Chief Customer Officer : Getting Past Lip Service to Passionate Action

Chief CustomerOfficerGetting Past Lip Service to Passionate Action

Jeanne Bliss

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Praise forC H I E F C U S T O M E R O F F I C E R

Jeanne Bliss is a force to be reckoned with when you tell her you want to focus onyour customers. With her great energy and uniquely strong background, she wasable to help us accelerate our performance, which translated to revenue growth andprofitability. Here, she lays all of it down on paper so that you can have the benefitof those years, that passion and that know-how. Learn from Jeanne how to navigatethrough the corporate structure and the key things senior leaders and executivesmust know to make customer profitability the priority in their organization.

Chandler Barton, retired president and CEO, Coldwell Banker Corporation

Chief Customer Officer blows past theory and gets right to the practical matter ofhow to bring a company together on behalf of customers. Bliss tells how to over-come the impasse of silos and varying agendas in realistic ways with approachesthat can be practiced today. Shes lived inside the corporate structure and impartssage advice on how to best navigate through it to get results.

Edward Benack, senior vice president of the customer experience andservice, Monster Worldwide, http://www.monster.com

Jeanne Blisss pithy, down-to-earth style, and realistic solutions come straight outof her unparalleled background inside corporations as the chief for driving cus-tomer focus and profitability. Anyone trying to clear a path across the organiza-tion for customer accountability would be wise to read this book cover to coverand complete the thought-provoking exercises.

Joe Wheeler, author, Managing the Customer Experience

Save yourself years of trial and error! Just pick up this book, enjoy the read(because you will), and do what it says. And get your leadership to read Chief Cus-tomer Officer too. Jeanne will tell them what you want them to hear but may beafraid to say in the frank, no-punches-pulled way that she does it here. Jeanne Blisshas been out there herding cats across the silos and with leadership. Shes doneeverything youre thinking of doing to get the action moving, and then some. ChiefCustomer Officer is an MBA on driving customer profitsJeanne Bliss style!

Cyndie Beckwith, vice president, customer experience,California State Automobile Association

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All the tools, technology, and training to drive customer profitability wontget you where you need to go if you dont first address the corporation, itsagenda, and how to drive this work across the constituencies. Chief CustomerOfficer debunks how to get this done. It gives realistic perspective and real-world techniques for instilling the motivation, the metrics, and the mechan-ics required to make traction inside the corporate machine.

Bill Price, former first global vice presidentof customer service, Amazon.com; president, Driva Solutions;

and cofounder, LimeBridge Global Alliance

Chief Customer Officer gives a realistic view of what this work of driving cus-tomer focus and profitability is really all about. Jeanne Bliss has been there,shes one of us. And she gives the tools, support, and real-world advice thatwe need to move this work ahead in our own organizations.

Matt Woody, vice president, customer support services,Fidelity Investments

Jeanne Bliss has gotten down the rigor of what really happens in the dailyquest to bring customer focus into an organization. She gives clarity to whatwe are living, but never seem to have the time to think through and strate-gize our way out of. These are: bringing the different factions of the organi-zation together for a common customer purpose, setting aside the individualsilo priorities, and creating metrics that rally and unify disparate parts of theorganization. Finally, the best thing Bliss does is offer ideas, answers, and toolsso youre left with hope that you can get this work done and a game plan forhow to do it.

Pat Barry, chief operating officer and chief financial officer,Bluefly, Inc., www.bluefly.com

Jeanne Blisss take on how to drive customer profitability management intoour organizations is clear and actionable. She gets right to the heart of whatmakes this work challenging, and provides realistic approaches, tools, andher personal stories of how she persevered her way through the work. ChiefCustomer Officer is a reference which Ill reach for again and again as I drivethis work inside my own organization.

Mike Webber, manager, customer support program & project office,Bombardier Business Aircraft

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Chief CustomerOfficerGetting Past Lip Service to Passionate Action

Jeanne Bliss

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Copyright 2006 by Jeanne Bliss.

Published by Jossey-BassA Wiley Imprint989 Market Street, San Francisco, CA 94103-1741 www.josseybass.com

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any formor by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except aspermitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the priorwritten permission of the publisher, or authorization through payment of the appropriate per-copyfee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400,fax 978-646-8600, or on the Web at www.copyright.com. Requests to the publisher for permissionshould be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street,Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008, or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best effortsin preparing this book, they make no representations or warranties with respect to the accuracy orcompleteness of the contents of this book and specifically disclaim any implied warranties ofmerchantability or fitness for a particular purpose. No warranty may be created or extended by salesrepresentatives or written sales materials. The advice and strategies contained herein may not besuitable for your situation. You should consult with a professional where appropriate. Neither thepublisher nor author shall be liable for any loss of profit or any other commercial damages, includingbut not limited to special, incidental, consequential, or other damages.

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Jossey-Bass books and products are available through most bookstores. To contact Jossey-Bass directlycall our Customer Care Department within the U.S. at 800-956-7739, outside the U.S. at 317-572-3986,or fax 317-572-4002.

Jossey-Bass also publishes its books in a variety of electronic formats. Some content that appears inprint may not be available in electronic books.

Library of Congress Cataloging-in-Publication Data

Bliss, Jeanne.Chief customer officer : getting past lip service to passionate action / Jeanne Bliss.

p. cm.ISBN-13: 978-0-7879-8094-8ISBN-10: 0-7879-8094-3

1. Customer relationsManagement. 2. Industrial management. I. Title. HF5415.5.B565 2006658.812dc22 2006000891

Printed in the United States of AmericaFIRST EDITION

HB Printing 10 9 8 7 6 5 4 3 2 1

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www.josseybass.com

Contents

Introduction vii

P A R T O N E : W H Y C U S T O M E R E F F O R T S C R A S H A N D B U R N 11 Machine of Mediocrity: Corporate Machine

on Autopilot 32 The Power Core 163 Dueling Silos: Competing Metrics, Mechanics,

and Motivation 54

P A R T T W O : W R E S T L I N G W I T H C U S T O M E R L E A D E R S H I P 8 54 Leadership Gut and Guts: Real Passion or

Hand Wave? 875 Guerrilla Metrics 1016 Herding C-A-T-S: Customer Accountability Targets 1157 Reality Check Audit 140

P A R T T H R E E : I S A C H I E F C U S T O M E R O F F I C E RT H E S O L U T I O N ? 1 7 9

8 Do You Need a Chief Customer Officer? 1819 The CEO and CCO Partnership:

The Tom Sawyer Formula 19510 Structures for Driving Change 217

P A R T F O U R : J U S T I N F R O M T H E F R O N T 2 4 111 True Life Stories of Chief Customer Officers 243

Epilogue 275Afterword by Jill Griffin 281

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References 285Acknowledgments 287The Author 289Index 291

vi CONTENTS

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Introduction

Heres the deal about this book. Its about reality. How to get thecustomer thing (you know, the public proclamation to focus on cus-tomers, followed by mass confusion on what to do) done beyondthe lip service, T-shirts, coffee mugs, and big kickoffs. Its about howto push the customer rock up the hill by turning the focus on theobvious: customer profits. Its about how to figure out how big thathill is. And its about how to keep that rock from falling on yourhead . . . as little as possible. Its about figuring out if youve got theleadership guts to take this effort on, and its about navigating thecorporate machine to figure out how and where to best leveragethis effort from. And, yes, this book is also about knowing when topick up your marbles and go home. So enough with the hand wav-ing and chanting that this year really is about the customer! Enoughwith the crazy task forces, the meetings before the meetings, themeetings after the meetings, and the actual silly meetings thataccomplish little more than pushing peas around on our plate.Lets get something done.

