Conversations With Chief Customer Ofcers At USAA, Key Bank, And Rosetta Stoneby Paul Hagenwith Harley Manning, Elizabeth Boehm, and Allison Stone 2013, Forrester Research, Inc. Reproduction ProhibitedUSAAS WAYNE PEACOCKEXECUTIVE SUMMARYWayne Peacock was appointed USAAs executive vice president, member experience, in January 2010. Forrester interviewed Wayne as part of an ongoing series to understand the role of a new type of executive that manages customer experience at the enterprise level, a position most ofen called the chief customer ofcer. USAA aligns all customer-facing resources in the company under Wayne, amounting to about 9,000 staf members across the companys marketing, channel management, sales, and service functions. He describes this restructuring as the natural culmination of many years of work on customer experience at the company and sees it as a step thats needed to complete USAAs customer experience journey.A PROFILE OF USAAS CHIEF CUSTOMER OFFICERAs part of an ongoing series of interviews with chief customer ofcers (CCOs), Forrester spoke with USAAs Wayne Peacock. Wayne reports to USAAs chief executive ofcer (CEO) and is a member of the companys 11-person executive council. Although he clearly fts the defnition of a CCO, like roughly a quarter of those in similar positions, he has a nonstandard title: executive vice president, member experience. Our conversation with Wayne centered on three broad categories: Te impetus for appointing a CCO. Te structure of his customer experience team. Te key activities on which he focuses.MOTIVATION FOR APPOINTING A CCOWhen we asked Wayne about the reasons USAA appointed a CCO, two rose to the top: natural evolution and the desire to seize an opportunity created by strong fnancial performance. Te frms goal for its CCO is ambitious. Wayne CONTENTSUSAAs Wayne Peacock .......... 1RECOMMENDATIONSPave The Way For A CCO .................................... 7KeyBanks Trina Evans............ 8RECOMMENDATIONSCreate A Foundation For A CCO .............................12Rosetta Stones Jay Topper ...13RECOMMENDATIONSCustomer Success Requires A CCO With Power, Support, And Clout .....................................16 Conversations With Chief Customer Offcers 2 2013, Forrester Research, Inc. Reproduction Prohibitedseeks to move USAA from a company that is already successful on a product-by-product basis to one that is even more successful because it operates as an integrated service network.What Was The Breakthrough Moment That Led USAA To Appoint A CCO?Wayne: Weve been on this customer experience journey for awhile now. We have done a lot without really changing the business model. But we began to understand that we needed to take a quantum leap forward in order to complete the integration journey. 2009 was the best year in USAAs history from the perspective of market and fnancial performance. It might have been a time for us to rest on [our] laurels and feel good about where we were. Instead we looked at it as an opportunity to make a play from strength.Forresters take: USAA laid the foundation for appointing a CCO by making customer experience a strategic mandate, fostering a culture that was receptive to a CCO, and creating a viable position one with power, operational linkage, and budget infuence. CCOs appointed before companies have laid this groundwork may struggle with legitimacy issues. Time Warner Cables vice president of branded customer experience warns: I could not have built the movement that I did if I had the CCO title.What Does USAA Hope To Accomplish By Having A CCO?Wayne: We wanted to elevate our game and start serving members in more of an advisory capacity than we have done in the past. Our ability to serve members across a wide spectrum of products and services is much more powerful than just helping them with a loan or insurance product. Its about knowing them better, being proactive, and responding more holistically when they come to us: for example, when they come to us asking about auto insurance and their real need is to buy a new car. We want to help members solve the need of buying a car rather than just buying insurance.Forresters take: USAA has taken tangible steps to make the vision of serving members holistically a reality, as evidenced by its Auto Circle ofering (see Figure 2). Te current efort to organize the frms business structure around customers builds on that foundation and should result in a big fnancial payback. Tats because a better customer experience drives improvement for three types of customer loyalty: willingness to consider another purchase, likelihood to switch business to a competitor, and likelihood to recommend to a friend or colleague. How big is the opportunity? A 10-point improvement in Customer Experience Index scores can have a $606 million annual impact for insurance companies and a $212 million impact for banks.ORGANIZATIONAL STRUCTUREUSAAs move is a radical realignment that centers the company on customers. Te move has Wayne overseeing all customer-facing resources in the company, which amounts to about 9,000 staf members across marketing, channel management, sales, and service functions.Conversations With Chief Customer Offcers 3 2013, Forrester Research, Inc. Reproduction ProhibitedHow Are The CCO Position And Team Structured?Wayne: I oversee USAAs marketing, channel management, sales, and service functions, which will amount to about 9,000 people when we make the last transition of contact centers. It seemed to us that