By Curtis Bingham

It’s a challenge for the CCO, as well as any loyalty executive, to prove value and get it right in the first two years, much less the first. Even though 67% of companies with CCOs outperformed their industry and markets in 2010, it is the most fragile member of the C-Suite, with an average tenure of 31 months based on research conducted by the CCO Council. In my interviews with successful CCOs, one central thread running through our conversations has been the importance of using data to prove the CCO’s value in those first two years. Even a seasoned executive can become overwhelmed or distracted by the job of managing and making data relevant, so here are three best practices to help ensure your data effectively improves your perceived value.

Let the Data Speak – Not Swallow You Up
Collecting and building data is a first essential step in connecting you to improved fiscal results. But rather than making data a central focus of your job, it should be used to inform you of the critical areas where your energy can be focused for greatest impact. Analyzing data should not become the big black hole you lose yourself in. Padded with a little appreciative inquiry, quality data will paint a clear picture for where you can improve delivery of value to the customer. 

Connect to the Customer Using Data
In some companies, the CCO has no direct ownership over processes that touch the customer, making it incredibly important for the CCO to connect her role to customer satisfaction. She does that by constantly measuring and monitoring customer feedback, customer loyalty, and customer satisfaction. Connecting to the customer allows you to figure out what drives customer satisfaction and repeat revenue. It gives you critical traction to deliver your point of view to an executive team. It helps you frame compelling messages to deliver to your teams and customers, and provides the needed borrowed authority to boost the perception of your value.

Own the Customer’s Voice and Make it Visible With Data
Successful CCOs are spending a lot of time communicating stories internally and externally; stories of revenue impact, turnarounds, customer loyalty improvements, etc. At the end of the day nothing speaks more loudly than a great track record and excellent execution—so use your borrowed authority as the voice of the customer to create a buzz around customer or organizational successes, and to plot the road map for continuing relationships. Data may change or disappear, but people will remember stories, and ultimately, the stories you collect persuade others to action.

Question to consider: how adept are you at translating/framing customer data for your executive team?

By Curtis Bingham

Most companies have only two communications channels with customers: sales and complaints. Both of these are important: companies need to sell and customers need ways to seek redress. But neither tells a company what customers need in order to be successful. To ensure success, you must continuously discover and deliver what you know your customers and prospects need, want, and are willing to pay for.

There are four steps to success in this process:

1. Proactively listen to customers in an organized, meaningful fashion
2. Make customer data actionable
3. Drive customer valued change throughout the entire organization
4. Measure effects of the change

The first step is critical for the success of the remaining three.

Customer Insight Conduits
The fastest way to gain real insight into what customers need and want is by establishing Customer Insight Conduits. These Conduits help bridge the gap between company capabilities and market or customer needs.

Customer Insight Conduits are defined as channels through which information passes primarily from customers and the marketplace to a function within the company that is able to make data actionable and drive customer-valued change throughout the organization. These Conduits provide an early-warning system for problems. As problems are recognized, the Conduits serve as a diagnostic tool to help fully understand issues and determine the efficacy of solutions. In addition, the Conduits are a measurement vehicle to assess overall customer value and other metrics.

Here is just a handful of Customer Insight Channels that could be leveraged as a key component to help gather customer data that is then converted to insight, made actionable, and used to drive strategic, customer-centric change throughout the organization:

• Customer advisory boards, comprised of economic buyers of your products/services from an appropriate sampling of the customer base
• Technical advisory boards, comprised of those who are actually going to be using your products or taking advantage of your services
• Customer conferences, where you roll out new products and/or service
• Chat rooms and discussion boards that you host or monitor or both and where you gather ideas and identify problems through product discussion forums
• On-site assistance for a day, in which you send an engineer, consultant or other appropriate person to a customers' site to help them gain the full benefit of your product/service

Using Customer Insight Conduits such as these and many others, companies can gain critical insight that, when made actionable, can:

• Develop successful products and services
• Differentiate from competitors effectively
• Improve prices and margins
• Attract & retain more profitable customers

What channels is your company using to discover and utilize customer insight?

By Curtis Bingham

Customer feedback is a gift-especially from disgruntled customers, because they represent customers that care enough to tell you what they really think rather than being frustratingly neutral in all of your surveys or worse, not responding at all.

So, how do you take advantage of it?

The first question you should ask is whether or not you SHOULD take advantage of it. Not all customer feedback is created equal. Oh, no. Some of your worst customers are price buyers and negotiate away all your profits, are massive credit risks, waste call center resources, and abuse your customer service reps. It might simply cost too much to satisfy them.