Theres a lot of talk going on now about having a chief toown the customer effort. Sounds great, right? Well . . . maybe.Dont put your money down until you know what youre buying,how this role can fit in your organization and how hard you haveto work to make it a success. This is expensive real estate in termsof commitment, time, people, and changing how people work. Itwill send some into a state of happy delirium and will annoy oth-ers. You need to know exactly what it will do to whom and whybefore you pull the trigger. Does this chief give everyone the abil-ity to wipe their hands of doing the customer thing? Does this chiefperson make it easier for the CEO to make a public commitmentto the customer? And just what are they chief of? Surely to leadthe customer thing, dont they need to own the operations where

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the customer issues are created and resolved? Not necessarily. Whodoes this person report to? Is this an evangelist or a doer?

Youll get answers to all of these questions in this book. Youllexamine your organization and determine if this is the right fit foryou. Most important, this book will prod you into understandingwhat has stalled your efforts in the past. What are the deeply rootedthings in the way your organization is wired that has gotten in theway, and what considerations are required before you step yet againinto the customer commitment arena.

For twenty-five years, Ive had the fifty-ton weight of Just go fixit strapped to my back regarding the customer thing. Ive workedwith enlightened leaders where weve been in lockstep every step ofthe way. Having had the good fortune to begin my customer zealotrycareer at Lands End, reporting to founder Gary Comer, I receivedthe foundation to know when that path was right. But Ive spent waytoo much time pounding on doors to get into meetings and ontothe agenda and to have a seat in the room where the big decisionsare made. These experiences gave me a living laboratory to figureout how to navigate in less friendly waters. My instincts for knowingwhich kind of water Im in has become quite sharpened, as have thedifferent approaches required to get the job done. Over the years,these survive-and-thrive tactics have amassed into a playbook, whichI have assembled into this tome you have in your hands.

Its my goal to give you as many ways as possible to fight thegravity of that rock. Along the way, youll also need to become a bitof a Tom Sawyer, getting people to come paint your fence. And Ipass along how to do this too, because the real joy in this workcomes when its not your own anymore but instead becomes thework of the organization. I hope you find real value in these meth-ods behind the madness, passion, guts, and process to get a com-pany to wrap itself around its customers. Keep pushing on thatrock! Through this book, Ive got my hand at the small of yourback prodding you on.

Reader RoadmapChief Customer Officer is written so you can discover the reality of theeffect your organization is having on customer relationships andprofitability and then do something about it. The process includes

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understanding what drives the organization, how you work to-gether, and how readily you can come together to solve the toughcustomer issues. And, finally, what are your metrics and leadershipaccountability? Do they line up to mean anything significant aboutmanaging customer relationships? The answer to your situationmay be naming a chief customer officeror it may not. This bookwill help you discover what the right answer is for your organiza-tion. Traversing it will lead you through four categories of infor-mation and decision making:

Why do customer efforts crash and burn? What is your com-panys power core? Where is the organization predisposed to per-form? How is it directing company priorities, the development ofcompetencies, and the areas where people seek to excel? How doyour collective company actions have an impact on customer rela-tionships and profitability? How are the silos working together? Dosilo conflicts and disconnects end up in the customers lap? Youllfind answers to these questions in Chapters One, Two, and Three.

Are you wrestling with customer leadership? What role doesleadership have in driving the customer agenda? Are they leadingit, hindering it, or on the sidelines? Are your metrics a bowl ofspaghetti? Do they line up to drive strategic customer manage-ment? Or are they the usual conflicting silo-based metrics used tomanage the discipline? Are people held accountable by leaders forclear and actionable customer performance factors? Explore yourcompanys customer leadership in Chapters Four through Six.

What are you actually doing to match the commitment to thecustomer to the actions of the organization? What is the series ofactions you should be taking to drive the focus? How many of themare you doing now? Is there a difference between the actions thatleaders say the company is taking versus what the organization be-lieves is happening? Take the Reality Check Audit in Chapter Sevento find out the answers to these questions for your organization.

Is a chief customer officer the solution? Do you need a chiefcustomer officer (CCO) to advance the action? As the CEO or cor-porate leader, do you know what youre buying when you put some-one in this organization chart box? Are you willing to put skin inthe game for the job to have optimum impact? What is the CCO jobdescription, how can it be structured, and where should it report

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in the organization? What will be its sphere of influence? What arecompanies who already have chief customer officers doing? Turnto Chapters Eight through Eleven.

What This Book Will Do for YouExecutives and CEOs: Use this book as a platform to evaluate yourorganization and your personal role in driving the customeragenda. You may be wondering why you just cant get traction oncustomer management and customer profitability even thoughyouve named it as a corporate priority. Through this books eval-uations and outline of the issues, you can understand why theimpasse exists. There is information here to assist you in deter-mining if the answer is a single position or a whole host of condi-tions, attitudes, and actions that must change in your organization.Hiring or appointing a chief customer officer will require a per-sonal commitment by you. This book will outline what you need tobe ready and willing to step up to doing before you put a name onthat organization chart.

To the new and existing chief of the customer effort: This isyour comprehensive handbook packed with ideas on how to getthis vital work accomplished. The tools, approaches, stories, andempathy contained in it will arm you with a place to start and amethodology for how to proceed in the first month, the first year,and those that go beyond when things really start to take hold.Youll get ideas for how to manage across the silos, where to weavein accountability, and how to engage the commitment of top lead-ers in the journey. Most important, it will provide ideas on how tobreak the work into segments so you can advance the organizationdown a specific path of improvement.

Senior leadership and functional leaders: You may be trying to crack the nut on how to deliver a comprehensive customer ex-perience. You may be at the point where its obvious that all of thefactions youre trying to bring together to get that project donehave different agendas. Or perhaps youre the service vice presi-dent with vast amounts of customer information that could drivethe company forward, but people just arent lining up to partici-pate. You may have joined forces with another functional vicepresident to get the company to make some tough cross-company

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changes required to manage customer relationships. In your pas-sion, you may have found yourself the de facto leader for thisgnarly companywide effort. This book takes and translates theissues youre experiencing but may not have had time to articulate.It offers tools to move the logjams youre experiencing and tacticsfor how to proceed with your particular brand of challenge.

January 2006 Jeanne BlissRedmond, Washington

INTRODUCTION xi

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To my husband, Bill. He knows why.

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Chief Customer Officer

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Part One

Why CustomerEfforts Crash and Burn

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Chapter One

Machine of MediocrityCorporate Machine on Autopilot

For whatever hallucination-induced state Ive been living in for thepast twenty-five years, my entire career has been dedicated to drivingthe customer agenda inside highly respected corporate machines.The most important skill required for the job: pushing back on theanswer no. No, we cant change that policy. It makes too much money.No, customers dont need us to resolve their problem on the first call. No,no, no. There is no reason that we should talk to customers to understandwhy they left!

In the best of times, this work has enlightened companies tocultivate change in how they work to deliver experiences to cus-tomers. This is when we customer crusaders rejoice . . . as we recedeinto the background and the ideas blend into how the companybegins to think and act. But then there is the state we usually livein. Like the guy at the circus spinning plates on those sticks, we getone change going and move on to the next, only to notice that thefirst is wobbling erratically and about to crash.

Why does it take such a push to wrap the focus of a companyaround the customer as the source of their revenue? Im no shrink-ing violet, and I can tell you that for every battle Ive won, Ive lostjust as many. The big question is, Why has it been a battle? Whyhave I even had a job? Largely reporting to company presidents,my charge has been to advance the customer commitment anddrive action to achieve customer profitability. In a nutshell, Ivebeen paid to be as annoying as the sound of fingernails on a chalk-boardto get the attention of decision makers (and frequently the

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president who hired me) so they consider the customers perspec-tive and the revenue impact of their business decisions.

For all the beating of breasts about the customer as king, we stillhavent gotten very far. Why? In my experience, its been becauseof the corporate machine and how we citizens of the machine havebeen programmed to achieve our success and reward.