it would be logical to operationalize our customer experience efort as opposed to trying to apply it from a small thought leadership team somewhere in the organization. We have had that kind of thought leadership model informally for the past several years. We are at a place now that if we want to do customer experience well, we need to make it how we operate.We needed to bring customer-facing employees together into one team and organize to accommodate how members want to shop. Members want to move freely across distribution channels. Tey start a transaction online and then may want to talk to an advisor before moving back online. And as mobile continues to emerge, they will want to take that capability with them wherever they go. In the past, we had separate teams working on each channel: usaa.com, mobile, and individual teams for each business contact center. We had to change the way we do business in order to serve members more purposefully than we have done in the past.Forresters take: USAAs approach raises the bar for its competitors as well as for other frms that seek to diferentiate based on customer experience. It throws out an age-old model of organizing by product line, life-cycle stage, and distribution channel in favor of one that revolves around the way customers actually interact. If the company executes this new model well, it not only will improve the customer experience but also should drive down the costs of redundant or irrelevant product development, improve revenue by doing a better job of cross-selling services, and raise the level of interactions from inefcient handofs to higher-value solution conversations. Firms not yet mature enough in their customer experience eforts to appoint a CCO into a similar operational level should at a minimum redouble their eforts to build bridges across organizational silos to ensure that customer interactions are efective and easy.Why Did USAA Decide To Put Marketing Under The CCO?Wayne: Marketing wasnt part of the blueprint when we started this exercise. We decided that if we were to do this well, we needed to make the marketing group part of the organization. Classically, we have pushed out messages to sell products. What I want to do moving forward is to understand members deeply, to understand their dreams and aspirations, and to orchestrate a series of conversations over time that helps them to reach those dreams and aspirations. Tat begins to look like marketing of the future.Forresters take: We like USAAs approach, which aligns marketings role of making the brand promise with the parts of the organization that fulfll the brand promise. While we have seen many chief marketing ofcers wrap themselves in the customer experience fag, we remain unconvinced that the structure and focus of most marketing organizations can deliver success beyond slogans. One important reason is that marketing organizations typically lack operational control over the actual delivery of the experience, something that Waynes organization does have.Conversations With Chief Customer Offcers 4 2013, Forrester Research, Inc. Reproduction ProhibitedWhy Isnt Product Development Under The CCO?Wayne: Weve created a product management council that has both the strategists and the insights folks from my team plus the senior product leaders from business lines. New product designs and features for existing products are based of of member insight and research that we do on my team [and] then taken back to the business lines. Everything starts with the member, and that informs our experience design and our product design decisions. We want to build products that meet members larger needs, as opposed to an old mindset, which said that if you are in the insurance business, make more insurance products.Forresters take: USAAs model ofers a compelling alternative for companies having trouble competing with typical approaches to product innovation. By breaking down product-line silos and starting with a holistic view of the customer, the company is even more likely to create products that meet real-world customer needs. Te approach clearly works: USAA has already demonstrated the ability to create innovations like its Deposit@Mobile service, which lets members deposit checks by taking a picture of them with their smartphones.KEY ACTIVITIESSimilar to other CCOs we have interviewed, Wayne emphasized the amount of time he spends evangelizing customer experience eforts. But his job goes far beyond cheerleading: Te company judges his work on how well he drives a mix of fnancial and customer experience eforts.How Do You Spend Your Time?Wayne: I spend most of my time talking to staf or strategizing about how we change the business model for USAA. Whether Im talking to big groups of people about the vision or talking to smaller groups about how we organize our programs for success . . . its about communications from a leadership perspective.Beyond that, we have ongoing operational work. Weve been working on a voice of the customer program for the past 15 months. Te big part of our efort is to connect the many disparate avenues for feedback into one repository where we can analyze it and then get that information back out to business leaders across the organization so that they can take action. Our [voice of the customer] data uses our enterprise data warehouse infrastructure as its repository, and we use the business intelligence capabilities on the backside of it to deliver insights. Without the work on this data