Annual planning is a missed opportunity for driving customer profitability inside the corporate machine.   Ah, the joy of the annual plan. Those last three months before the fiscal year ends are spent rushing about trying to decide what you’ll do next year. Each silo pushes its numbers around for head count, capital expenses, vendors, and programs.

The silos usually pick their projects and plan their budgets independent of one another.

Here’s what happens: Short-term tactics with outcomes easily attributable to individual departments (for purposes of “clean” compensation and metrics) comprise annual plans and financial commitments. These often come at the exclusion of messier company-wide efforts that could resolve customer issues and subsequently yield more significant long-term revenue. As a result, customer experience and customer profitability opportunities are lost in the (lack of) hand planned projects, and planned experience hand-offs between the silos.

Programs? 
 Is this where the customer comes in? 
Or is it vendors? 
How does all of this tie together across the organization?
 Tilt. It doesn’t. Annual planning is perhaps one of the greatest missed opportunities regarding customers. Everyone’s budgets and plans get cobbled together. We miss the opportunity to strategically forge ahead on key things that would have an impact for customers. Instead we do a multitude of separate things that don’t connect and neither does the customer experience.

Do You Capitalize on Annual Planning to Manage Customers as Assets?

1. Do you do a loss review prior to planning to know which customers left and why?
2. Do you evaluate trending of customer issues prior to planning to identify priorities?
3. Do you take stock of customer segments and their profitability prior to planning?
4. Do you convene a forum of cross-company groups to determine the customer priorities for the upcoming year?
5. Do results of those forums impact annual plan investments?

Does any of this sound familiar?  It’s likely that the mad dash that has caused annual planning in your organization is partly to blame for the lack of focus on the customer. It’s a bit odd that in all the hand waving about strategy, a company’s biggest asset, its customer base, is not yet viewed as that big asset when it comes to the annual plan and what to invest in.

Some of the companies I have worked with did the hand wave to “customer satisfaction” when the annual survey results came in. Based on the culture, there was some rushing around to change some things, especially if they didn’t like the results. But I’ve also seen more often than not, that customer survey timing is out of whack with annual planning cycles.  (i.e. too early or too late to be considered).   This is hardly a continuous improvement effort with progressive metrics to drive an increase in customer experiences, customer profitability, and customer loyalty. There is typically no baseline for each of those three dimensions or goal line. Yet this is how most companies continue to approach annual planning.  And it is impacting customer profitability.

Without common accountability targets, actions will continue to be planned tactically, based on the individual annual plans of the silos.  Companies need an ongoing roadmap to define where they want to make progress in customer profitability, customer loyalty, and customer experience delivery.

Annual planning customer-centered goals may include, for example:

• Taking a strategic look at how much prospecting for new customers or business needs to be done every year to replace the revenue lost in the previous year.
• Establishing annual goals for the movement of customers from one level of purchase behavior to another.
• Identifying the priority customer experiences requiring cross-company efforts to fix or differentiate the end-to-end  experience.

Without these types of customer-centered goals, the company continues to focus only on business outcomes; wheel spinning continues, and companies continue to stand still regarding customers without knowing exactly why.

Uncover Ways to Drive Customer Profitability 
1. Turn the annual opportunity missed into an annual opportunity gain.
2. Utilize data, customer feedback and real time outcomes to drive customer profitability
3. Unite the silos to start with the customer experience priorities FIRST, and then dole the work, the tactics and the budget out to the operations.

Read more about annual planning in my book, Chief Customer Officer: Getting Past Lip Service to Passionate Action.

You can recognize disconnected silo agendas at work when short-term revenue requirements compromise long-term revenue efforts. It’s when lack of clarity on what’s really important to differentiate the company for the customer is not understood the same way by everyone who needs to know. And it’s when there is an imbalance between the culture to drive revenue and the understanding and purpose of including customer investment to meet those goals.

The shorthand for the CCO role is to be that duct tape to connect the silos by reframing the work of the business through the lens of how the customer experiences your company.

Take Action: Download How to Reduce Dueling Silos
The key to this work is to be high on operational relevance and low on the “Kumbaya” or lip service.

1. Unite the Operation from the Customer Experience Perspective

2. Identify Cross-Silo Dependencies

3. Evaluate the Silo Impact Across the Customer Experience

This is a brief, shorthand description for the Chief Customer Officer. You can use this as the starting point for a job description, modifying it as necessary for your organization.