The corporation has become a machine of mediocrity to itscustomers. Over the years, the organizational model has been castas pushing widgets out the door. What goes out is defined by thetraditional silos created to drive competency vertically: marketing,sales, shipping, and operations. Those in charge of building thecompetencies are motivated to create performance standardswithin their span of control. And those of us working inside thesilos have learned that success can be achieved most easily throughcompartmentalizing our work and staying singularly focused onour mission. These separate standards inhibit executive leader-ships ability to comprehend and manage their companys total sit-uation with customers, as they are served up only a slice of how thecompany performs by silo. This frequently accounts for the ran-dom, reactive, and less-than-strategic responses Ive seen presidentscall for time and time again regarding customers. When squeaky-wheel issues are fixed per executive mandate, these efforts are her-alded greatly, while pressing and strategic customer issues lie inwait as the corporate machine scurries to fix the one random issuethat landed on the presidents desk.

Squeaky Wheel Whiplash: Spinning the Heads of the Phone PersonnelA highly regarded financial services company with a strong market-ing department convinced leadership that they could get a lotmore sales with every inbound customer service call. The solution:get the telephone personnel to up-sell and cross-sell customerswhen they call requesting help. Payout to the phone personnel wascalibrated according to how many customers were convinced totake the offers and buy the value of the add-ons. Simultaneously anew effort was rolled out within customer service to improve thephone personnels ability to build customer rapport and increasebrand value in the customers eyes. An elaborate system of surveys

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was created to measure customers attachment to the brand. Theseresults linked down to the phone rep so they could be held ac-countable for the results.

In order to win the payout for the up-sell and cross-sell promo-tion, the phone personnel had to stay within a talk-time boundary.At the same time, the new behavior to build customer rapportprompted longer conversations. Talk times naturally stretched overthose previously tracked. There was payout for up-selling and cross-selling (read: We care about this so we pay for it). But there wasno payout associated with achieving a customer-rapport phone call(whiplash! We care about this too but dont pay for it). So hereshow those calls went. With one eye on the timer clocking minutesand prompting them to end the call, theyd try to build rapport.Then with talk-time dwindling, theyd rapid-fire offers to up-selland cross-sell.

The result was uncomfortable customers, disappointing addi-tional sales, and frustrated phone personnel. What caused theseare classic. A single silver bullet was shot through the air to getmore cash out of customers. It was fired from the marketing silo,which did not have the benefit of knowing what else was going on.That disconnect made a tangle of things for both customers andthe reps trying to serve them. While the phone personnel wantedto build rapport, they also wanted to make their payout. The mixedmessages about what was important drove them to go where themoney was, compromising the results of both efforts.

The Big Aha!The corporation does not live in rapport with its customers be-cause the customer doesnt experience a company through its silos.The customer experiences a company horizontally, across the silos. The typical silo structure bumps the customer disjointedlyalong to deliver the outcome of its experience. Its only when thesilos clang and clash into one another that the total experiencecomes together. And the customer becomes the grand guinea pig,experiencing each variation of an organizations ability, or inabil-ity, to work together.

This outcome is the brands defaulted customer experience,and its what it becomes known for in the marketplace. Companies

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dont plan their brand experience; they leave it to chance. Theyleave the determinants customers use to decide if theyll returntheir impression of the company, brand values, differentiation, andhow they are treatedto chance. And they hope it will be all right.

But it isnt. Across the world, after all these years of supposedfocus on the customer, up to two-thirds of all customers leave dueto poor customer service (Tepe, 2003). This means that the break-downs in the execution of our basic interactions with customersmake them exasperated enough to walk. And customers are doinga lot more walking these days. That bit of information FrederickReichheld (1996) delivered about the typical U.S. corporation los-ing half its customers every five years had us all aghast. That wasjust the beginning of customers growing willingness to depart forthe competition. Between 32 and 94 percent of all customers rightnow are thinking of walking away from the companies that cur-rently serve them (Haughton, 2005). But it appears we have got-ten somehow numbed by that dismal performance because wehavent done much to make those numbers change. What we havenow is a frenzied awareness of a problem that often leads to aneven more frenzied approach to a solution.

CEOs asked by the Conference Board in 2005 to rank the chal-lenges that keep them up at night (Barrington and Tortorici, 2005)put customer loyalty and retention third overall in the UnitedStates, just behind steady top-line growth and consistent executionof strategy by top management. Those three things are linked, yetanother big aha! A company challenged to consistently executeacross leadership divisions is also likely to experience challengesdelivering a cohesive customer experience. This will have animpact on their ability to keep and develop profitable customers.The worldwide Conference Board results for this study expose yetanother telling fact. Across the world, CEO respondents from com-panies classified as more successful (those that earned the high-est average return on assets) more frequently listed customerloyalty and retention as a chief concern over CEOs of less suc-cessful companies.

The bottom line is this. The organizations weve built, the waysweve compensated and motivated people, and the accountabilityweve demanded have created a neat and ordered world for us torun our businesses. But for the most part, weve let down our cus-


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tomers. Its as if were all working with one hand tied behind ourbacks. To see what I mean, answer these questions: Do you have tolobby other silos to work collaboratively so you can get the best out-come for customers? How much time do you spend lobbying ver-sus actually working together? How many of the completed ideaslook vaguely like the one you started with? And (the kicker), howmany of them end up delivering something better for customers?Ive spent much of my time inside the corporate machine lobby-ing; it sometimes amazes me when things get accomplished. I canttell you the number of three-hump camels Ive been involved inbuilding:

A T h r e e - H u m p C a m e l S t o r y

Were in a conference rooma whole mess of us. In attendanceare sales, service, and marketing and operations people. Were all there at the behest of our chief executive to establish a loyaltyplan for a segment of customers. One executive sponsor was in the room. And thats all we needed for the show to begin. The ideas started flying. We could give points! What about a birthday club? Lets offer discounts. The fact of the matter was that a bunch of information we had gathered indicated why we werent keeping these customers: we had increased prices on services, reduced our availability, and were slower in responding to requests and resolving issues. My team hadtabulated and followed the trends on these issues for a few months, so we knew what was up. And the latest customer feedback validated that information. When we presented these data to the group, it was pretty much seen as a wet blanket on those initial ideas. There was a pause. Then the three humps began to build. What we ended up with was an outbound phone call made by a telemarketer to offer the customer a discount on his or her next purchase. At the end of the call, a question was asked if there was anything the customer wanted to discuss about the company.

This was not exactly the rethinking of the service processes ourteam was primed to push for. The bone thrown our way was thatquestion at the close of the call. In the end, this turned out to be a mediocre effort. It just had too many agendas. What we didwas build a three-hump camel. And we spoiled many customersdinners with our pointless telemarketing phone call.


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The Power CoreWho approves the camels design and the function of the camel canusually be traced to the power core of the organization. Most com-panies have a predominant power core. Frequently it is the strongestskill set in the company or the most comfortable to senior execu-tives. Because executives know the power core best, people gravitateto perform in that area. Success in the power core competencies areassuredly met with acknowledgment and reward. The power corecan be the most influential in directing the silos and is one of thebiggest determinants of how success, metrics, recognition, and com-pany growth are defined inside the corporate machine.

The complexity and scale of work required to drive customerprofitability and loyalty into the business model is greatly affected bythe strength of the power core and its distance from the customer.

When I left Lands End and moved on to other companies, I hadmany watershed moments. Understanding the power core and itsimpact on the customer has repeatedly proven itself to be a crucialfirst step in assessing how to proceed. Why? Because understandingthe company power core zeroes in on the corporate machines moti-vation and ability to drive movement toward customer relationshipsand customer profitability.

At Lands End, the power core was the customer (Figure 1.1).Almost everything we built was created from the customer per-spective out. Performance metrics and recognition were groundedin how we delivered on the promise and guarantee made to cus-tomers. I can say unabashedly that it was highly rewarding person-ally and professionally to be in this type of environment. It spoiledme for the other experiences that were to come as I kept search-ing to replicate the Lands End experience. However, it gave methe strong tools and abilities I needed to weave the customer per-spective into companies where the power core resided elsewhere.

