Chief customer officer: Threat to the CMO, or the ultimate modern marketer?
- 28 May, 2015 07:31
Look around corporate Australia today, and you’re bound to see a chief customer experience officer or two.
Take AMP, for example. The company appointed its first chief customer officer, Paul Sainsbury, two years ago to head up a new customers’ division and support its strategy to become more customer-centric.
With a background in integrating mergers and acquisitions as well as heading up operations within the AMP group, Sainsbury was neither marketer nor customer service leader. Yet he holds responsibility for all customer-related programs, including marketing spend, and more recently gained controlled of CapEx spend. Last year, he also appointed direct report and first ever director of brand and marketing, Helen Livesey, to join his team.
Sainsbury isn’t the only CCO with such a wide-reaching remit, or direct influence and responsibility for marketing strategy. Australian National Broadband Network provider, NBN, also chose to appoint a chief customer officer, John Simon, rather than a CMO, to hold the dual responsibility of customer engagement and marketing.
Over at Virgin Australia, chief customer officer, Mark Hassall, has a strategic role that included overseeing the airline’s recent transformation efforts to become the Australian traveller’s brand of choice. Virgin also maintains a general manager of marketing, but it’s the CCO sitting at the management table with the ear of the CEO.
There’s no one model for chief customer officer, of course. At ING Direct, executive director of customer, John Arnott, has responsibility for steering the financial services company’s customer experience efforts and programs, but doesn’t manage day-to-day marketing operations. Neither does HCF chief customer officer, Stephen Nugent, who earned his stripes in managing the insurance company’s retail footprint and call centre before being given the customer chief title.
The rise of the customer chief isn’t really surprising in the face of digital disruption and change. Social has also given consumers the means to express their displeasure with a brand, its products and services, and influence millions of other consumers and prospects while they’re at it.
Most companies now realise the key to future growth and prosperity is to be more customer-centric. It’s one of the reasons why the CMO role has gained prominence: As the function closest to the needs and wants of the customer, marketers can inform and orchestrate the way a company interacts with prospects and customers, and provide valuable insight on their needs, wants and values.
But it’s also the reason why chief customer officers are on the rise. The question is: Are CMOs in fact destined to take up the reins of this role, or will they be sidelined by it?
What a customer chief does
US-based Jeanne Bliss has spent the past 20 years working as a customer chief, albeit under different job titles, across a raft of large organisations including Mazda, Microsoft, Allstate and Landsend. It’s worth pointing out that while at Microsoft, Bliss sat within the customer loyalty function, while at Mazda, she was responsible for crafting the customer journey map and touchpoints.
She now consults to c-level executives on what customer experience strategy looks like, and just completed a book, Chief Customer Officer 2.0: How to build your customer-driven growth engine, based on her own experience as well as interviews with more than 40 chief customer officers.
For Bliss, it doesn’t matter so much who owns the role; what’s important is that the competency exists within an organisation to operationalise the brand promise.
“Traditionally, marketing has been focused on crafting the brand process, uniting people in understanding that, then managing the stuff to action that externally, such as ads, campaigns. But it hasn’t necessarily connected the dots and united the operating areas to deliver that experience you promised through the branding,” she told CMO.
“I don’t see the chief customer officer so much as a threat to the CMO, but more as a chasm from a skills and competency standpoint. If the CMO wants to evolve and expand their role to not only defining the brand, but also guiding the company’s ability to live the brand, then they will have to have other skills behind the traditional marketing skillset established to date.”
These more operational skills include uniting the leadership team around language, prioritisation and decision making, bringing together operating groups and transforming the collaboration process, and implementing customer experience design.
“These are not necessarily things marketers have loved to do,” Bliss claimed. “So it’s less a threat and more about recognising the additional skillsets required if you want to expand into also lead the company transformation.”
According to a recent Forrester report products by senior analyst for customer experience, Rick Parrish, CCOs are becoming commonplace in the private sector and taking on increasingly prominent roles. The research group estimates there more than 2000 across industries in the US this year, double the number identified in early 2014. In addition, more than 25 per cent of Fortune 100 companies now have a dedicated CCO.
Forrester also found CCOs occupy increasingly senior-level positions, with more than half reporting directly to the CEOs. “That’s a far cry from just a few years ago, when CX leaders were usually buried beneath CIOs or chief marketing officers,” the report stated.
If the CMO wants to evolve and expand their role to not only defining the brand, but also guiding the company’s ability to live the brand, then they will have to have other skills behind the traditional marketing skillset established to date
In addition, CCOs are no longer the purely advisory figures they were when the role first appeared. “Today, CCOs often control their companies’ voice of the customer programs and at least some customer-facing channels or touchpoints,” Forrester reported. “They are also more likely to have input on enterprise-level technology procurement, product development, and other major decisions that influence the customer experience. In a few companies, CCOs even run public relations, marketing and strategic planning.”