The goals of the CCO are to:

• Engage the organization in managing customer relationships, revenue, and profit.
• Create a persistent focus on the customer in the actions the company takes.
• Drive the organization to work together for optimum customer experience delivery.
• Support leaders in their role as cultural leaders in the transformation journey.

As a change agent inside the company, the Chief Customer Officer performs four specific functions:

1. Establishes metrics for defining the relationship with customers
Partners: Usually finance and marketing for guerrilla metrics; issue trending requires engagement and alignment with all functional vice presidents

• Guerrilla metrics; simple metrics to manage customers as an asset.
• Voice of the Customer competency development.
  • Real-time issue trending and tracking (such as complaints).
  • Corralling all the surveys and uniting a company-wide approach.
  • Optimizing for “listening” pipe opportunities, web, social media, field, etc.
• Create a united platform for understanding and taking action.

2. Influences cross-company agreement on how to deliver greatest value to customers
Partners: Marketing and finance (and sales, depending on the organization)

• Define what customers value – how to determine the differentiating experience to be delivered.
• Determine what customers to invest in.
• Decide where to make investment decisions, that is, the highest-impact contacts and efforts.
• Create a common language set and definitions for the customer experience.

3. In partnership with leaders, drives accountability through cross-company data and metrics
Partners: The chief executive and all functional vice presidents

• Facilitate the development of the accountability action chain, establishing the approaches and implementation of research to understand customer loyalty and return on investment (ROI).
• Work with leaders to identify baseline metrics for tracking interaction with customers.
• Drive tracking and reporting to get to reliability in key interactions.
• Lead the accountability forums – when to meet with whom to drive accountability.
• Work with leaders on messages, reinforcing, recommendations for recognition, and driving the culture change forward.

4. Clarifies a common approach and process for driving the work across the organization
Partners: All of the functional vice presidents

• Identify operational accountability cross-functional alliances.
• Facilitate working together across the silos instead of separately within them.
• Instill the discipline of process change and change management into the organization.

Take Action: Download the Chief Customer Officer Job Description

As has been the case with nearly every incarnation of customer focus activity, this focus on “experience” is inadvertently randomizing corporations, sending people out on tactical missions to map customer touchpoints with no future relevance to the operation and making a lot of consultants happy.

To make customer experience stick as part of your operation, you need an organized and phased approach for how to integrate this new competency into your organization. Without it, “CX” becomes one more customer focused “hoopla” event that your company tried for a while and then abandoned.

So here, based on working with scores of clients around the world…is the REAL world approach for how to integrate the discipline of customer experience into your operation – in a way that will make each competency change how you do work.

• These five competencies need to be embedded into the DNA of a business to ensure that “customer experience” becomes part of how you do business.
• The Customer Experience Leader has the responsibility for uniting leaders and the operation in understanding the need for these competencies and for building them in the order most relevant and pressing order.
• The key here is to do as much in each competency as needed to provide clarity for the competency, get action moving and build the bridge when required between one competency and another.
• These competencies don’t need to be tackled in order. Relevance to your operation is most important.  Getting traction is paramount.  Don’t “boil the ocean” as we used to say at Microsoft.

You will find this framework will “demystify” the actions and the end state, which you should be able to recognize when your company and operation become proficient at “customer experience.”

Take Action: Download the Overview of the 5 Customer Competencies of Customer Experience

5 Customer Experience Competencies

Competency #1 – Define the Stages of Experience to Gain Alignment around Customer Experience
Competency #2 – Develop Experience Based Customer Listening and Feedback
Competency #3 – United (Cross-Silo) Experience Reliability and Accountability
Competency #4 – Manage Customers as Assets – Prove the ROI between Experience and Growth
Competency #5– Create a “One Company” Customer Experience Culture

The grand outcome of dueling silos is the random and inconsistent customer treatment delivered to customers. It is our organization charts that emerge most clearly to customers when they do business with us, certainly not a unified brand experience.

Lack of a unifying purpose for customer treatment across the silos
PLUS
A hodgepodge of inconsistent metrics
MEANS
Parts of the organization deliver varying levels of performance to your customers
(Translation: Bad Mechanics and Biorhythmic Service)

Service providers and everyone else throughout the company can’t get a grip on what their personal performance is supposed to be. Especially those at the front line are subject to performing based on their personal skill set and interpretation of what’s important. (And as we all know, people have better days than others.)