warehouse, we wouldnt be able to accomplish what were doing today. Tis work has been part of the integration journey that has been underway for the last few years. Were in year three of a fve-year efort.Forresters take: Wayne notes that USAAs realignment could not happen without this upgrade to its technology infrastructure. At least half of the CCOs we spoke to for Forresters Te Rise Of Te Chief Customer Ofcer report are involved in customer relationship management (CRM) and/or data warehousing eforts. Tis makes sense because a companys technology infrastructure can signifcantly afect a frms ability to deliver good customer experiences. New CCOs should investigate their frms CRM ecosystems and data warehouse to understand how much work is necessary to shore them up. Otherwise, neglected infrastructure could undermine their employees abilities to deliver good customer experiences and stop the CCO from succeeding.Conversations With Chief Customer Offcers 5 2013, Forrester Research, Inc. Reproduction ProhibitedWhat Metrics Does The Company Use To Monitor Your Success?Wayne: My metrics are pretty simple: 1) member growth; 2) depth of customer relationships; 3) traditional measures like member satisfaction and advocacy; and 4) cost metrics.I will likely translate the depth-of-customer-relationships metric into something more sophisticated in the future, like measuring how well we facilitate our mission of helping members with their fnancial security. Its easy to look at it in tangible terms like how many products members have, but the real opportunity is to understand peoples needs and see how well were fulflling them. My cost metrics include the things you would expect around continuing to drive more efciency into the system through the integration.Forresters take: USAA established a balanced set of detailed metrics for its CCO. Not everyone is so fortunate. Customer experience leaders ofen get their bonuses tied to mega metrics like improving a companywide Net Promoter Score, even though they can take years to move, even when the company is doing the right customer experience improvement projects. As result, new CCOs need to exercise caution and negotiate their personal success metrics carefully.What Are Your Strategic Priorities For 2011?Wayne: We thought of 2010 as a preparing the battlefeld year, so we focused a lot on culture, building the team, communicating the business case, and making high-level functional design and organizational change. In 2011, we will focus on two big ideas: 1) building out member journeys and experiences around those journeys, and 2) human-capital changes.For the frst priority, the hard work is around deeper-level process design so that the organization can operate in an integrated and repeatable fashion that is highly efcient. Its not sexy, but we are working on getting the pipes trimmed and aligned so that we can do this really well.On the human-capital side, we want to infuse the sales culture with the idea of building relationships and meeting needs. We need to broaden their product-level skills so that they can help members in a more holistic fashion than theyve done in the past.Forresters take: Te end game for customer experience is embedding it deeply in the DNA of the company culture. USAAs focus on the human-capital side is critical, which requires signifcant time spent on making sure that the human resources department is on board. Companies can do this by pulling three levers: hiring, socialization, and rewards systems.What Have Been Your Biggest Challenges?Wayne: Te biggest challenge has been that we have done well as a company in the past. Te lines of business presidents are very confdent that our current way of doing business serves them really well. Our challenge is to convince them that the new way will serve them better and not introduce more risk into their business environment.Conversations With Chief Customer Offcers 6 2013, Forrester Research, Inc. Reproduction ProhibitedLike any big change, you have to start with painting a vision of what can be in the future, how that will be diferent from the past, and who will beneft. Te rest of it is about planning, organizing, and executing, which is substantial when youre moving 9,000 employees across the company.Frontline employees have been powerful advocates in leading the charge for the change. Our biggest wins this past year have come from the frontline employees who see the opportunity, who value the change, and who are telling their peers and bosses how excited they are. Employees see this as a way to broaden their skills, operate across a much wider array of products, and serve members better.Forresters take: Engaging employees early in customer experience eforts is a powerful tool, which we heard ofen from CCOs. Firms that implement a voice of the employee (VoE) program in parallel with a voice of the customer (VoC) program will identify policies and processes that undermine employees ability to serve customers. In addition to helping fnd and fx problems, these empowered employees also give CCOs new advocates to promote the customer experience cause.Conversations With Chief Customer Offcers 7 2013, Forrester Research, Inc. Reproduction ProhibitedForrester believes that CEOs considering a CCO should establish several preconditions for success. Consistent with our framework, our conversation with Wayne Peacock yielded this specifc advice: If youre not committed to large-scale change, dont appoint a CCO. As Wayne Peacock puts