While the digital world is materially influencing customer behavior, it is also influencing the way companies are organized to capitalize on a more integrated experience. The progression to a truly customer-focused company with enterprise engagement generally includes an organizational landscape that reaches beyond the realm of CMO.
The objective of any organization that hopes to be truly customer centric is to reach a state of customer value optimization, in which its programs and campaigns are fully integrated across media, channels, and corporate silos. The most difficult part of the transformation is breaking through from level 3 to level 4 in the CRM maturity model below; and it will never happen without a concerted effort and engaged, committed leadership.
Organizational Barriers to CRM Maturity
There are a number of organizational barriers that make movement between levels 3 and 4 so difficult. The first barrier is related to structure and the associated role alignment within that structure. Structure refers to the ways people are grouped into units, while role alignment, means clarifying expected outcomes of a unit, agreeing on mutual expectations when coordinating work across units, and clarifying boundaries for decision making . Conflicting marching orders can cripple a cohesive CRM strategy, which, by definition, must be coordinated across the enterprise. For example, a retailer may want to be “omni-channel,” but its website has its own P&L responsibility. Structurally, the retail store operations and the website operations may report into different people – even different business units. Without purposeful alignment of objectives across units, outcomes aren’t aligned, and neither group is motivated to help the other meet its goals.
The second barrier is about incentive systems, meaning target metrics, compensation,, recognition and rewards . Even if the business units were aligned to the same objectives and operating structure, in many cases the KPIs of the old “CRM 1.0” world aren’t well aligned to incentives of the omni-channel, “CRM 2.o” world of today. For instance, I may get paid to create leads, but not on the lifetime value of earning a new customer. So, I’ll work to get the phone to ring, but I’m not interested in the follow-through, which is a linkage to customer value. This scenario doesn’t promote the development of the enterprise lifetime value currency; which in turn doesn’t reinforce the idea that we’re managing a portfolio of customers. Ultimately, we have to remember that our job is to increase the value of that entire portfolio over time, and we will get the behavior that we incent; therefore we must incent behaviors that maximize portfolio value.
The third barrier is really more of a fledgling trend. We’re seeing that the creation of a chief customer officer (CCO) role is becoming more prominent, with roles like chief marketing officer (CMO), chief experience officer (CXO), and even in some cases the chief information officer (CIO) or chief analytic officer (CAO) reporting in to it. Just last month, Lowe’s appointed a new CCO to maximize customer experience. The CMO for PNC Financial recently had her role elevated to CCO. Kohl’s nabbed its new CCO from Starbucks. Even pharmaceutical companies are making an effort to embrace the customer-centric transformation, with Sanofi naming its first chief patient officer and Intarcia’s creation of a chief customer experience and outcomes officer.
This trend supports my ongoing assertion that the role of marketing is surely being elevated. CEOs are starting to realize that marketing isn’t an island. Customer-centric organizations must have a leader whose interest is in tying together a comprehensive set of the highly integrated inbound and outbound media and channel systems. In some cases, the CMO is a candidate for that role, and in some cases not so much.
But what makes this trend somewhat of a barrier to CRM maturity is the lack of a standard definition of the CCO role as one that drives cross organizational cohesion. The CCO Council defines the role as “an executive who provides the comprehensive and authoritative view of the customer and creates corporate and customer strategy at the highest levels of the company to maximize customer acquisition, retention, and profitability.” That’s a pretty broad description of a complicated, varied, but very specific set of competencies. The CCO should propel information and insight across organizational boundaries to maximize the customer portfolio. The CCO not only provides the vision, but also needs to build relationships and processes within the organization to implement the vision. Examples of this are building communities of practice; holding retreats; developing training programs; forming cross-functional teams to solve problems; conducting team building around a common purpose, etc. You might think of the CCO as playing an integrative role that spans typical organizational boundaries.
From an organizational perspective, if you don’t address structure, incentives, and authority at the outset, you might as well not even try to become customer centric. With advancements in technology, infrastructure, and analytics, it’s no longer the capability model that constrains the customer-centric approach. It is the operating model that has become the gating factor with the potential to sink the initiative.
The transformation to customer centricity requires planning, sustained commitment to change, course correction along the way, and an ability to deal with resistance. After all, there will always be individuals that are uncomfortable with change.
In the end it’s executive sponsorship that makes the difference between success and failure. The CCO, or equivalent role, takes ownership of every aspect of the customer relationship – in both directions. Permission is not enough — this is a mandate that must have support across the enterprise, through marketing, sales, customer service, account management, training, legal, accounting, etc.
The executive team needs to face the difficult decisions of how to organize the company for success in this new customer-centric world – such as defining the relationships between ecommerce and stores, between marketing tech and ad tech, between analytics and CMOs. In many cases these are decisions that can only be made at the CEO level.
Don’t get trapped in a fantasy world. This is hard. The promise of a customer-centric business strategy makes good sense to everyone — who wouldn’t want it? But then you get into the tough decisions, and suddenly you realize it’s not a no-brainer. If you can’t get sponsorship from executive who can make those decisions, you’re only going to confuse and frustrate the organization, and it’s best not to even try to accomplish this. As much as it pains me to say it, you’d be better off optimizing against the old school metrics like product, or operational efficiency.