Defining the CCO
The first CCO was hired in 1999 at Texas Power and Light.
The CCO role is still quite new, the first appointment to which was Jack Chambers, the CCO of Texas New Mexico Power (TNMP), in 1999. Because it is still so new, there is neither an Executive MBA program nor an HBR treatise or field guide to being a CCO. Consequently, the role remains relatively undefined and poorly understood, even amongst the C suite and especially amongst customers. A number of CCOs still have to explain what their role is when they hand over their business card to customers.
Chief Customer Officers may be known by many titles, however the CCO is properly defined as “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.”
While not a requirement that the CCO be a board-level position, to be effective, the Chief Customer Officer must be one of the senior-most executives of the company. Chief Customer Officers typically report directly to the CEO, although there are some exceptions.
The CCO must be the ultimate authority on customers, understanding customers better than any other individual in the company and perhaps better than some customers may even understand themselves.
The distinction between a CCO and VP of Service is evident in the second aspect of the definition. The hallmark of the CCO is the ability to create and drive customer strategy across the company, unencumbered by boundaries imposed by traditional silos or business units. Without this ability, the individual’s purview is limited and does not warrant the CCO title.
Finally, the CCO must use the comprehensive customer insight and the strategic purview to acquire and retain the most profitable customers.
Chief Customer Officer, Chief Client Officer, VP of Customer Experience—the titles are not important. What is important is that in the end, the customer recognizes the intent of the title, and the power that it provides the bearer to act in the customers’ best interests
The Genesis of the Chief Customer Officer
In 2003 there were fewer than 20 people in the world with the obscure title of Chief Customer Officer. These included a small handful of trailblazers including Marissa Peterson of Sun Microsystems, Doug Allred of Cisco, and Jeff Lewis of Monster.com. Most people at this time had never heard of the title and many of these couldn’t fathom the need for another member of the C-Suite.
Early CCOs were more of a “Chief Customer Service Officer” whose primary focus was on customer service and retention. Their efforts centered on helping their company “play nicer with customers.” Some were focused on finding ways of keeping customers from suing the company, and some are unfortunately still stuck here.
Despite much success, some of the early pioneers faced such an uphill battle that they ended up leaving or retiring early. Some were forced out the moment the company’s revenues hit a speed bump. Another had a heart attack, retired, and left the field altogether.
However, not all suffered such dramatic fates. Many succeeded and carried the torch forwards, paving the way for others to follow.
The Chief Customer Officer of Today
There are now more than 500 Chief Customer Officers in the world and perhaps hundreds more serving the same role but without the formal title. The role is evolving rapidly, and more CCOs are being appointed every month.
The CCO role is evolving into more of a “Chief Customer Strategy Officer,” focused primarily upon driving profitable customer strategy at all levels of the company with the express goal of acquiring, retaining, and serving the right customers for greater profits. It is no longer a “nice to have” designation; for many companies it is business critical and primary source of competitive advantage. In a telling about-face, many people have stopped complaining that a CCO is unnecessary because a company has a CMO. Instead, they are advocating an extreme position in which the CMO should be replaced with a CCO.
CCO Goals & Challenges
The CCO by definition is designed to drive customer and corporate strategy into the C-Suite and throughout the company. Because CCOs can provide the authoritative view of the customer they are uniquely qualified to shape corporate strategy to guide the company in the coming years. As well, CCOs must be the authors of customer strategy to define customer portfolios, prioritize customer retention and acquisition efforts, create greater customer value, and increase loyalty.
Chief Customer Officers, regardless of their industry or tenure share three common goals:
- Drive profitable customer behavior: To help customers spend more, and more often, the CCO must focus on initiatives such as profitability segmentation, customer retention, customer loyalty, satisfaction, and improving the customer experience. As well, many CCOs will use in-depth customer insight to inform the sales and marketing efforts to acquire more of the “right” and profitable customers.
- Create a customer-centric culture: One of the most important roles of the CCO is to help create a strong, customer-centric culture complete with accountability and ownership at all levels in the company. CCOs that fail at this imperative incessantly put out fires and burn out as nobody else takes ownership. CCOs must prioritize customer initiatives to drive the most profitable initiatives with the greatest customer impact. They must put a face on customers and help employees (especially the non-customer-facing employees) remain focused on driving customer value.
- Delivering and demonstrating value to the CEO, the Board, peers, and employees: Because the CCO role is new and some are not yet fully convinced of the value, the CCO must strive to deliver demonstrable value to all stakeholders, not the least of which are the CEO, the Board, and peers. Because results are sometimes harder or take longer to measure, CCOs must be very clear about their performance metrics to allay concerns about performance. As well, CCOs have to proactively collaborate with some executives may feel threatened by the CCO’s broad purview into customer issues that span traditional silos.
The successful CCO:
- Grows the customer base
- Enhances profitability
- Increases the strength of the customer base as an asset
- Balances the C-suite and Board of Directors with their traditional focus on cost cutting and revenue-growth