it, If you are not committed or you dont think the company can make those changes, it is wasteful to go down the path. One clear readiness indicator is whether your company is willing to create an explicit customer experience strategy and, if necessary, revise the overall company strategy to make it more customer-centric. If the organization cant make that level of commitment, its a sign that your executives arent prepared to take the CCO plunge. If you are committed, translate your strategy into a clear agenda. A customer experience strategy provides a shared understanding of what success will look like if the CCO achieves his or her objectives. To reach that end point, however, frms need to put milestones in place so that customer experience professionals can rack up early wins to build momentum and gain support among skeptics. For example, top executives at Sage set annual goals for each business unit that combine both customer experience and business objectives. Customer experience leaders then conduct regular reviews to track progress against those goals and hold their peers accountable. Ten build a business case that justifes the position. USAAs business case for its customer experience efort (and CCO) had three tiers: 1) serving members better; 2) creating an environment for employees to be their best; and 3) achieving better business results. Tis aligns well with Forresters research, which shows that customer experience professionals need to build business cases that appeal to executives on three levels: authority, logic, and emotion. When building your own business case, start by understanding the top infuencers youll be presenting to, classifying their current level of support, and creating customized action plans and progress trackers.RE COMME NDAT I ONSPave The Way ForA CCOConversations With Chief Customer Offcers 8 2013, Forrester Research, Inc. Reproduction ProhibitedKEYBANKS TRINA EVANSEXECUTIVE SUMMARYTrina Evans was appointed as KeyBanks executive vice president (EVP) and director of client experience in April 2010. Forrester interviewed Trina as part of an ongoing series to understand the role of a new type of executive who manages customer experience at the enterprise level, a position most ofen called the chief customer ofcer. At the time of our interview, Trina oversaw a centralized customer experience team whose role is to champion the client across the enterprise and across channels. As part of KeyBanks executive council, Trina was a peer of regional presidents and other business-line heads, which let her shape activities, infuence priorities, and weave customer imperatives into strategic and operational plans. Subsequent to this interview, KeyBank promoted Trina to corporate center executive, a direct report to the CEO.A PROFILE OF KEYBANKS CHIEF CUSTOMER OFFICERAs part of an ongoing series of interviews with chief customer ofcers (CCOs), Forrester spoke with KeyBanks Trina Evans. Subsequent to this interview, both Trina and her boss Beth Mooney were promoted. Trina, now the corporate center executive, continues to report directly to Beth, who is now KeyCorps chairman and CEO. In her new role, Trina works within the management committee to ensure the alignment of objectives, priorities, and messaging for the CEO, the leadership team, and their teams. She also works with internal and external partners to move forward strategic initiatives and select special projects. At the time of the interview, Trina was the top leader of customer experience eforts for KeyCorps Community Bank, which operates more than 1,000 branches, 1,500 ATMs, and three call centers across the companys 14-state footprint. Our conversation with Trina centered on the motivation for appointing a CCO, her key activities, and the organizational structure of her team.MOTIVATION FOR APPOINTING A CCOWe asked Trina why the company appointed a CCO. She pointed to three primary reasons: 1) the view that customer experience is a way to grow revenue; 2) the need to drive voice of the client insights into decision-making processes; and 3) the goal of increasing employee engagement and enablement as part of a robust service culture.What Was The Breakthrough Moment That Led KeyBank To Appoint A CCO?Trina: Te arrival in 2007 of our new Vice Chair Beth Mooney was the beginning of our transition. She focused us on a community banking model with an emphasis on building enduring relationships as a way to grow proftability.Te watershed moment for us was the realization that we had lots of voice of the client data coming from diferent channels, but it wasnt getting into our decision-making process. Leaders within some channels were using the information, but it wasnt being used consistently enterprisewide. We realized that the company needed to Conversations With Chief Customer Offcers 9 2013, Forrester Research, Inc. Reproduction Prohibitedhave a third-party ofce that was a constant advocate for the client, that would bring the clients voice into decision-making, and [that would] manage the target client experience.Forresters take: Trina, who was appointed to her position in 2010, joins a host of other freshman customer experience executives in fact, 55% of the CCOs we researched in January 2011 had been on the job for a year or less. Similar to other frms, her appointment came about afer several years of customer experience eforts at the company and was prompted by a change in leadership. KeyBanks realization that it needed an executive champion to