I got a loud wake-up call when I moved to the automotiveindustry and observed that the power core was not the customerbut the sales and marketing of the product. During my time in theindustry, the economy was shrinking, and the automotive productmarket was shifting and on the cusp of understanding customervalue and retention. At that time, automakers relied heavily onwhat historically had brought them success: conquest sales, heavy


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marketing, events, and incentives. Sales and marketing was thepower core. Even a meeting presentation was called a pitch. AndI needed to understand how people processed and prioritizedpitches in order to even make it onto a meeting agenda. If Iwanted to talk about loyalty, it needed to be about a certain vehi-cle, not overall brand loyalty. To get attention, it was best to firstprovide sales numbers, followed by the customer retention andrepurchase information. The lessons from that experience con-tinue to ring true: know the source, methods of operating, and pri-orities of those with their fingers on the power button.

Understanding the power core source and its impact is key toframing how to proceed with the customer work. Whenever I workwith companies now, early on I assess where the company powercore resides and measure its impact in driving the corporate agenda.This yields an immediate understanding of the complexity and scaleof the job required to integrate the customer experience and cus-tomer profitability into the business model. Chapter Two providesthorough information on the power core concept and a process foryou to diagnose and understand your company power core and itsimpact on customers. As strong as the power core is, it can put upblinders to the other corporate competencies required to drive cus-tomer profitability and deliver a powerful customer experience.Chapter Two also identifies the potential customer profitability hotspots and potholes a company may encounter for each power coreand offers a diagnostic tool for identifying the scale and complexityof work ahead.


FIGURE 1.1. When the Power Core Is the Customer:The Case at Lands End

CustomerProduct

Marketing

InformationTechnology

Sales

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Dueling SilosAs the mechanics of running the business take over, the corporatemachine goes on autopilot and begins to lose sight of its customer.The machine moves further away from the strategic relevance ofcustomers in business decisions. And then the customer graduallysinks out of sight. This is usually not purposeful, but it occursrepeatedly. In a companys quest to meet the numbers, strategy isbypassed for short-term hits, and the grueling work of figuring outhow to deliver whats most desirable to customers is short-cut oravoided. To get me off their backs, Ive even seen executives picka date, create a push to drum up action, and commit their leadersto pledge to push them through. And thats when we tend to muckthings up even more as a proliferation of tactics and messages getscooked up that randomizes both the customer and the company.

You can recognize dueling silo agendas at work when short-term revenue requirements compromise long-term revenue efforts.Its when lack of clarity on whats really important to differentiatethe company for the customer is not understood the same way byeveryone who needs to know. And its when there is an imbalancebetween the culture to drive revenue and the understanding andpurpose of including customer investment to meet those goals. Intheir rush to push the customer thing forward on the corporateagenda (for what could be more blasphemous than not commit-ting to the customer?), many organizations fail to address the met-rics, the motivation, and the mechanics of just how to move themachine to improve with regard to their customers.

Dueling Silos at Work: Funky Task ForcesThink about the number of task forces youve been involved inaround customers. Did anyone have a clue, beyond the first fewmeetings, on how you were going to get the wild things done thatthe brainstorming had birthed, where you were going to get thefunding from, and who was going to lead the effort? How many ofthese have you been involved in during the course of your career?And WHY do executives keep calling for these things?

See if this sounds familiar to you: Alarm! Alarm! Our cus-tomer satisfaction scores just came in. . . . We [expletive] at our


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scores. Lets get some people together to see what we can do aboutthis. Everyone here means well. No doubt, the room is filled withyour brain trust on the subject: the technical wizards, the customerservice people, the marketers, and all of the others until youve gota room busting at the seams. There is great talk, great enthusiasm,and agreement to have another meeting. Everyone goes back totheir corners of the business. Many, many more meetings and timeand debating and finger-pointing later, little has changed. And thebeat goes on. Here are three reasons why: (1) the customer thingis still considered something layered on to the existing work, (2)theres no one clearly in charge or able to take charge of knittingthe pieces together, and (3) there are dueling silos. Unless youvebeen working in a non-Dilbert world somewhere, youll know whatthis means.

H o p e i n a C a s e S t u d y : E v e n H a r r a h s a n d R o y a l B a n k o f C a n a d a H a d F u n k y Ta s k Fo r c e s

Harrahs is the gaming and hospitality company admired by manybecause of its ability to target and develop its customer base andcustomer profitability. Senior vice president of business develop-ment Rich Mirman described Harrahs version of the funky taskforce as the huddle after the huddle. This is the same as whatweve all experienced in the halls before or after meetings wherepeople make a decision in groupthink about how much theybelieve what is being advocated and how much theyre thinkingabout lining up behind it. Heads nod in unison in the meeting, but as even Harrahs experienced at the beginning of its journey,youve always got some cat herding to do. For Harrahs, theindividual casino properties would do the nod to a companywideapproach being pitched and then would go back and decide if it applied to their market. They would dissent in private. SaidMirman, All of a sudden youre spending 25% of your time tryingto get people to run the play (Gulati and Oldroyd, 2005, p. 10).

The same rang true at Royal Bank of Canadas credit card division.Product folks agreed in principle to the customer-focusedapproaches but dissented by continuing to do their own thing inmarketing. When the metrics proved that current customers weremore open and likely than noncustomers to become credit cardcustomers, the tide began to turn.


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Dueling Silos at Work:Annual Opportunity Missed

Annual planning is a missed opportunity for driving customer prof-itability inside the corporate machine. The silos usually pick theirprojects and plan their budgets independent of one another.Short-term tactics with outcomes easily attributable to individualdepartments (for purposes of clean compensation and metrics)comprise annual plans and financial commitments. These oftencome at the exclusion of messier companywide efforts that couldresolve customer issues and subsequently yield more significantlong-term revenue.

Frequently all the money invested in the big satisfaction surveycant even be applied, since the results are out of sync with theplanning cycle. Some of the companies I have worked with did the hand wave to customer satisfaction when the annual surveyresults came in. Then, based on the culture, there was some rush-ing around to change some things, especially if we had egg on ourfaces from the results. The customer surveys typically come out ofthe annual planning cycle, so defining whats needed is usually outof whack in planning investments. This is hardly a continuousimprovement effort with progressive metrics to drive an increasein customer experiences, customer profitability, and customerloyalty. There is typically no baseline for each of those three dimen-sions or goal line. Yet this is how most companies continue to ap-proach the customer thing. Without common accountabilitytargets, actions will continue to be planned tactically, based on theindividual annual plans of the silos. Companies need to have anongoing roadmap to define where they want to make progress incustomer profitability, customer loyalty, and customer experiencedelivery. For example, they need to take a strategic look at howmuch prospecting for new customers or business needs to be doneevery year to replace the revenue lost in the previous year. Theyneed to have annual goals for the movement of customers fromone level of purchase behavior to another. Without these customer-centered goals, the company continues to focus only on businessoutcomes; wheel spinning continues, and companies continue tostand still regarding customers without knowing exactly why.


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Motivation, Metrics, and MechanicsThree areas are most accountable for creating the chasm betweenthe corporate machine and the customer: motivation, metrics, andmechanics. When they dont factor in the needs of customers, theyadvance the corporate machines lackluster performance, drivingthe advance of mediocrity and the decline in customer profitability.But when they are strategically executed to manage customer rela-tionships and profitability, they can reverse the course of brand andcustomer erosion. Most important, they enable the corporatemachine to work from a unified platform with customer profitabil-ity and company revenues as the unifying force. All three of thesemetrics, motivation, and mechanicsare interdependent, just as thesilos should be. And all of them have to be worked on. Ive neverseen a company (not even those whose power core is the customer)avoid sinking into at least one of these quicksand ingredients thatform the muck of our dysfunctional relationship with customers.

Because of how we have been conditioned to act inside the cor-porate machine, the frenzy of activity that occurs throughout thecompany doesnt necessarily aggregate to mean anything to cus-tomers. Lack of clarity on whats really important to differentiatethe company for the customer is not crystallized. Its certainly notunderstood the same way by everyone who needs to know. And thecustomer sinks deeper and deeper into the quicksand. ChapterThree provides more information on the obvious and unspokenimpacts of the natural dueling that occurs between silos. Thereyoull also find diagnostic tools to determine how deeply each ofthese is being ignored or executed inside your corporate machine,as well as how to prioritize the execution of the elements based onneeds and the reality of executing them in the short and longterms. That chapter also offers field-tested tools and approachesto try to keep those plates spinning in some semblance of orderfor the customer.