Biorhythmic Service  - Without the guideposts of metrics to keep us in line, the delivery of service frequently goes up and down based on the mood, competence, or opinions of the person interacting with the customer. This is what I call biorhythmic service because the front line, not the company, individually makes decisions on what the brand will mean to customers, and that changes from day to day, from person to person. There is no process inside organizations to work together and figure out how to move the customer through an experience versus a tour of our disjointed and dysfunctional organization charts.

Here is how unreliable, uncoordinated operations and biorhythmic service impact your business growth and profitability:

Summary: Why a Unified Cross-Silo Experience is Important
1. Provides accountability and connects the functions of the operation
2. Brings the silos together to use annual planning in a strategic manner to drive the management of customers as assets

Learn More: Customers Defect When the Silos Don’t Connect

If you have tried repeatedly to get a focus on customers, customer loyalty and customer profitability inside your organization with less than stellar results, you’re far from alone.  Most companies jump in without evaluating how the organization works together, whether the CEO is truly committed and if the patience exists for the long road ahead.  These are the key issues that usually get in the way of making progress.

Here are the eight key issues that usually get in the way of making progress in your focus on customers inside your organization. See if you recognize any of them in your organization.

1.  CEO’s aren’t clear about where they want to take the company for customers. (Lack of clarity of  “one company” customer experience)

When the CEO says ‘go focus on the customer,’ every one takes it differently. The shot gets fired into the air and a proliferation of tactics, vendor proposals and actions get going.  But they often don’t aggregate up to something meaningful for customers.

 2.  The ‘commitment’ doesn’t frame and modify actions for leaders and the organization. (Lack of alignment of “one company” customer experience)

 What we have now is a frenzied awareness of a problem that often leads to an even more frenzied approach to a “solution.”  When CEO’s say they’re committed to the customer mission, ask these questions to gain more clarity about their commitment to the customer and the mission.

• Are you clear in your mind about what you want to accomplish?
• Do you understand the sweeping scope of the work?
• Will you develop the new skills required for the company to thrive with customers?
• Are you willing to commit company time and resources to make this happen?
• As the CEO, do you sign up to be a true partner?
• Will you insist on corporate patience?
• Are you ready to push hard for strategic customer metrics?
• Do you have the guts to drive reliability in company operations?
• Do you have the focus to define the differentiated value you want to deliver to customers?

 3.  The ‘customer’ still isn’t elevated as the major asset of the corporation. (Customers aren’t an asset)

Organic customer growth drives long-term profitability.  So why isn’t it as important to CEOs as quarterly sales goals?

Understanding the state of customer relationships and even something as simple as customer counts still pale in comparison to quarterly sales goals in the rate at which they are understood, managed and held up as a success factor of the business.   No one knows the goal-line for customers.  Most CEOs haven’t told their company what it is.

4.  The metrics and motivation don’t line up with the commitment.  

CEOs say they’re committed to customers but don’t make any modifications for how success is defined and what people are compensated and rewarded for.  Or if modifications are made, it’s at such a high level such as attaching bonus to customer satisfaction survey score increases – that people don’t really know how to change their behavior.  The metrics aren’t attached down to relevant operational changes.  There are even times that satisfaction score goals can be negotiated out of relevance if a high sales performer doesn’t make the grade on customer satisfaction but hit the ball out of park bringing in new business.   Tilt.  The company takes a queue from where people are rewarded and what the company really cares about and will act accordingly.

5.  There is inconsistency for driving accountability.  

Companies who do this right spend the time to lay out what the new metrics are down to the operational level.  And they establish meaningful forums and methods to hold people accountable.  The ‘customer stuff’ is not wedged into an over-crowded meeting agenda and potentially pushed completely off when time falls short.  The work is done to clearly identify how the different sections of the customer experience are accountable by individual areas and through collaboration.  And accountability is clearly attached to each.

6.  It’s not natural for the company to work together. 

Each faction of the company continues to establish their own plans, budgets and goals.  The challenge of this work is that it cuts across the entire organization and orchestrating that new behavior isn’t often factored in.  This won’t happen naturally and the CEO must be a major player in a)identifying that this new skill is necessary, b) finding someone to bring the pieces together to work on common efforts, and c) reinforce through accountability, metrics and motivation that these are the necessary behaviors in the new customer-focused world.

7.  Fleeting corporate patience exists to drive sustainable change. 

This work is not for the mild-hearted or quarterly inclined.  Becoming a ‘customer’ company is a multi-year endeavor.  When things seem to waver (and they will), people will need to hear that the corporate patience exists to stay the course.