So is this a role marketers should be stepping up to?
Should CMOs feel threatened?
Virgin Mobile CEO and former CMO, David Scribner, believes CMOs should become the chief customer officer of their organisation. He described the position as providing a customer voice around the leadership/board table, something every business now needs.
“Rather than being threatened by the rise of the CCO, I think CMOs need to embrace the role and in most businesses, strive to ultimately become the CCO themselves,” he said. “With the role of CCO still only existing in a small group of companies in Australia, it’s up to the CMO to be that customer voice, representing and influencing the complete customer experience and interaction with the brand.”
Scribner agreed the customer has never been more powerful than they are today, and that makes marketing more powerful, too – provided you take the right approach.
“Rather than broadcasting your brand at the end of the process, it’s about listening to them, engaging them and designing your product or service around them,” he said. “It’s about actually doing it and being it, before you say it - make sure your product or service delivers before you spread the word about it through your marketing.
“It’s well documented that loyal customers are more likely to hold more products with a company and spend more money, so in an increasingly crowded marketplace, creating the reasons to make them ‘stick’ is a no-brainer.”
Scribner advised CMOs to work closely with whoever heads up delivery of their service and frontline interactions with customers, such as the chief operating officer, to make this happen.
“The product or service the customer experiences is now a business’s biggest brand moment – not its TV advertising campaign,” he added. “A strong relationship also needs to be in place between the CMO and their CIO - by working together, the CMO can influence the process and internal workings that deliver the customer experience.”
According to Bliss, the need for a dedicated chief customer officer, versus a CMO owning end-to-end customer experience, is going to depend on the organisation.
“There are competencies and things that need to be done in marketing that are building the brand platform, and that will continue to need to be done,” she pointed out. “Because social media is a forcing function and because companies are finally recognising customer experience as a growth engine, customer experience is increasing in importance. And as customer experience rises in importance, there are very specific action items and tools to address.
“There are decisions to be made if the CMO also wants to lead operations. Customer experience is your operational response to the brand definition. Can you expect one person to do both these things – define the brand and have the depth operationally to guide the organisation to deliver it? You could have people underneath you to do some of that. But there has to be a new understanding from the CMO of the depth of expertise they require in their team to do that.
“As the company begins to understand customer experience, they will need to make a choice. It’s not about power, either, it’s about working together differently.”
All too often, customer service and marketing teams don’t work together because of internal silos, Bliss said. But this doesn’t mean the CCO is a permanent solution.
“If after five years of the CCO, the customer experience is organically embedded in the organisation, you could do away with that role potentially as it’s part of how you work as an organisation,” Bliss said.
For Australian Marketing Institute CEO, Lee Tonitto, it’s important to distinguish between a role and a title.
“While the title of a CCO is being increasingly embraced by some organisations, an effective CMO has always performed this role,” she said. “If the CCO’s responsibility is to be the custodian of the customer within the organisation, then that is what a CMO ought to be doing.
“There is a growing tendency to split hairs and introduce new titles only because the old titles haven’t lived up to their roles. So the threat exists only if the function is not being fulfilled. Otherwise, there is no threat, only an opportunity.”
To reinforce this perspective, Tonitto pointed to how the CCO Council defines the role of the CCO: ‘An executive that provides the comprehensive and authoritative view of the customer and creates corporate and customer strategy at the highest levels of the company to maximize customer acquisition, retention, and profitability.’
“Any enlightened marketer would see no difference between this and a CMO’s role. If any, the future role of a CMO has to go beyond the above to include aspects of sustainability, corporate responsibility and customer well-being,” she said.
“The CCO title is a replacement in a way but still falls short of the potential value that CMOs can add to a business. Let us not fall prey to the temptation of rebranding the title when what is required is a re-positioning of the role.”
Tonitto added the role of marketing should be changing to take into account end-to-end customer engagement.
“But this will only occur when marketers assume greater responsibility for the bottom line (long term, sustainable profits), engage more and more with the rest of the business, and spread a customer oriented mission across the whole organisation,” she said.
Up next: Why the NBN chose a CCO over a CMO, plus how to take the CCO reins
Why NBN chose a CCO over a CMO
Repositioning and relabelling the role is arguably what has been done at NBN through the appointment of chief customer officer, John Simon. The company, which once had a CMO, has now brought together product, brand, marketing and sales under one team centred on customers and the community.
“More and more, companies are recognising that to succeed they must place the customer at the heart of everything they do,” Simon said. “Ultimately, to meet and indeed exceed customer expectations you must have the end-to-end view.
“Importantly, customer centricity is a core part of our company’s culture. Knowing our customers, and listening and acting on their insights, is the responsibility of all teams and mangers at NBN.