bring customer experience concerns into the mainstream decision-making process was spot on: Te lack of customer experience management processes is one of the top three obstacles to improving the customer experience that frms deliver. Firms that put a centralized team in place reduce that barrier.How Is The CCO Position And Team Structured?Trina: I report to KeyCorps Vice Chair Beth Mooney, who runs the companys Community Bank, which includes retail and business banking, wealth management, private banking, investment services, and mortgage products. I sit on the companys executive council and am a peer of the regional presidents and other business-line heads.I run several areas in addition to customer experience. My customer experience team has two strategists and fve feld advocates, managed directly by a senior vice president. Te feld advocates, who are aligned with regions, disseminate service measurements and voice-of-the-client feedback to feld staf. Tey spot problem areas that prevent employees from delivering the target experiences. Te strategists and feld advocates partner with businesses to drive the desired experience into strategy and operational plans. Te strategists also work on a dozen or so problems identifed by staf monthly, from process to technology issues.Forresters take: Trina and her team play an advisory role. Tis is signifcantly diferent from the operational role of the customer experience teams at USAA and Boeing, which Forrester has also profled. Both structures can be efective, and Forrester recommends that customer experience leaders pick the one that has worked most successfully for strategic change initiatives at their frms in the past.KEY ACTIVITIESLike other customer experience leaders we have interviewed, Trina spends a signifcant portion of her time evangelizing customer experience eforts and creating a shared understanding at the executive level of the company.How Do You Spend Your Time?Trina: In addition to customer experience, I also run desktop and information management, rewards and recognition, the risk management ofce, and the strategic planning process. Because of the way that the various parts of my organization are aligned, it has tremendous leverage. I essentially clear the way for my team, which focuses on the day-to-day customer experience opportunities.Conversations With Chief Customer Offcers 10 2013, Forrester Research, Inc. Reproduction ProhibitedOne of the more important roles I play is to bring the customer experience perspective into top-level meetings. I am able to shape what is happening at the highest levels, create a broad circle of infuence, and give input on priorities. I see other CCOs [who] are either aligned to one part of the organization, like marketing, or stand alone and report to the CEO but dont have tentacles to other parts of the company. Te standalone customer experience leader is sometimes anemic; its like having superpowers that cant be used.Forresters take: As a peer on the frms executive council, Trina is able to gain executive support on a day-to-day basis, which is something that frms without such a leader ofen struggle to get. When customer experience leaders build the business case for their eforts, they should start by understanding the top infuencers, classifying each ones current level of support, and then creating personalized action plans. Tey should go on to develop a portfolio of projects and pilots that support the business goals of these top infuencers. Once theyve achieved some measured successes, they can publicize the results to build a coalition of new leaders who support customer experience eforts.What Are Your Top Strategic Priorities This Year?Trina: Our team has four priorities this year: 1) a training tool kit to help area and branch leaders coach sales staf on how to service clients in a way that builds sales; 2) faster, one-time-and-done problem resolution in response to client feedback; 3) greater transparency of the status of service requests for both employees and clients; and 4) foundation coursework for new and existing employees. We found that groups [that] make good use of coursework perform better on satisfaction scores.Forresters take: Two of KeyBanks priorities focus on training, which is an important element when building a customer-centric culture. Forrester encourages frms to utilize three important levers in focusing its culture: hiring (e.g., recruiting and selection processes), socialization (e.g., training, storytelling, rituals), and rewards (e.g., formal and informal incentives).What Have Been Your Teams Top Wins Over The Past Year?Trina: Tree recent wins have been important to our team: Creating a consistent way of measuring customer experience across the company. Each business unit used to conduct surveys on [its] own, sometimes by email and other times by mail, each with a diferent set of questions. Our customers cross channels, so we wanted a consistent way to measure them and make the comparison across the channels. Embedding service training into sales training. Knitting a service tool kit together with the sales tool kit was a very big win for us. Now salespeople will be coached to service well, not just to sell more. Getting external validation. Te validation weve received from places like J.D. Power and Associates and ACSI have helped energize employees and senior leaders. Everyone enjoys the external confrmation.Conversations With Chief Customer Offcers 11 2013, Forrester Research, Inc. Reproduction