What Is a Chief Customer Officer?

The role of a Chief Customer Officer (CCO) is something of a puzzle. Organizations don’t exactly know how to define them, what they do, and if they should even have one. Curtis Bingham, founder and executive director of The Chief Customer Officer Council, sat down with Smart Customer Service and offered his insight.

Q. First and foremost, what does a CCO do?

A. The primary purpose of the CCO is to increase the value of the customer as a strategic asset to the company. Typically people look at the assets of a company as the product, the plant, the facility, etc. But more and more companies are starting to value their customer base as an asset, and are looking at churn, longevity, and customer lifetime value.

CCOs are considered the ultimate authority on customers throughout the organization. They are also driving customer strategy at the highest levels of the organization. They would be successful in injecting the voice of the customer into the C-suite in every major decision.

Q. What doesn’t a CCO do?

A. It’s important to realize that CCOs are not necessarily customer advocates that do whatever the customer wants. The CCO’s role is to figure out what a company can do to improve customer value and balance it with meeting the needs of the business.

CCOs are also different from chief marketing officers. The CMO is typically focused on landing the customer, working on all of the presales, creating interest leading to trial, leading to purchase, but they typically don’t focus on what customers need after the sale, what keeps them loyal and keeps them buying more, meeting their needs and keeping them from defecting.

Q. How prevalent are CCOs?

A. We estimate that there are currently 500 CCOs globally, mostly in North America, and that number is climbing. They are mainly seen in the tech sector, but they are proliferating rapidly in public utility organizations as well. Unlike the enterprise, utility companies have to make a case before a public utility commission to increase rates. There’s a correlation between profits and complaints, so they’re putting in CCOs to address that. The public utility commission is going to be swayed by customer feedback, and if they receive a large number of customer complaints, they’re not going to be favorably inclined to allow rate hikes.

Q. Why are CCOs on the rise?

A. What we’re seeing here is that customers are becoming far more intelligent and more demanding in their decision-making process. It used to be that companies could manage the communication process for the customer and control the information and dissemination process. Those days are long gone. Now customers are clearly in the driver’s seat, and marketers are trying to catch up. Customers are going to reward those who take care of them, who are focused on the customer rather than trying to maximizing profits at the expense of the customer.

Competitors are able to neutralize advantages or steal [customers] in as little as six months. There are so many competitors out there that you can no longer rely on a product or service or even a process for a competitive advantage. The only true and sustainable competitive advantage is an in-depth insight into what customers need, want, or are willing to pay for, and the ability to deliver on that better and faster than all of your competitors. With that I think that there’s this massive sea change where customers are firmly in the driver’s seat, and it’s up to businesses to guide them to where they want to go. Companies are realizing that the way to do this is through a chief customer officer.

Q. Why hire a CCO?

A. [Companies should determine if] customer centricity is viewed from the very top as an enabler of business results or a strategic imperative. Without that, companies can view having a CCO as something just to polish up the company a little bit, but not necessarily make systemic changes. So often CCOs are hired because somebody thought it would be a nice thing to do, and CCOs  end up spending 20 to 50 percent of their time justifying their position, trying to prove to people that they offer value. There is a significant appetite for customer centricity at the very top, but if CCOs don’t have the authority and are not granted the support that they need, they end up failing. They become casualties of a feel-good initiative that’s not funded and supported.

Businesses need to look at is whether people at the highest levels, the executive team, are willing to allow the CCO to drive strategies at the highest level of the company. Another consideration is if a company is mature enough to temper the reactionary management in favor of a more considered strategic process that addresses endemic issues and drives strategy.

Companies also need to consider if there is a willingness to create, capture, and take action on customer data. Are people willing to be driven by customer data rather than just by how things have always been done or by what we believe that our customers want?

A big piece is if a company’s culture actually desires to serve customers. In some companies, you see this ingrained attitude of “We don’t have a desire to serve customers, we’ve always done things the same way,” and they cannot be convinced otherwise. The culture has to be ready to serve customers. In many companies, executives are absolutely convinced that they know what to do based on financial projections and market projections, and they’re not willing to acknowledge that the customers may have a different story to tell.

Q. What is the future for CCOs?

A. CCOs are absolutely growing. I’ve seen in the last year or so, with the recession starting to lift, that there are an awful lot more companies who are beginning to adopt the CCOs. Companies are starting to say, if we don’t hire a CCO, our competitors might. CCOs are starting to be viewed as a driver of competitive strategies; they’re starting to become much more integral to business. They’re perpetuating the notion of business with customers in mind. Customer centricity drives better profits both in the near term and in the long term. Even at the largest companies, they’re starting to get it and recognize that customer centricity is the wave of the future.