If the CEO doesn’t personally commit to corporate patience, people will see right through it. They’ll abandon efforts when their performance rating is at risk for staying focused on the “customer thing” that’s not yielding results quickly enough for the impatient corporate machine.

8.  There is a lack of understanding and commitment to the scale of work required. 

For the customer work to take-hold it must be seen for what it is and understood for the challenge that it will be to the ‘normal’ workings of the corporate machine.  The CEO needs to be realistic about what accomplishments are requested and support it accordingly.  I’ve been in more situations than I care to remember where the ‘commitment’ was there but not much more.  People will see right through this and the corporate ‘Nay-Sayers’ will be quick to point out that this is yet one more empty promise about customers. CEOs on a realistic path for this work recognize its scale and understand that many people may need to be assembled to bring about the level of wholesale change required.

Take Action: Download “Where Are We NOW?”

]]> http://chiefcustomerofficer.customerbliss.com/2012/05/01/rate-your-customer-experience-progress-why-customer-efforts-fail-signs-to-look-for-and-avoid/feed/ 2 http://chiefcustomerofficer.customerbliss.com/2012/04/27/start-managing-customers-as-an-asset/ http://chiefcustomerofficer.customerbliss.com/2012/04/27/start-managing-customers-as-an-asset/#comments Fri, 27 Apr 2012 16:30:34 +0000 Jeanne Bliss http://chiefcustomerofficer.customerbliss.com/?p=73

Organic customer growth drives long-term profitability.  So why isn’t it as important to you as quarterly sales goals? This is where the customer commitment falls apart, because what’s actively asked for, measured and rewarded doesn’t always line up with what’s good for customers.

Here are five questions for commanding customer accountability inside your organization.
They propel the organization into understanding the customer end-game and supply leaders with a platform to stand behind and reinforce.

1. What is the Volume and Value of Our New Customers?

Ask about the volume and value of your incoming customers and you may find that you are tracking incoming customers across a multitude of company areas – with conflicting definitions of what it means to be a new customer.

The wild card here is if you have achieved alignment in how customers are classified inside your system. The part that’s not likely tracked is the quality of incoming customers. This is especially important as the market becomes more saturated and new, profitable customers are harder to come by.

2. What is the Volume and Value of Our Lost Customers?
(And What Are the Reasons They Left Us?)

The volume and value of lost customers needs to be paired with the answer to the volume and value of new customers (Question 1) to layout the true situation for your company.

You must reconcile “Customers In” with “Customers Out” to know how well you are doing with managing customers as an asset of your company. In addition to knowing which customers left, you need to know the reasons why they don’t care to do business with you anymore so you can drive change across the business.  Without this information, the organization misses a massive opportunity to galvanize people into taking action.

3. What Customers Renewed? (At What Rate and Why?)

For this to have relevance for your company, you’ll need to define customer behaviors that constitute ‘renew’ or the commitment to continue doing business with you, according to your business model.

The key is to understand patterns that indicate loyalty based on continuous purchase habits. You must ask for reasons why customers are staying with you to ensure that you personally know what you are delivering to customers that they value – and to ensure that you are well aware when these reasons shift or begin to erode.

The “with reasons” part of these metrics are key to taking a leadership role in demanding focused actions to drive customer profitability rather than reacting to random pitches that come across your desk.

4. What is Our Revenue and Profitability by Customer Group?

Getting to this classification of customers is not a trivial project. You need to understand the movement of customers from one profitability group to another so you can strategically lead the customer agenda. Your goal should be driving efforts that cause your costliest customer groups to decline and those most profitable to grow.

If you are not demanding that the business be tracked this way and if you do not ask for accountability around these metrics in the regular language of meetings, it won’t happen.  Getting this data in line to achieve a regular pattern of accountability around customer profitability patterns will take some time, but stay the course. It will optimize your ability to manage customers as an asset of your business.

5. What is Our Referral Rate by Customer Segment?

If your customers are willing to stick their necks out vouching for you, they have become your marketers.  Keeping these customers, growing them and developing other customers like them are the key.

You need to know how far you are down this path of building a customer base that would refer you. Because if you can track the rate of referrals in general and by customer group, you’ll know the strength of your ongoing revenue stream before you even spend another dollar on marketing.  Companies completely focused on customer profitability will learn how referral rates differ by customer group and reasons for not referring.  They will rigorously apply this learning to constantly adjust and improve.