Lets now revisit those no comments from the beginning ofthis chapter to see some more customer quicksand at work.

No, we cant change that policy. It makes too much money. Customersare ready for it. This was a debate about how to ease in a contract


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change that would commit customers to a longer term of commit-ment than they were used to. A strong argument was made to earnthe right of customers to want to commit longer by first under-standing and resolving issues and fully training the field force in howto roll out the new policy. There was huge push back because therevenue upside had already been calculated and people wanted tosee the additional revenue rolling in now. The initial source of thepush back was finance. They had run the numbers on a cost basis toquantify the benefit of the policy change. The president was con-vinced of the revenue boost to the balance sheet and did not wantto wait. Since this affected the sales force, the sales vice president wasa powerful advocate for moving forward sooner rather than later.The result was high customer frustration and backlash for the deci-sion. A massive and expensive process was put into place to try torectify the situation. The company is still trying to make up for thecustomer ill will generated from the decision based on an internalquest to drive speedy revenue for the corporate balance sheet.

No, customers dont need us to resolve their problem on the firstcall. This push back came from the call center leader. He was eval-uated and compensated based on his cost management ability sowas in favor of a system that first triaged customers into bucketsand then put them in a callback queue, or a holding pattern. Thisput customers into voice mail hell as they bounced through a sys-tem trying to classify them and get them to the right party, usuallyrequiring a call back. It has been proven that the longer customerswith a problem wait, the more they stew about it and the bigger theproblem looms in their minds. The fix must then include notonly resolving the initial problem but also resolving the miserableexperience of trying to get the problem solved. This is exactly whathappened here. Any costs saved on reduced calls through thetriage process were more than spent with the additional salvos thathad to be applied to overcome the bad experience it caused.(Triage is a term that drives me crazy. If customers werent feelingsick at the beginning of the call, they got that way after theyd beentriaged.)

No, no, no. There is no reason to talk to customers to understandwhy they left! This scenario played out in the financial services in-dustry where service agents had convinced the sales leadership thatprice, not service agent performance, was pushing customers away.


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Outbound calls to find out the reasons were considered costly andnot necessary. A great appeal was made, suggesting that if we couldspeak with these customers, perhaps not only could we find outwhy they had left, we could also potentially solve the problem andconvince them to return. Finally, the funding was approved tomake the calls to a sample of customers who had left. Customerswho didnt renew their service agreement were asked why they hadleft. The result: 75 percent said that service agent quality waslargely factored into the reason for their split. Armed with thisinformation, the company secured funding to add more call cen-ter personnel who were especially trained to speak with customerswho expressed issues with the company and who had left. Thirtypercent of the lost accounts contacted reestablished contractsbecause (1) someone noticed they had left and contacted them(hint: know whos leaving you and ask them why) and (2) they hadthe issue that had caused them to depart resolved.

ConclusionThe bottom line is that the organizational behavior weve all becomeproficient at has forced us into the narrow role of pushing our indi-vidual widgets out the door. What goes out is defined based on thesilos were in; marketing, sales, shipping, operations. It is true thatthe intent of the silo structure is to build strong competencies verti-cally. But it cuts the customer out. What they receive is frequentlycompromised to meet the agenda of the corporate machine.

And we all wonder why we havent made more progress on thecustomer front.

It is these so-called soft elements that have become our quick-sand. Examples of leadership balancing a culture of revenue and customer investment are extremely rare. In our quest to pushthe customer thing forward on the corporate agenda, we havefailed to address the metrics, the motivation, and the mechanicsof how to move the machine in concert to deliver meaningful cus-tomer experiences.


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Chapter Two

The Power Core

This work is as much about knowing what motivates people as it isabout getting the job done. Thats where the power core comes in.Most companies have a predominant power core. Frequently it is thestrongest skill set in the company or the most comfortable to seniorexecutives. Because executives know the power core best, peoplegravitate to perform in that area. Understanding the strength andpull of the power core will help to uncover the hot spots and pot-holes for driving a customer profitability culture. It will frame thescope of work required to influence change. It will provide clarityon the approach to take in creating partnerships with leaders andin motivating people within the organization through the changeprocess. And it will help to zero in on your companys motivationand ability to drive movement toward customer profitability.

People who lead customer improvement efforts frequentlybegin without understanding the impact of the power cores pullfor driving the agenda. They dont think this through and beginwork on customer issues in earnest, but it inevitably hits the brickwall of the power core. People want to do the right thing; they wantto work on the customer stuff. But the pull of the priorities of thepower core will always course-correct them in the next meeting withtheir boss. Ive seen brave souls pull together enthusiastic task forcesto fix the customer thing. The first order of business is to bring peo-ple together to figure out how to get an issue fixed. So far, smoothsailing; a funky task force has begun. But when it gets more seriouswith accountability, metrics, and a reporting schedule assigned tothe task, the backlash begins: We dont report to you. Theres notime for this. This wont leave time to make sales. On and on it

16

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goes inside corporate machines around the world. This is becausethe power core hasnt been asked to the dance.

For example, I really had to scratch my head on how to ap-proach driving the customer agenda with some technology-basedcompanies. The greatest challenge was that I just hadnt gottenclose enough to the power core to understand the best way tomake early inroads. The process stuffimproving broken opera-tional issues, improving the service experiences, and so forthiswhere efforts typically gain momentum and establish a track forsuccess within many other industries. But with these particular or-ganizations, the product emerged as the power force that the worldrevolved around. It was about the software. I learned that lessonwell. The customer work gained momentum when the efforts puta laser focus on using customer feedback to improve the product.

The Elephant in the RoomThe power core is an unusually strong yet often unspoken force.Never underestimate the power of its pull. Because executivesmake decisions through the filter of the power core, people wantto perform there: they will be driven to perform where the enthu-siasm is the highest, the understanding is the easiest, and therewards are the greatest. As a soldier inside the corporate machine,which would you choose? Would you focus on something peopletalk about in high-level terms but has no day-to-day accountabilityor compensation tied to it (the customer thing)? Or would youexcel at your quarterly sales goals that you receive urgent e-mailmessages on, receive quarterly incentives for achieving, and forwhich stack ranking lists are posted comparing you to your peers?

The end game is to incorporate the drive for managing cus-tomer relationships and profitability into the power core. Becausethese goals and actions remain elusive, theyre simply not called forwith the same level of gusto. In many cases, theyre not called for atall. Especially where theres success at pumping out sales, saturat-ing the marketplace and growth, or the product demands contin-ued updates and captive customer loyalty, it is difficult to take thetime out to do what people consider the slow work of process: con-necting the efforts across the organization and even counting thenumber and value of customers who go in and out your doors. The

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customer stuff always seems to be something to layer on top of thereal work rather than being part of the work itself. Its often seenas the competition.

Six Common Power CoresThere are six common power cores that determine how things goinside the corporate machine. Youll likely find one of them to bethe dominant factor in decision making and direction in your com-pany. You may also see another in a supporting second place ofstrength. Here are the six power cores that Ive found to have thegreatest impact on driving customer profitability inside the cor-porate machine. (Youll find them summarized in Table 2.1.)

When the Power Core Is the ProductThe product is the company to the marketplace. Product develop-ment groups get the most resources and the most play, and theyhave the most power. Just look at the organization chart. Metricsare about new products, size of products, getting products out,speed of product development, and competitive progress of prod-ucts in relation to competitors.

When the Power Core Is MarketingThe marketing department defines the tenor and tone of the rela-tionship with customers. Customer relationships may be collapsedto marketing campaigns and tactics. Brand at the advertising mes-saging level is emphasized, but the implications for how to tie thatto the experience can fall short. Ive literally seen companies taketheir strategic direction from their advertising agency. While focusand vision can be very strong here, Ive seen two pitfalls that some-times occur when marketing is the power core. First, all eyes lookup to the president or chief marketer for calling the shots becausehe or she is so strong on the vision that people stop trusting theirinstincts in exchange for predicting how the chief marketer wantsit done. In addition, marketing strength doesnt necessarily begetthe patience or skills to translate the vision into an operating planthats executable.


