Customers now have a champion on the executive team: the Chief Customer Officer. CRM magazine reveals the success strategies of three of these new leaders.
For the rest of the November 2004 issue of CRM magazine please click here
The customer's time has come
Today, as organizations increasingly recognize the value of being customer-centric, the role of chief customer officer (CCO) is appearing on more and more executive teams.
"Each year we're seeing an increasing number of CCOs being added to corporate organizational structures, because we now have a means to measure the return on such a position," says Liz Roche, vice president and practice lead for CRM at META Group. Roche started looking at chief customer officers back in 1999, and had just a short list of "live" CCOs in 2001. "People have been talking about it for a long time," she says. Now they're taking action.
Today such organizations as Coca-Cola, Delta Air Lines, Hershey Foods, Kellogg, Nautilus, and Sears all have chief customer officers.
To be successful a CCO must be an executive voice for the customer and report directly to the CEO. According to Roche, CCOs will ensure that managers and executives in an organization view CRM as critical. "The CCO will be a horizontal overlay and will own the framework for how different customer segments are treated," Roche says. "They will serve as a rallying point for the customer as a design point, as opposed to a line of business or department."
Too often, Roche says, CCOs are set up to fail because they're not given actual responsibilities and spheres of authority. In a 2004 IBM Business Consulting Services study, "CRM Done Right," organizations where managers view CRM as useful, but not critical, to doing business receive a negative 37 percent correlation to success. The study also reports that organizations have a 25 percent to 60 percent chance of success when corporate owns CRM, which Roche equates to a CCO position.
"When CRM is viewed as critical, there is a positive 76 percent correlation to success," Roche says. "I bet if you go back and look at the culture of successful companies and how they view the CCO role, they've come to view it as critical to their way of life."
Campbell Soup Company, Colorado Springs Utilities, and The Evercare Company are three organizations that strongly believe in the power of the CCO role. These CCOs' success strategies, and the positive results their efforts have had on their firms and customers, follow.
Campbell Soup Company
"Campbell's Valuing Customers. Customers Valuing Campbell's."
The framed value statement graces the wall of Campbell Soup Company's New Jersey headquarters, and illustrates the firm's focus on customers.
Another sign of Campbell's customer commitment is the CCO role. CEO Douglas Conant created the chief customer officer position in 2001 as one of his first hires for the executive leadership team. CCO Denise Morrison came on board in 2003 from a general management background at Kraft, and reports directly to Conant.
Morrison has five focus areas: She leads the global sales function to deliver Campbell's sales and profit plan; fosters a culture that is consumer-centered and customer-focused; creates functional excellence that includes customer intimacy and operations excellence; attracts and develops the best sales talent; and develops customer industry relations.
"We are in an era of fragmented consumers and consolidated retailers, so the degree [to which] we can collaborate with our customers at multiple levels in the company is really important," Morrison says. "Having a CCO puts you in a better position to set that in motion."
The CCO has to be out speaking with customers and the industry about key initiatives, according to Morrison. The Global Sales Leadership Team is one way Campbell stays connected to its customers. Morrison's reports represent 20 global sales forces, which conduct joint business planning with customers.
Campbell also brings customers in to meet with marketing associates, to learn of new products, and to try new recipes in the test kitchen using Campbell's products. "We give them an experience that really takes a cross-functional team to pull together," Morrison says. "I think our customers leave with a different view of us."
Morrison has noticed remarkable progress internally, with even more customer focus than when she joined the company. Others, outside the organization, have noticed as well. Earlier this year research firm Cannondale Associates ranked Campbell ninth out of 100 for best sales forces and best practices with the customer--the first year it broke the top 10. The organization wasn't even "on the Richter scale," before the CCO role in 2001, according to Morrison. "I believe it's directly attributable to the role of the CCO and the customer focus that role has been able to bring to the company," Morrison says. "The company works with the customer, and that has been a great evolution."
Colorado Springs Utilities
Three years ago Colorado Springs Utilities completely reorganized from a product-based firm to a process-based organization. Out of this change emerged a new position: chief customer officer. This directive came from CEO Phillip Tollefson, and positioned Springs Utilities to operate as a competitive business with both other utilities and other service providers.
"We actually think our competitors aren't so much the utilities, but the experiences customers have with everyone else," says CCO Kelly Means. "Lands' End, Dillard's, Wal-Mart, or whoever the customer determines is [the] standard for service. Customers expect us to be as responsive, if not more so, than their other favorite service providers."
Means reports directly to the utility's CEO, and his responsibilities encompasses anything related to direct or indirect customers, including reading meters, call center interactions, measurement of services, billing issues, payment processing, and account management. Means's position focuses on the customer at the executive level to provide a voice on key issues, strategic planning, and budgeting.
Under Means's direction Springs Utilities has implemented several strategies for servicing customers in a more flexible manner. For example, employees are now cross-trained to handle customers' complete needs, which eliminates the former practice of sending multiple employees to the same customer site. As a result of strategies like these, the field workforce achieved a 55 percent productivity improvement in the past three years, and the call center saw a 45 percent boost in service levels.