To protect your best customers AND your profits, you must do three things:

Prioritize Customers According To Value
Most everybody will agree that some customers are more valuable to your company than others. Guided by your overall customer strategy, use your CRM system to prioritize your customers according to their value to you. Metrics might include profitability, share of wallet, lifetime value, cost to serve, strategic impact, or other metrics.

Tier the Service Offering
Some customers will buy on price alone and purchase the cheapest products possible. World-class companies will tier their product offerings to address the low-price segment as well as a high-value segment. Service offerings must be tiered as well. If a customer isn’t willing to pay for additional service, it is critical that the additional service not be offered or delivered!

Address Disgruntled Customers According To Their Priority And Service Tier
If the disgruntled customer is a low priority and has paid for a lower-tier service plan, after offering to upgrade their service plan direct them to lesser expensive self-service or online channels. The goal is to do just enough to prevent a tarnished overall reputation. If however, the customer is “high net worth” (i.e., high-priority and on a high-service plan), you then must do everything you can in a high-touch fashion to resolve the customer’s complaint and ensure their perception of and loyalty to you is restored.

Here are five steps to do so:

1. Understand the customers’ complaint
2. Determine how the customer would want it resolved in an ideal world
3. Develop and communicate an action plan
4. Deliver on the action plan
5. Communicate the results of the action plan

It should go without saying that if you don’t deliver on the plan after raising customer hopes, you ruin your future chances of getting this customer to collaborate with you, not to mention destroying loyalty and removing barriers to their defection.

Too often, the step that many companies leave out is that of communicating the fix/resolution to the customer. Even though you may have met or exceeded customer expectations, if you don’t communicate the resolution as promptly as possible, you might as well have outright ignored the customer from the outset.

Customer feedback (even the negative kind) is a gift if it comes from valuable customers and it should be welcomed and addressed immediately to protect your reputation, customer trust, and your revenue. Feedback from the rest of your customers might be interesting, but quite possibly irrelevant.

By Curtis Bingham

I recently had a problem with a headset purchased nearly a year ago from Headsets.com. The automatically adjusting speaker volume resulted in numerous aborted calls. When I called to complain the rep said, “Mr. Bingham, your headset is just barely out of warranty.” I waited for the bad news. And then he surprised me by saying, “But I can imagine how frustrating that must be with such an important piece of equipment. I want you to be happy and I’m going to send out a replacement via FedEx. You should have it the day after tomorrow. Use the enclosed return label and send back the defective unit in the same box.” Later that day I received a shipping notification and a personal follow-up from the rep, and exactly as promised I received the replacement headset.

Such excellent care went above and beyond the minimum they were contractually required. But that wasn’t necessarily what won my loyalty. 

Within the box was a handful of Tootsie Rolls and a paper survey, the kind that everyone sends and surely nobody ever reads. Because they had done very well in meeting my needs and even exceeding my expectations, I gave them very high marks on the survey. Deciding to have a bit of fun with them, I answered their open-ended question, “What other suggestions do you have for us to improve?” with the tongue-in-cheek, “I don’t really care for Tootsie Rolls, but Jolly Ranchers, on the other hand…” 

Two days later I received another FedEx shipping notification. I was convinced that somehow their systems had screwed up and sent the notification in error, or I was going to have to waste my time calling them to return a duplicate headset. The package was much lighter than before. And it rattled. I opened it to find a very large handful of… Jolly Ranchers. 

Some employee read the survey, purchased a bag of Jolly Ranchers on their way home from work, and shipped a handful the next day. I had to laugh, as even though I know very well how this game is played, I felt an intense loyalty to them—I won’t even look anywhere else for phone/headset equipment. Not even for a better price. 

Rudy Vidal, CCO Council board member and originator of the Extreme Customer Loyalty initiative at Panasonic, found that the difference between second- and top-box loyalty scores was that customers felt they unexpectedly got something more. As he put it, “it didn’t matter if it was a new car or a lollipop!” 

Or in my case, a Jolly Rancher. Of course, the replacement headset may cost some in terms of time/effort to get warranty service from the manufacturer. But the real clincher for me was the fact that someone not only read the survey and took action—they showed thoughtfulness. The Jolly Ranchers probably cost $0.50, and shipping was $11.50. Of course they did everything better than right with the return. But they won my loyalty for $12. 

What are you doing to show your customers you are actually listening and responding to their needs and desires?