ProhibitedForresters take: Establishing consistent enterprise metrics is an important early step in any customer experience transformation journey. As frms gather more sophisticated data about customer experience, they build models that capture the complex mix of factors that infuence customer decisions. For example, executives at Southwest Airlines are already working on models that show the correlation between changes in subjective metrics and a lif in outcome metrics, such as the likelihood to make Southwest customers frst choice when booking a fight. Tese metrics become a powerful tool for customer experience teams to drive employee change and build executive support.Conversations With Chief Customer Offcers 12 2013, Forrester Research, Inc. Reproduction ProhibitedRE COMME NDAT I ONSCreate A FoundationFor A CCOTe appointment of a CCO will not by itself make a company customer-focused. Rather, Trina advises frms considering the appointment of a CCO to create a foundation that leaders can build upon. As she puts it: If a company hasnt built a good foundation, theres no point in appointing a CCO. On the other hand, there comes a point at which you cant move forward without someone advocating for the experience across the enterprise. Trina ofers a few pieces of advice for those considering a CCO: Set clear expectations with employees. Trina says: Firms need to defne in the simplest terms what client-centered activity looks like. Tey have to bring it to life make it real and tangible. Tis starts to set expectations. At the same time, companies need to deliver adequate tools and training to help employees deliver on promises. Otherwise, dont bother with a CCO . . . the position will just churn, which sends a very powerful negative message to employees. Forrester agrees. A portfolio of customer experience projects, engaged employees, and involvement by the human resources (HR) department signal that the frm is ready to appoint a customer experience executive. Ensure alignment of executives. Trina advises: Make sure that the set of peers have strong philosophical alignment around what the company is trying to accomplish. Ten ensure that the chief customer ofcer is positioned as a peer to those who are running diferent segments. Our research supports her assertion that before putting a CCO in place, frms should make sure that there is strong agreement on both what the company seeks to accomplish with the position and how it can help deliver on specifc objectives and outcomes. Tie the position to the operational mechanics of the organization. Trina recommends that the position needs tentacles to other parts of the organization. It needs knowledge of the operational mechanics of the company as well as the team who can help to make change. For teams structured in an advisory capacity, such as the one at KeyBank, this operational linkage is all the more critical. Firms should ensure that CCOs have the ability to break down and mediate across organizational silos. Tis means establishing a governance structure that arbitrates resource allocation and activities.Conversations With Chief Customer Offcers 13 2013, Forrester Research, Inc. Reproduction ProhibitedROSETTA STONES JAY TOPPEREXECUTIVE SUMMARYRosetta Stone appointed Jay Topper to the role of senior vice president of customer success in 2009 to help the frm make a radical transition from a product company to a services model. Te new position aligned all post-sales groups under Jay, who took on the task of coordinating customer interactions to drive both engagement and satisfaction. Jay and his team are now able to boost customer satisfaction as well as the frms bottom line by carefully monitoring and improving customers service usage at all points of the language learning process. Forrester interviewed Jay as part of an ongoing series to understand the role of this type of executive orchestrating enterprisewide customer experience, a position that Forrester calls a chief customer ofcer (CCO).ROSETTA STONE APPOINTS A CCO TO GUIDE THE TRANSITION FROM PRODUCT TO SERVICERosetta Stone is a $260 million language learning company that aims to make language acquisition fun, easy, and efective. Te frm recently transitioned from a product-focused model of selling CDs to a services model that supplements sofware-based learning with online companion activities such as language coaching and interaction between learners. Te frm decided that it needed a CCO position to guide its transition and ensure that the company gained the competencies that drive success in a services-oriented industry.As part of an ongoing series of interviews with CCOs, Forrester spoke with Jay Topper, senior vice president of customer success at Rosetta Stone, to learn about how the company set up his organization and responsibilities.Centralized Customer Experience Aligns Rosetta Stones Organization With Its StrategyAs the frms chief information ofcer (CIO), Jay was heading up a new customer relationship management (CRM) implementation as part of the transition when he realized that the fragmented nature of diferent services groups would not support the kind of relationships the organization sought with its new model. Rosetta Stones senior management realized that the new technology alone would not solve the problem, so it: Created a CCO position that reports to the CEO. Te executive management team agreed with Jays assessment and created a new position the senior vice president (SVP) of customer success to oversee and