“Organisations will create structures and titles that suit their businesses. Our structure enables us to best serve customers and the community by integrating, end-to-end, the functions of brand and insights, demand generation, channel and market management and product lifecycle management.”
While some CMOs could very well feel threatened by the appearance of a chief customer officer, Forrester’s head analyst on customer experience, Harley Manning, said he’s yet to find any who’ll admit it.
“I've not run into any CMOs who've admitted to feeling threatened by the rise of chief customer officers. What I have seen is a lot of marketers who are intrigued by the emerging field of customer experience,” he said.
As an example, he pointed to a recent an analysis of the 1000 attendees of the group’s Customer Experience Forum NYC, where the second-largest function represented after customer experience professionals was marketers.
“What I'd add to that is CMOs are stewards of the brand promise. But often that promise goes unfulfilled,” Manning continued.
To help demonstrate how marketing and customer experience can complement each other, he pointed to America’s largest telecommunications company, Verizon, where the head of customer experience reports to the CMO. The pair branded their CX improvement initiative ‘Broken Promises’.
CMOs are stewards of the brand promise. But often that promise goes unfulfilled
In this instance, CX leaders brought together more than 50 sources of customer feedback and found that that roughly 14 customer issues, such as having to call the call centre more than once, were driving 60 per cent of customer comments, things that
The two teams them worked together to systematically address these issues. Manning said the program created between US$200 and $300 million in cost savings and drove a spike in Verizon’s Customer Experience Index (CX Index) data. The score for the DSL business for example, went up 11 points year-on-year, and in the wireless space it went up 8 points.
At GoDaddy, both the CCO and CMO report directly to the CEO, and work together on ensuring customers are the first and last thing the business thinks about.
At HCF, the CCO and marketing teams work closely together, its CCO, Stephen Nugent, said. He positioned the customer experience teams as the custodians of the “fifth P in marketing: People”.
“We also have a say in product, promotion, price and place, and we work collectively and catchup with marketing on a weekly basis to make sure what we’re doing is effective with customers,” he said.
“Customer-centricity is there across the organisation; it’s a matter of what we’re doing and understanding what that means across the board.”
Owning the customer experience role
For those marketers looking to improve their ownership of end-to-end customer experience, Manning said the most important thing is to plan from the outside in.
“Start by making sure you understand the customer’s perspective,” he advised. “Don't just look at quantitative data – do some in-depth interviews with customers to understand the context for why they come to you and when. Then document what you've learned in personas: Models of the key behaviours, attributes, motivations, and goals of a company's target customers, created from primary research with real customers and taking the form of a vivid narrative description of a single person who represents a behavioural segment.
“You should also use that same data set to create customer journey maps: Visual representations of the series of interactions between a customer and a company that occur as the customer pursues a specific goal.
“Once you have that solid understanding of the customer and their end-to-end journey, you'll be able to guide all the various parts of the organisation around how to create a seamless, omni-channel experience for your customers.”
As part of her coaching process, Bliss outlines five major aspects of ensuring the chief customer officer role is successful and impactful in an organisation. The first is “checking egos at the door”.
“For this person to be successful in this role, they have to recognise their higher purpose is supporting the organisation and operational areas in being more successful,” she said. “This is by uniting them, giving them perspective and enabling them to improve experiences in a manner they haven’t done before.”
The second thing Bliss pointed out is that the most successful customer chiefs often come from inside the organisation. This is because they already have a proven track record of running successful operations, and a high level of credibility with employees and executives.
“The challenge if you bring in someone else or with marketing taking up this role, is that the traditional marketer hasn’t run billing or been in the field, so understanding the complexity and ability to unite those silos may not be there,” Bliss said. “There will be an appreciation for it, but the understanding and ability to connect the nuances of multiple operations doesn’t exist.”
A third major ingredient is holding relationships with the senior leadership team.
“A lot of times someone gets appointed into organisations and becomes the beggar, asking the rest of the team to pay attention to the figures,” Bliss commented. “They need to have strong and honest relationships that they can talk about things frankly. That only happens at that peer level.”
At a more tactical level, chief customer officers then need to be able to see comprehensively across the whole organisations and help inform customer-led strategy in all areas.
“In many cases, customers are the only ones seeing the whole organisational chart today,” Bliss said. “The role of the customer chief is to first get that whole perspective on the customer journey, but then break that into pieces and focus the organisation to make the starting point of customers tangible.
“This also helps prevent the company from trying to boil the ocean, and helps to create the focus that helps the company prioritise work to be done.”
Jeanne Bliss’ top 5 on being a chief customer officer
- Honour and manager customers as assets of the business
- Align around customer experience
- Build a customer listening path
- Proactive experience reliability and innovation
- Unite the organisation with one-company leadership, accountability and culture
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