To stay close to customers Springs Utilities collects comments and concerns in an extensive, online customer-feedback system, which is available to all employees. "Almost every group in my organization has a way to get direct feedback from [its] customers on what they thought of the service [employees] directly provided," Means says.
Means and his counterparts on the executive team take this feedback to heart, and examine trends and changing customer expectations monthly. Means tracks this information at least weekly.
Through Springs Utilities' performance management system Means can follow 120 metrics across the entire division down to individual performance. An incentive-based pay system reinforces the utility's goals, and the organization focuses on hiring and retaining people who have a passion and an interest in serving customers.
"It's a great place to be a chief customer officer, because it's so natural to be customer-focused," Means says. "Our owners are our customers."
The Evercare Company
The most likely place to find The Evercare Company CCO Jeff Neppl is out meeting with customers.
"It's the only place where things happen--when you're out talking with the customer," Neppl says. "We have a saying in my organization: 'We want our face to the customer and our back to the company.' We try as hard as we can to live that way."
Neppl joined consumer goods company Evercare in November 2003 as CCO. The role replaced the senior vice president of sales position. CEO Nick McKay, whose parents founded the organization in 1956, made the change to create even more focus on customers. Neppl says that as a small company with only 300 employees, it was important to start demonstrating that customer focus.
"If you're going to align with customers and partners, you've got to start with what's important to them," Neppl says. "There are very few products that we introduce that our customers were not involved in in one way or another."
The CCO role reflects a new operating philosophy, rather than any new systems initiatives relating to CRM. Neppl's directive is simple: talking with customers. He goes out to understand major customers' strategies and brings that back as key input in company planning. Evercare's customers are retailers in the food, drug, mass, club, and specialty markets.
"I'm talking nine to twelve months out with customers on things we're starting to think about," Neppl says. "They see great ideas every day, and just by spinning what we're trying to do from another perspective, we pick up a lot of value. You better learn to listen to your customers and work with them as a true partner if you want to succeed long term."
The Evercare Company has achieved several milestones that Neppl credits to the CCO role. First, the company is healthy and growing, and recently one of the largest retailers in America recognized Evercare as vendor of the year in one of its key business areas. "They outlined Evercare's constant collaboration, and stated that Evercare reacts quickly on a consistent basis to their input," Neppl says. "That is really exciting for a smaller company like us."
Vicki Powers is a Houston-based freelance journalist
Tale of Two CRM COOs
CRM vendors NuEdge Systems and Salesnet have created chief customer officer (CCO) positions that report directly to the CEO. Although one CCO has been in place for more than four years and another for just four months, both organizations are truly practicing what they preach to their CRM customer base.
"That's really why we put the position in place in the first place--it's all about putting our money where our mouth is," says Ted Uczen, CCO at NuEdge Systems, a CRM provider with
Uczen's executive-level focus on the customer has benefited both the organization and its customers since he first became CCO, in February 2000. The first step involved completely reorganizing the company by building customer-facing groups. Uczen says this allows for a tighter relationship with customers, and provides better knowledge about their needs.
By the end of 2001 Uczen had developed a formalized customer contract called Customer Care Guide. This service-level agreement sets expectations, defines the level of partnership, and helps start each relationship on solid ground.
NuEdge regularly solicits customer feedback through its customer advisory board, which meets twice a year. This strategic group provides input on product development issues. The organization also conducted a user interface study by physically watching how customers interact with its products.
"The customer gets a true voice in what's taking place in the company," Uczen says. "They get opinion into products and into how we grow as a company to better serve their needs."
Retention numbers speak for themselves. In the first year after putting the CCO position in place, NuEdge retained 95 percent of its customers. That number has hovered around 90 percent over the course of four years.
"We're really a partner with our customers, versus someone just delivering a product," Uczen says. "That's what CRM is about for us: driving the best possible relationship with your customers to meet their needs, grow their business, and ultimately grow your own business."
Similarly Salesnet created its CCO position in April 2004 to handle its dramatic growth and formalize its customer contact. The organization has always followed a customer-focused strategy, so "all doors were open" when Anthony Nelson started as CCO, he says.
Nelson focuses his customer strategy around building an online community for Salesnet customers. His first project, an e-learning portal dubbed mySalesnet, empowers customers to share best practices with the organization and other customers. This online customer community will continue to evolve in the next few quarters, according to Nelson.
"We recognize we'll only be successful if our customers are successful," Nelson says. "We need to understand their world, the business drivers, and devote resources at the highest level."
Nelson says that having an executive position focused on the customer as part of a CRM organization truly aligns Salesnet and its business strategy with its customers. "We're pushing hard to make sure their implementation and experience with Salesnet are positive and successful ones," Nelson says. "At the end of the day, the proof is in the pudding." --V.P.
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