hold a comprehensive record of their customers, despite the vast investments in CRM systems. The data required to build real insights span:

  • Transaction records
  • Marketing campaigns (with responses)
  • Segmentation
  • Intentions
  • Buying preferences
  • Satisfaction and advocacy feedback

Only by integrating these data will companies generate the insights they need to serve the customer properly. This data will need to be shared much more widely across the organization, with anyone serving the customer having access to the same complete customer record. Only then can informed customer interactions (through any channel) take place, increasingly informed by decision-support tools that guide customers, and the people dealing with them, to the best deal.

Many companies will seek to exploit this integrated view of the customer to their advantage. But in an environment where trust is a vital component of relationships with customers, what better way of demonstrating trust than turning the power inherent in the information over to the customer? Listening is the new marketing.

David Jackson
David Jackson is the managing director of Clicktools, a company he co-founded in 2000. Clicktools was the first enterprise-scale, on-demand customer experience feedback management system. Jackson is the author of three books, including The Management of Advanced Manufacturing and is on the Global Future Forum's European Advisory Board.


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