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THE POWER CORE 19

TABLE 2.1: The Six Predominant Power Cores

Product Power Core Marketing Power Core Sales Power Core

Product development Marketing defines the Motivation is toward is the focus. The tenor and tone of the making the numbers, product is the relationship with and performance is company in the customers. Customer measured in short-marketplace and in relationship may be term sales goals and the boardroom. collapsed to marketing targets. Sales targets Metrics are about campaigns and tactics. are the strongest and new products, size of Brand at the advertis- most tracked products, getting ing messaging level is corporate metrics. products out of, and emphasized, but the Frequently the speed of product implications for how organization hasnt development and to tie that to the worked together to competitive progress experience can fall ensure that the after-of products in relation short. the-sale experience to competitors. delivers on the pro-

mise of the sale.

Vertical Business Information Technology Customer Power Core (IT) Power Core Power Core

A business discipline As the bulk of spending Company decisionsis the specialty and related to IT projects emanate from under-forms the core of far exceeds other standing what will power. For example, financial requirements, drive greatest value to the business focuses IT has been given customers in the strongly on its pro- power in determining short and long terms. ficiency in the disci- the priorities of the Driving profitable pline of insurance. organizationnot just customers aligns The metrics revolve in computer resources, marketing, sales, on the execution of but by having a large product development,an industry, fre- voice in representing, service, IT, and quently as its always selecting, and en- operations investment.been done. Processes abling IT-dependent They connect to can be inward focused projects across the enable optimum rather than customer organization. product and sales delivery focused. execution to ensure

optimum customer value is delivered.

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When the Power Core Is SalesThe quest for the sale pulls the weight in the company. In theseorganizations, people are motivated to make the numbers. Per-formance is frequently measured in short-term sales goals and tar-gets. Sales targets are the strongest and most tracked corporatemetrics. Speed sales are rewarded, even if they dont necessarilyresult in long-term customer profitability. Frequently the organi-zation hasnt worked together to ensure that the after-sale experi-ence delivers on the promise of the sale.

When the Power Core Is a Vertical BusinessThis power core is based on a particular competency related to anindustry or function. The term vertical power core is used becausedeliverables to customers are akin to a vertical line of businesshighly focused on one particular area. Banking is an industrywhere many businesses grew strong through the detailed execu-tion of the functions of the account, the loan, and identifying therisk. In these types of deep competency businesses, theres a riskfor customers to become anonymous. The process becomes thedescription for what the person is working on: Big loan opportu-nity coming in at noon today. The financial services revolution,for example, has been in large part the realization and incorpora-tion of the human process into the execution process. Weve allexperienced the strong vertical disposition of the medical indus-try: doctors still define their work by procedure rather than cus-tomer name ( Ive got an appendectomy at eight, then tonsils atthree). This makes sense given the ways medical practitioners havebeen classically trained: livers, hearts, the circulatory system, andso on. Bedside Manner 101 usually didnt show up on the medicalschool curriculum. And so where a vertical business is the powercore, it is frequently because the foundation of the business andits growth are based on the execution of that function.

The insurance industry is yet another vertical power core busi-ness. Most insurance companies have classically run their businessesto be proficient in the disciplines of actuarial calculations, policydevelopment, claims execution, and other traditional areas of theinsurance business. However, shifting consumer needs and demands,


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new market entrants such as Progressive, and the heralded practicesof USAA have prompted that industry to have a collective aha!moment. The race is on as they are trying to wrap a customer expe-rience around the delivery of that policy.

When the Power Core Is Information TechnologyThe technology tail wags the dog of the corporation. What Ive cometo call the CRM (customer relationship management) hallucina-tion has created a strange forcing function where information tech-nology (IT) becomes the power core in many organizations. Becausethe bulk of spending related to IT projects far exceeds other finan-cial requirements, IT has been given an inordinate amount of powerin determining the priorities of the organizationand not just incomputer resources. It also has a loud voice in representing, select-ing, and enabling IT-dependent projects across the organization.Typically these spending requests come through annual planningand lack a strategic plan relative to overall advancement for improv-ing customer profitability or the customer experience. In its questto serve the company, IT too has fallen into the well-intentioned trapof allocating resources by silo. This compromises what should be astrategic IT strategy into a bunch of silo-driven pieces that may notcumulatively have the most potent impact.

How many of you have been the recipient of some CRM enginethat can do a million things? Yet when they are thrown over the wallto the field or to the customer service people, theyre just not used.Why? Because IT got busy building the CRM systems that everyonesaid they wanted and needed right away (they were a very popularsilver bullet). IT began the building process and quickly movedahead of many business owners ability to define the purpose of thesystem, what they wanted the data to do, and what company actionsneeded to kick in as a result of knowing the data. So IT was forcedto make decisions and define the business rules! Not that they didntwant help. Its just that our brains werent wrapping themselvesaround the new CRM world as quickly as their fingers were writingthe code. It was rare when the processes requiring humans to driveactions from the data (such as calling customers, sending out tar-geted communications, resolving issues) were thought through.There was often negligible input from the field or the service folks

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who were the intended users (some called themselves victims) ofthis stuff. That time period from 1998 through 2003 (according tothe budgets I was involved in) inadvertently placed IT dead centeras a very strong power core in many businesses across the globe.

When the Power Core Is the CustomerPassion for customers prevails. Leaders are close to the customer,and it is often that leaders passion that built the business. Employ-ees feel that the handoff of that passion from founder through theranks of the company is an inheritance that is theirs to pass on andnurture. Company decisions emanate from understanding what willdrive greatest value to customers in the short and long terms. Thecompanys long-term desire is to deliver a differentiated customerexperience to drive the greatest amount of profitable customers.This is still rare, surprisingly, after all these years of effort. Corpo-rate machines with the customer as their power core are, not sur-prisingly, the companies known in the marketplace to be best forcustomers. These companies began with the customer at their core.In a company with a customer power core, customer needs drivethe overall plan for whats developed and delivered.

Other Possible Power CoresIts likely that the power core in your company may not be one ofthe six most common identified; for example, operations mayemerge as your organizations predominant skill set for runningthe business. You are a well-oiled machine driven by the mechan-ics of execution. This is sometimes seen in the hospitality businessor distribution businesses. Your power core may be finance. Thepoint is to identify your power core and use that understanding toframe the scale of the work to integrate customer leadership andcustomer profitability management. The six that I identified aresimply the predominant ones. Regardless of what your power coreis, it will have an impact on how you strategically address the work.

H o p e i n a C a s e S t u d y : I n t e r n a t i o n a l H e a l t h I n s u r a n c eP u t C u s t o m e r s i n t o t h e V e r t i c a l P o w e r C o r e

Denmarks International Health Insurance (IHI) is an insuranceprovider for expatriates and corporations with a large presence


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overseas. In 2000, CEO Per Bay Jorgensen led the company torethink its purpose. The new direction was to participate in thelifetime health and personal safety support of their clients. Thisfocused on increasing wellness and illness prevention, which wasmore fiscally sound for their corporate clients and yielded betterhealth management for patients. With this shift, IHI went fromexecuting the vertical insurance competencies of policies andclaims to creating a partnership with customers in the managementof their overall health and wellness. Helping corporate clients withpreventive solutions resonated well. It created a connection thatmore traditional insurance relationships had not fostered beforeand carved out an increased market space for IHI. By showing howwellness management helps companies prevent employee healthproblems and their expense 70 percent of the time, IHI became anally and partner for client businesses. It learned to predict theneeds and timing of clients and was therefore able to prepare anddeliver relevant solutions that customers and corporate clientsrewarded them for. International Health Insurance achieved a20 percent annual growth rate while other insurers were sufferingfrom a soft market (Vandermerwe, 2004).