unify the frms new customer strategy. As someone who understood the companys goals, technology, and culture, Jay was tapped for the position. I didnt have any designs on the position, but the management team felt like it was easier to fnd a new CIO than to fll this position. Te CEO looks at my group as one of three strategic pillars along with product and brand/marketing. So he made me a direct report, explained Jay. Aligned all post-sales functions under the CCO. Unlike many centralized customer experience teams that play more of an advisory role to other parts of the organization, Jay has operational control over Rosetta Stones service delivery organization. Jay explains that this organization is responsible for everything afer the initial sale, whether consumer or business-to-business (B2B), US or international. We encompass traditional Conversations With Chief Customer Offcers 14 2013, Forrester Research, Inc. Reproduction Prohibitedcustomer service, product support, CRM, and product-related components like our live online instruction and concierge services. Strengthened connections with the marketing and product divisions. Although Rosetta Stone didnt fold control of pre-sales activities into the position as others have done, Jay has gained responsibility for B2B account managers and call center sales as the position has evolved. Jay told Forrester that this was part of an ongoing alignment between the product, marketing, and services groups. Te amount of time I spend with marketing, sales, and brand now versus two years ago is up by 20 times. One way or another, these groups need to be really intertwined and push on each other. Leveraged behavioral personas to drive alignment. Rosetta Stone uses personas to understand consumers motivation for learning a language and to align services to those customer needs. Says Jay, One person may be rehabilitating his brain afer a stroke, and another may have personal enrichment reasons. Te behavioral personas have enabled us to go back upstream to the people who are just starting language learning and be more specifc about how we message to them. When we were a box product culture, we focused only on buy, buy, buy. As a service organization, we are using the personas to help us transition to here is something that you can use to reach your goal. Our big word now is nurture.Measurement Links Customer Satisfaction With Company SuccessLike many frms, Rosetta Stone has adopted Net Promoter Score (NPS) as a key metric. But measuring NPS is only one part of how the frm understands customer experience. Jay told Forrester: Product usage is a strong predictor of NPS . . . and renewals. For Jay and his company, success comes down to a combination of satisfed usage and the right touches. Jay says, My number-one metric is what we call the usage funnel. It starts at purchase [and] includes online activation, logins, taking a studio coaching session, and average hours using the product. Tis is our bread and butter in terms of both revenue and customer experience. People who socialize within the product experience (e.g., take a coaching session) have a 20-point jump in NPS. People who socialize outside of the direct learning experience (e.g., participate in a webinar): Teir usage more than triples, their renewals more than triple, and their NPS can jump up over 70. Usage and satisfaction are key employee metrics. Jay said that employees down to the agent level have compensation tied to usage. We have a group of concierge agents who solely focus on usage. Tey are constantly testing and identifying what works. Top agents that are able to stimulate learners and fnd the secret sauce for usage are defnitely compensated accordingly. Tose people who crack the code are incredibly valuable to this organization.Future Customer Experience Activities Mature Beyond The BasicsIn his frst two years as CCO, Jay implemented a solid customer experience foundation. He and his team built a voice of the customer program, invested in personas, and identifed activities that drive key customer experience and fnancial metrics. When we asked him about his strategic priorities for the next year, Jays answers indicate that the frm is moving beyond the basics. Key initiatives include:Conversations With Chief Customer Offcers 15 2013, Forrester Research, Inc. Reproduction Prohibited Automating processes that drive scale. Many of the smart touches the company has with customers to date are manual. Jay recognizes that the company needs to build in some automation to scale the efort. According to Jay: We are working to put the business rules in place to automate the interactions we are now doing mostly manually. We now have enough data and the personas to know the kinds of diferent interactions that help diferent customers move from one stage in the learning process to the next. We know if a customer gave high satisfaction ratings for a learning module, he is likely to sign up for a coaching within a couple of days if we give him a little nudge. Creating a plan for global customer experience expansion. Rosetta Stone is looking to replicate the operational improvements it has made in the US market into growing markets across the globe. Jay says: I will spend a lot of time helping with the architecture of those organizations so they stay tightly aligned with what were doing here. We will largely replicate our existing organizational structure and approach, though well likely tailor certain elements to the local markets. Our