By Curtis Bingham

Customer loyalty is dead. Long live customer engagement. Loyalty is an emotion notoriously difficult to measure, typically only by proxy, such as via surveys that capture the stated intention to recommend or repurchase. But it is tricky at best to overlay stated intent on actual behavior, which can be very different. Consequently, loyalty as a business metric is often misleading and worse: difficult to correlate with other business management metrics used by executives to assess strategic decisions. This, in turn, makes loyalty problematic for justifying increased resources and credibility among customer executives. 

Long live customer engagement. Customer engagement is an effective leading indicator of loyalty and profitability. It is easier to measure, easier to influence, and more strongly correlated with revenue and profits than loyalty measures such as Net Promoter (NPS), Customer Loyalty Index (CLI), or others that are poor proxies for revenue. Effective engagement activities create emotional attachments that draw customers closer to protect them from competitors, encourage repurchase while lowering price sensitivity, gather insight to refine strategy, and ultimately promote evangelism. 

Customer engagement is the sum of activities that build positive connections between a company and its customers and result in greater involvement that positively impacts revenue.

Jeb Dasteel, CCO of Oracle, found that Oracle’s most engaged customers are 7% more satisfied, and 33% more profitable than similarly-sized, non-engaged customers in the same industry. A 2008 study by PeopleMetrics on the impact of customer engagement on financial performance showed that companies with high customer engagement enjoyed 13% higher revenue growth, as compared to 36% revenue losses as customers disengaged.

It is easy to identify engaged customers because they participate in discrete customer programs. Their transactional behaviors are easily observed and their relative profitability is easily calculated. Validated by such clear correlations with profit, customer engagement activities then clearly warrant greater priority, with a commensurate increase in funding. 

Customer engagement activities might include mail or email notifications, post-purchase follow-up calls, participation in online communities, executive or industry advisory board participation, etc. 

The CCO Council recently undertook an effort to characterize customer engagement and create a framework for its members to follow in adopting this new metric. Some of the key recommendations from this effort include:

1. Investments in customer engagement activities should be made according to their impact. The ROI of customer engagement activities can be plotted along an increasing trajectory with the least valuable (but likely necessary) activities being tactical and impersonal and the most valuable activities being those that are both strategic and personal. Personal activities increase engagement, and strategic activities drive longer-term business value. 

2. Engage customers selectively. The most impactful customer engagement activities are typically the most resource-intense. Programs should therefore be carefully matched with those customers most likely to engage further.

3. Simple measurement approaches are sufficient to realize the strategic intent. Participation in select high-value activities and the crossing of thresholds to levels of involvement are two simple measures that can demonstrate engagement. 

Engagement coupled with strategic business opportunity can provide a powerful guide to customers with greater business/revenue potential. Coupled with transactional satisfaction measures, engagement can further highlight those in need of rescue.

Customer engagement is a more easily measured and more accurate metric than the outmoded customer loyalty. It is also a powerful leading indicator that enables executive decision-making to drive increased revenue and profitability. Long live customer engagement. 

By Curtis Bingham

This past March was published one of the very first quantitative analyses that I'm aware of that correlated the effect of customer engagement via social media with the firm's bottom line. In the article entitled, “The Effect of Customers' Social Media Participation on Customer Visit Frequency and Profitability: An Empirical Investigation", academics examined the effect of customers' participation in a firm's social media efforts and found that social media engagement resulted in not only a stronger bond between the brand and the customers, but also discovered that engaged customers visited the store 5.2% more often and generated 5.6% greater revenue than the control group with similar shopping history, identified before the social media effort began. As well, engaged customers as measured by frequency of posting had a stronger preference for premium products and lower price sensitivity, making them more profitable than their non-engaged counterparts.

The researchers examined a large retail wine seller and gathered information on customers' demographics and spending habits including wine purchased from other outlets. They created a control group consisting of customers with similar purchase habits and who are not participating in social media. One of the challenges that could easily get lost in a company's social media experiments is whether the relationship is actually growing or the firm has actually provided greater accessibility to promotional coupons. In this study, the researchers weeded out "price buyers" who were using social media solely for the purpose of obtaining coupons. The social media customers and the control group did not have significant differences in their purchase behavior prior to the firm's social media experiment. Thus, they effectively isolated the effect of social media on a material segment of their customers.

However, these results are sometimes masked by the law of averages. To duplicate these results in your company you should carefully segment customers, observe their behavior, and compare such behavior with an appropriate control group. Even more importantly, it appears that done properly, social media can be an effective tool for engaging customers.

As we see in this study, engaged customers spend more and more often, may have a higher predilection for premium products, and are therefore more profitable.

What can you do to engage customers in your business? How can you go beyond preaching at them or pushing coupons to engaging them in a dialogue, and truly understanding what they need?