Dont Try to Change the Power Core:Dance with ItI have learned that optimizing the strength of the power core andthe differentiating value it brings to customers is the solution. Thecompany has got to sign on to weave the customer perspective andexperience into the operation of the power core. Changing thepower core is not the answer. Its this: know what the power core is.Know who drives the power core, and know how to make a com-pelling partnership with the power core to integrate customer prof-itability efforts into the day-to-day activities that now define successfor the business. Thats where you get real traction.

Mea CulpaMake no mistake: do not try to morph the company power coreinto the customer power core. I spent more than my fair share oftime in my business youth in a zealot-induced frenzy trying to dojust that. A lot of energy was used up pushing that rock up that hill,

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where it rolled back to crush me repeatedly. Already fearful of shrink-ing from my five-foot, zero-inch stature, I did myself a real injusticein this particular valiant but misguided crusade. As the rocks repeat-edly fell on my head, I was absolutely knocked down a peg or two.Moral of this story: Dance with the power core!

The power core makes a much better dancing partner than spar-ring partner any day of the week. The first ten years of customer cru-sading I spent with passion as the major ingredient. This works in acompany already predisposed to customers as the core of business.But its not the ticket for long-term sustainable change. Balancingthat passion with pragmatism, partnering with key people, and devel-oping the homing device for sniffing out the base of organizationalpower let me make much greater inroads over the years.

Power Core Strength and Distance from the CustomerA set of competencies exists in organizations that have learned todevelop and deliver customer experiences across the silos. Thesecustomer focus competencies shown in Table 2.2 form a chain ofactions required to manage the handoffs of the customer experi-ence across the enterprise. They need to become second nature toorganizations wanting to become proficient at managing customerrelationships and customer profitability.

Each power core naturally develops certain skills and pays lessattention to others, so the power core will have an impact on theease with which these cross-company customer competencies canbe developed and integrated. How swiftly an organization can inte-grate them correlates to how closely aligned they are to the rein-forced power core skills. The distance between where you are nowand when you get to wiring in customer focus competencies willdepend on how natural this work is to those who drive the powercore. The power core of your company will likely make some ofthese competencies easier to develop than others. Some will seemnearly impossible; it may be that the inclination to work this wayjust doesnt exist naturally. Thats why its critical to figure out howstrong the power core is in possessing or advocating the customerfocus skills sets. You need to know how interested they are in com-ing to the customer party:


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TAB

LE 2

.2.

Cus

tom

er F

ocu

s C

om

pet

enci

es

Pro

duct

s, s

ales

, In

tegr

ated

M

etric

s dr

ive

Rec

ogni

tion

Cla

rity

in h

ando

ffsC

usto

mer

se

rvic

es b

ased

cu

stom

er

relia

bilit

y in

key

base

d on

act

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and

inte

grat

ion

feed

back

driv

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on c

usto

mer

ex

perie

nce

inte

ract

ions

able

ope

ratio

nal

betw

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silo

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goin

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met

rics

deve

lopm

ent

c02.qxd 2/7/06 10:42 PM Page 25

Where do you drop the ball repeatedly with customers? Where are you vulnerable because of your focus on other

things? Which competencies are considered optional or up

to the individual zealots to nurture and push in theorganization?

An Examination of Each Power CoreAn examination of each power core will connect the dots for youbetween what your company power core is and the ease or diffi-culty you experience in driving customer focus. It will illuminatewhy, based on the core of power in your organization, you are ableto accelerate some things and hit roadblocks on others when itcomes to customers. Putting you through these paces is meant togive you that Aha! moment, so that you can frame the scale of youreffort and craft a realistic plan for your organization.

When Product Is the Power Core

If your strength in the marketplace stems from the products yousell, you are striking a chord with customers on the tangible side ofthe experience equation. Table 2.3 identifies the typical areas ofstrength and vulnerability for companies with a product power core.

A r e a s o f S t r e n g t h

Product strength in the marketplace means that you are doing wellat understanding your competition and are strong about deter-mining where to focus. Sustaining that position of strength is de-pendent on staying relevant. Youre likely a well-oiled machine onmaking continuous product improvement. There are clear opera-tional metrics that you are used to tracking and delivering on,which is the good news. The flip side of that coin is that they mayor may not have anything to do with customers. Im giving you thebenefit of the doubt here that you are also a strong listening com-pany, using customer feedback to constantly tweak and improvethe products you create. That means that you should have your fin-ger on the pulse of customer needs.


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TAB

LE 2

.3.

Pro

duc

t P

ow

er C

ore

Str

eng

ths

and

Vul

nera

bili

ties

Str

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Inte

grat

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Met

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driv

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ecog

nitio

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larit

y in

han

doffs

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serv

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bas

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cust

omer

re

liabi

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in k

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on a

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d in

tegr

atio

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edba

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rives

on c

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perie

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inte

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ions

able

ope

ratio

nal

betw

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silo

son

goin

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eds

met

rics

deve

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C u s t o m e r V u l n e r a b i l i t y a n d H o t S p o t sIn a product power core company, the vulnerability comes fromthe soft side of the experience equation. This is not the develop-ment of the tangible product. Youve got that down. The hot spotis the experience wrapped around getting the product into cus-tomers hands and serving them after the purchase. Theres a realrisk for a product power core company to deliver a defaulted cus-tomer experience, which happens when people dont plan thehandoffs and the experience is random, dependent on the paththe customer cuts across the organization. The handoffs betweendepartments are tricky, and its easy to see how the customer expe-rience can fall between the cracks.

Getting your field up to speed on the knowledge and under-standing for how they support the product can be a challenge. Itsjust not second nature. You may also find it tough to do the processwork for setting up and maintaining service and service levels thatare customer focused. So metrics around those competencies areprobably spotty at best and vary wildly dependent on the leader ofthe particular operating areas.

C a s e S t u d y : W h e n a P r o d u c t - C e n t e r e dP o w e r C o r e L o s e s S i g h t o f C u s t o m e r s

When the product is the focus, a company can get an if we will build it, they will come mentality. Think about the Polaroidcamera, for instance. Powerfully strong in the marketplace because of its cutting-edge technology for a time, PolaroidCorporation thrived in an era where success came from immensely powerful product development silos that pushed their ideas out into the marketplace. Eventually they lost touch with their customers. Digital cameras and photography burst into the marketplace as a better way to get instant pictures.Customers were offered a total and expanded solution that met their desire to have immediate access to their photographicimages. The Polaroid solution paled in comparison. As historyshowed, not reacting quickly enough to changing customer desires and increased market competition pushed Polaroid to aweaker place of relevance in the market and with customers(Ready, 2004b).


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A K i c k s t a r t f o r I n t e g r a t i n g t h e C u s t o m e ri n t o t h e P r o d u c t P o w e r C o r eIn a product-driven organization, start wiring in customer focuswith the product development process (Table 2.4). This will makesense to the organization. You can build competencies here thatcan translate over to the softer sides of the organization. But youwill be doing it at that point after having had some early successes.This is the key: you must prove that you can make some things hap-pen to get people to want to do more. The people leading the cus-tomer focus charge need to understand the product developmentprocess and decision-making mind-set. Zero in on the methodbeing used to garner customer feedback for identifying issues andmaking improvements. Then make a clear and strong metric sys-tem for tracking and marking performance in this area.

For example, at Microsoft, the product development teamsestablished customer-focused product improvements when a tech-nology solution was created that let customers send on-the-spotmessages when their software malfunctioned (Figure 2.1). CalledWindows Error Reporting, this piece of software created real-timetracking and tallying of software malfunctions sent from customersdirectly to Microsoft at the time when they occurred. This imme-diate tracking put the customer experience with the software rightin front of Microsoft programmers. It had an actionable impactbecause it was still in the first language of the organization: soft-ware. It worked because it provided swift and relevant data. And itworked because the product teams took ownership of the process.