hypothesis is that at the root level, there are a lot more commonalities among learners than we think. People want to learn a language, its not easy, and they have a reason motivating them to learn. Embedding social support into the product. To date, Rosetta Stones social media initiatives have largely revolved around marketing and service, but Jay sees great potential in enabling social within the product itself. What has me most excited is when our guest coaches and concierge agents socialize with a learner who is afraid of taking a section for some reason. Te likelihood of that customer going to the next level goes from 0% to nearly 70%. Whether its a coach or another learner on Facebook, it stimulates engagement with the product, which improves our Net Promoter Scores. Translating personas into B2B service improvements. Jay indicated that personas are helping Rosetta Stone extend its relationships with B2B customers. When we sold to Booz Allen or the Army, we looked at the company as a demographic. Tats crazy! Tere are diferent personas within the institution. But Jay is still looking to extend personas further: Tere are a lot of complexities involved with our B2B customer, because we are also serving the overall overseer of the language program, which could be human resources, training, or some other department in a company. At this point, whats most important to us is focusing at the learner persona level. We have not yet mastered the personas for others.Conversations With Chief Customer Offcers 16 2013, Forrester Research, Inc. Reproduction ProhibitedRE COMME NDAT I ONSCustomer SuccessRequires A CCO WithPower, Support, AndCloutRosetta Stone is not unique in transitioning from a product-focused company to one whose success depends on service and customer engagement. Tis kind of transition is happening with a broad range of B2B and business-to-consumer (B2C) companies. For example, Crown Equipment is including sensors in its forklifs to enable usage-based services, Nike is building out its net-connected Nike Plus devices, and Zeal Optics is embedding an Android operating system into its next generation of ski goggles. Tese and other companies will fnd that a services-focused approach will change the skills and competencies they need within their organizations to create and refne customer experiences that build loyalty and mutual beneft in a service-focused market. Forrester believes that these companies will do well to have a centralized customer experience organization, headed by a strong CCO. To boost their chances of success, frms should: Make the CCO a direct report to the CEO. To succeed, companies must give a CCO the clout and tools to transform the way a company operates. To do this, frms need to create a position that has: power, operational linkage, and budget infuence. Te best way to do this is to have the CCO report directly to the chief executive ofcer (CEO) so that the CCO has peer status with other executives. In addition, ensure that executive management teams uniformly understand and support the position by building customer experience into the company strategy and adopting companywide customer experience metrics that correlate with key business performance outcomes. Hire a CCO whos passionate about the customer . . . but credible as well. Forrester found that about 83% of CCOs were internal hires with a median of eight years of tenure with the frm and most ofen held general manager or division president positions prior to the appointment. Because the customer experience organization gets most of its work done through others, the ability of its leaders to infuence people across the business is critical to long-term success. Look for someone who has a broad range of experience, skills at defusing politically charged situations, passion, pragmatism, persistence, and a natural desire to collaborate across organizational boundaries.Tis document is excerpted from the following Forrester Research reports: the February 15, 2011, Conversations With Chief Customer Ofcers: USAAs Wayne Peacock report; the June 3, 2011 Conversations With Chief Customer Ofcers: KeyBanks Trina Evans report; and the November 15, 2011 Conversations With Chief Customer Ofcers: Rosetta Stones Jay Topper report.About ForresterA global research and advisory frm, Forrester inspires leaders, informs better decisions, and helps the worlds top companies turn the complexity of change into business advantage. Our research-based insight and objective advice enable IT professionals to lead more successfully within IT and extend their impact beyond the traditional IT organization. Tailored to your individual role, our resources allow you to focus on important business issues margin, speed, growth frst, technology second.FOR MORE INFORMATIONTo fnd out how Forrester Research can help you be successful every day, please contact the ofce nearest you, or visit us at www.forrester.com. For a complete list of worldwide locations, visit www.forrester.com/about.Forrester Research, Inc. Global Headquarters:60 Acorn Park DriveCambridge, MA 02140USA +1 617.613.6000Trive In Te Age Of Te CustomerFace it: you need your customers more than they need you. Thats why Forrester has in-depth research and analysis, tools, and solutions to help you craft a customer experience that boosts revenue, drives down costs, and earns customer loyalty.Visit solutions.forrester.com/customer-experience to get complimentary research and advice on moving your customer experience forward.