Article No :1030 | June 4, 2013 | by Paul Hagen
While not yet mainstream, the Chief Customer Officer (CCO) position continues to gain traction.
Over the past seven years, Forrester has observed an increase in the number of companies that have a single executive leading customer experience efforts for a business unit or an entire company—this year, we identified 730 such leaders, which we believe is a small fraction of how many actually exist.
Despite the relative youth of this position, our observations of the group highlighted several trends and commonalities that help us put together a profile of the CCO in 2013:
- Title: “Chief Customer Officer.” Chief Customer Officer is now the title used by 45% of these types of executives, up notably from 30% last year. Apart from that, the only two titles with any real traction are Chief Experience Officer (18%) and Chief Client Officer (11%).
- Tenure: two years or fewer. This is a relatively new position at most companies, which explains why 44% of CCOs have spent two years or fewer in their current job. However, 55% of these leaders are internal hires with significant history with their company. Among those we studied, the median time at their firms was more than seven years.
- Background: diverse and senior. While CCOs’ backgrounds remain diverse, 31% of them now come from previous positions within operations, quality, or process improvement. Additionally, 29% were previously division presidents or general managers, showing the importance in seniority within this position.
- Reporting structure: member of the executive leadership team. 85% of CCOs now sit on the executive management team within their companies, up from just above 50% in 2012. More than half of those we observed report directly to the CEO. The rest report most frequently to the president of a division or a line of business, or to a senior executive such as the CMO or COO.
- Company size: all sizes. Similar to 2012, CCOs are fairly evenly distributed among companies of different sizes. The largest concentrations are found in companies with revenues between $1 billion and $5 billion (26%) and in small companies with revenues below $250 million (25%).
- Industry: software firms lead the pack. Firms in a wide range of industries have CCOs, but we found these executives most frequently in the software, professional services, and financial services industries. Highly regulated industries—such as financial services, utilities, healthcare, and telecommunications services—all had an increase in representation relative to 2012.
CCOs are not only becoming more popular, but also more powerful as they sit on executive management teams. It is important that they take full advantage of this new opportunity to make real customer experience improvements that lead to profits. To do so, they should:
- Create end-to-end accountability for customer experience. Customer experience success requires change across all parts of the organization, not just in specific functions like marketing or customer support. Executives in the CCO position are ideally positioned to drive that change.
- Design experiences rather than processes. Customer experience transformation involves changes in the fundamental ways that a company operates and delivers value to customers. The big uptick in CCOs with operations backgrounds signals an awareness of this fact. These leaders need to reframe problems and opportunities from the customer’s perspective, not the internal point of view that business process improvement takes too often.
- Build a cultural shift. 2013 saw an increase in the scope of the CCO role from advisory-type positions to more operationally structured positions. One company added all marketing and sales functions to its CCO’s line of command, while another put customer quality and its dealer development network under the direct control of its CCO. This operational control makes it easier to drive culture change across the organization.
Despite the growing number of CCOs and the potential improvements that they bring with them, it is important that CEOs don’t blindly follow the hype and assume that hiring a CCO will fix all of their customer experience problems. Instead, they should establish three preconditions for success.
- Strategic mandate. Because CCOs need to create organization-wide change, executive management teams need to uniformly understand and support their efforts. This means that the executive team must define the purpose for appointing a CCO, build customer experience into the company strategy, and adopt companywide customer experience metrics that correlate with key business performance outcomes. One CEO personally recruited a CCO to reinvent the experience, clearly signaling a top strategic mandate.
- Cultural maturity. Customer experience teams typically build internal momentum that sets the stage for the CCO’s arrival. A portfolio of customer experience projects, engaged employees, and deep involvement by the HR department signal that the firm is ready to appoint a customer experience executive. One firm convened a workshop with 75 HR leaders across business lines to ensure that they understood the firm’s customer experience strategy. This allowed HR to begin adjusting the way it hires, trains, communicates with, and rewards staff—elements that affect the organization’s culture.
- Viable position. To succeed, companies need to give a CCO the clout and tools to transform the way a company operates. To do this, firms need to create a position that has power, operational linkage, and budget influence. One CCO advises, “To ensure success, the CCO has to influence operations and how the company delivers the experience to customers. This means the person needs to have influence over other resources used to support these activities.”
CCOs will play an increasingly critical role for firms—not just in helping them differentiate based on great experiences, but also in adopting new business architectures and operating models made possible by new capabilities like digitally connected products and services, mobile computing, social networks, and dynamic partner networks. Successful CCOs will move their company from a reactive find-and-fix mentality to one that aligns employees, partners, processes, and technologies around customer goals and uses emerging capabilities to deliver new value.
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