THE POWER CORE 29

TABLE 2.4. Product Power Core Kickstart

1. Focus on product development.

2. Establish a customer feedback system.

3. Create initial performance standards.

4. Institute tracking and reporting.

5. Introduce guerrilla metrics.

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You need to introduce the customer language into the prod-uct development language, so next move on to bringing the guer-rilla metrics into play. Guerrilla metrics is a set of five initialmetrics I suggest you use to get the customer action moving insideyour organization. (See Chapter Five for all the details.) The com-pany needs a strong senior advocate to move this work forward ina product-oriented environment, so before you go further here;get the absolute agreement for doing this customer-centered work.One thing that works for me is to have a person from the productoperating area be part of my team in the development of the tac-tics moving forward. The most important thing is sharing the reinsof the customer leadership agenda with the product area. Forginga partnership with them and acknowledging the power they wieldin driving the customer to the company is critical. Keep workingon the approach. Dont develop solutions on your own and thentry to get them to sanction it or bless it. That wont work.


FIGURE 2.1. Windows Error Reporting Solution

Source: Microsoft product screen shot reprinted with permission from MicrosoftCorporation.

c02.qxd 2/7/06 10:42 PM Page 30

When Marketing Is the Power CoreCustomer is the language of marketers, so there is an inherentunderstanding of the need to connect the experience and createa comprehensive brand. Table 2.5 identifies the typical areas ofstrength and vulnerabilities for companies with marketing as theirpower core.

A r e a s o f S t r e n g t hStrong marketers create a solid platform to define the overall ex-perience so the company has a sort of beacon to follow in execut-ing its operating plans. If the marketing group is far along usingcampaigns and tactics, the data can be in good shape for examin-ing and understanding what is meaningful to customers. Like theproduct power core, marketing groups have a clear set of metricsrelated to their discipline that they use for tracking, such as churn,campaign results, and direct marketing sales lift. This under-standing will be of good use as the work is moved to progress fromthe internal metrics about the company business to the metricsabout the customers response about how theyre treated by thecompany.

C u s t o m e r V u l n e r a b i l i t y a n d H o t S p o t sWhen marketing is the power core, its a bit of a wild card. Somemarketing functions own the customer experience. In this case,they have taken on the comprehensive efforts companywide. Theyare working to connect the operating areas for delivery of the con-tact points, and they are connecting the messaging and data. Thatsan enlightened environment, however. More traditionally, whenthe power core is marketing, the focus on the customer relation-ship is about marketing campaigns and tactics. Brand at the adver-tising messaging level is emphasized, but direction to the operatingareas for how to deliver the brand experience can fall short. Thebiggest part of the work here is not in convincing the marketingpower core of the importance of the work but in gaining its ac-ceptance of its scope and expansive responsibilities. This workrequires additional skill sets beyond marketing campaigns, datamanagement, and communication plans. It requires process work,change management, and new leadership approaches. It requires

THE POWER CORE 31

c02.qxd 2/7/06 10:42 PM Page 31

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the development of different motivation and reward programs anda whole new approach to accountability.

Fe e t o n t h e S t r e e t : R e s e a r c h R e p o r t o n A l i g n i n gt h e M a r k e t i n g R o l e w i t h C E O P r i o r i t i e sA study completed by the Association of National Advertisers(ANA) and Booz Allen Hamilton in 2004 identified a potentialchasm between the priorities of CEOs and what central marketingorganizations (CMOs) are focusing on. The baseline for CEO pri-orities in this study was the Conference Board 2004 CEO top chal-lenges, where it named top-line growth, speed and flexibility andadaptability to change, and customer loyalty and retention as thetop three priorities. The ANA/Booz Allen Hamilton study foundthat marketers focused on more tactical issues such as maintainingbranding guidelines, sharing best practices, and counseling divi-sions. Driving the CEOs agenda and driving innovation were onlyprioritized by only 37 and 35 percent of marketers surveyed,respectively. These results have a connection to the work of drivingcustomer profitability and relationships in that in many companies,the CEO looks to marketing to lead the customer effort. This addsto the growing importance for the CMO to align with the priori-ties of the CEO and take on a more strategic role across the orga-nization. Table 2.5 identifies the strengths and vulnerabilities of amarketing power core. Table 2.6 shows how marketing depart-ments can kickstart their efforts to lead the strategic drive for cus-tomer relationships and profitability.

THE POWER CORE 33

TABLE 2.6. Marketing Power Core Kickstart

1. Gain agreement for scope of work.

2. Create process and change management competencies.

3. Define the customer experience and identify priority contacts.

4. Track and improve priority contact performance.

5. Introduce guerrilla metrics.

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A Kickstart for Integrating the Customerinto the Marketing Power CoreThe goal here is not in convincing the marketing folks to believein the customer; they already have that religion. The goal is gain-ing consensus with marketing to expand the scope of the work toinclude the process work and the integration across the silos. Thiscan be an easy conversation to gain agreement on the need for es-tablishing an overall customer experience (who among us has nothad the 360-degree customer view hallucination?). But convertingthat conversation to realistic commitment and action is the chal-lenge. Where will the resources come from to expand from tradi-tional marketing work to process change and operations-orientedchange? Next is the large-scale challenge of redefining the cus-tomer metrics. Customer loyalty performance is defined in manycompanies as loyalty programs driven by marketing campaigns.Youve got to get past this limited definition and establish a set ofmetrics with relevance to understanding the outcomes of how youare treating your customers. And marketing needs to move past itstraditional boundaries and look to the rest of the company tounderstand and define customer issues and priorities.

H o p e i n a C a s e S t u d y : H o w M a r k e t i n g C r o s s e dC o n t i n e n t a l s D i v i d e w i t h C u s t o m e r s

Continental Airlines analytics group continuously understand whatthe customer issues are by tapping into the forty-nine thousandfrontline folks who have contact with customers daily. Here is agreat example of how marketing has taken supreme advantage offeedback to drive targeted actions. And in doing so, it has emergedas a key player in bringing the company silos together on behalf ofthe customer. Continental has formalized how it does this into athink tank experience across the organization.

Marketing ambassadors bring in flight directors, managers, flightattendants, and all other frontline personnel to provide their take on what is happening in the customer experience. There is a never-ending supply of relevant, actionable ideas that come forth andinspire the marketers to translate them to customer relationshipimprovement tactics. For example, there is a keen sensitivity tomollifying a customer whose flight was delayed. Thus began a seriesof ideas for how to soothe the travelers experiencing this frustrat-ing situation.


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After several test tries with different marketing vehicles, Continentalnow knows that sending out a letter of apology from the CEO has agreat and genuine impact on customers. It has validated proof thatthis letter helps to keep customers flying with Continental. By listen-ing to the high touch input from the frontline personnel, translat-ing it to action, and then applying high tech analytics to determinethe return on investment, marketing has connected the organizationin the effort. Its hard to know if the marketing department wouldhave ever gotten that information delivered to them about weary trav-els in the impassioned format that they received it during one ofthose think tank sessions. Survey feedback might have brought it up,but it was the pleas of the frontline that made it a priority.

The moral of the story is this. Marketing has the tools and theknow-how to drive a powerful customer crusade. At Continental, itleads that crusade with the help of many others through all parts ofthe organization. And in doing so, customer focus becomes self-propagating as more and more people give ideas and think aboutthe customer in preparation for their time in the think tank(Gulati and Oldroyd, 2005).

Marketing should emerge as the leader in bringing together allparts of the organization to do this work. Start with the definition ofthe customer experience. This will immediately put marketing inthe role of including all parts of the organization to work throughthe execution implicationsand well beyond the traditional mar-keting role. Take a breather then (a couple of weeks usually works)so the real scale of the work to do the customer thing sinks in. Dur-ing this time, discuss the guerrilla metrics to strategize how the shiftto the customer should take place for metrics and accountability.This will lead to the need to review the current ways that customersare measured and managed. Again, this is a comfortable space formarketing to live in. As stated previously, the biggest thing will be tod

Documents

Chief Customer Officer : Getting Past Lip Service to Passionate Action