 

ACTION STEP:  Download Managing Customers as Assets
Reconcile “Customers In” with “Customers Out” to know how well you are doing with managing customers as an asset of your company.

The best “Chief Customer Officer” or “Customer Experience Officer” is a strong leader inside the organization who is respected for running a good, successful operation, and who has a strong network of relationships across the organization.

Naturally collaborative, they are adept at bringing people together to:
1. Engage the organization to manage customer relationships, revenue, and profit.
2. Create a persistent focus on the customer in decision making and actions.
3. Drive the organization to work together to create unified and optimum experiences.

But the CCO job is not like the others where our score card is clear, where we are in charge of our own deliverables and have a budget and large team connected to our actions.

Building Repeatable Customer Experience Competencies

Simplifying the work of the Chief Customer Officer or Customer Experience Officer is one of the most important things that should be done early on – to take the mystery and fear out of what this role does.

Simply stated, the work is to embed two new competencies inside the operation:

1. Customer Experience Reliability Competency
Resolving issues creating irregularity and lack of reliability in your experience

2. Customer Experience Improvement/Innovation Competency
Differentiated experiences at key touchpoints or “moments of truth”

As you embark on this work, create clarity about the work ahead, and gain agreement that people are ready to work collaboratively on building these competencies. One of the biggest things I’ve seen CCO’s head straight into is the brick wall of not first getting people’s consensus to work together rather than separately. Consensus needs to be agreed upon regarding how the organization will unite the silos.

Take Action: Frame the work to build repeatable customer experience competencies

Besides a great CCO Job Description, a CCO builds credibility through getting specific and operationally relevant about what they will be enabling and building.

As you frame the work, engage as early as possible the operational leaders and matrix organizations who you will be working with – about the collaboration required for this to be successful.  Challenge each other about how realistic it will be to move from silo based approaches for these competencies to united approaches.  And decide together how you will step your way into these transitioned approaches.  Showing up and proposing that independent work processes are collapsed into one approach is not a successful approach that I’ve seen.  So, have the hard conversations now.

Here are some discussion starter frameworks to use inside your organization, with my compliments.  Under the CX Toolkit tab, you will find more detailed information outlining each of these competencies.

Why does it take such a push to wrap the focus of a company around the customer as the source of their revenue and profitability? I’m no shrinking violet, and I can tell you that for every battle I’ve won, I’ve lost just as many. The big question is: Why has it been a battle? Why have I had these jobs? Why are YOU so necessary now?

While your company learns how to unite their efforts – your job is to unite the silos to move the business from delivering a defaulted (uncoordinated) experience to a reliable, deliberate and eventually desired experience.

Your job is to be the human duct tape of your operation; providing your CEO and company with a view across your operation that just doesn’t exist today. In other words…move your company from delivering your organization chart to delivering a differentiated experience to drive business growth and customer profitability.

For all the lip service about customers being at the center of business, we still haven’t gotten very far. Why? In my experience it’s because of that organization chart, the silos and the isolated targets we establish during annual planning and put on our score cards.
What goes out is defined by the traditional silos created to drive competency vertically: marketing, sales, shipping, and operations. Those in charge of building the competencies are motivated to create performance standards within their span of control. And those of us working inside the silos have learned that success can be achieved most easily through compartmentalizing our work and staying singularly focused on our mission.

Separate silo standards inhibit executive leadership’s ability to comprehend and manage their company’s total situation with customers, as they are served up only a slice of how the company performs silo by silo. These ‘silo snapshots’ frequently account for the random, reactive, and less-than-strategic responses regarding customers. Independent silo issue gets fixed to meet scorecard goals, but because efforts aren’t connected, often our customers are the only ones to experience the totality of our ability (or inability) to work together in the corporate sandbox.

Here’s An Example of Dueling Silos
 (See if this sounds familiar):
Silo One: A highly regarded financial services company with a strong marketing department convinced leadership that they could get a lot more sales with every inbound customer service call.
So they received the CEOs hearty endorsement and funding to train their phone reps to up-sell and cross-sell customers calling into customer service for help. Payout to the phone personnel was based on how many offers were taken by customers, and by how swiftly the reps could make all this happen.

Silo Two: Simultaneously a new effort was rolled out within customer service to improve the phone reps’ ability to build customer rapport; requiring an increase in reps’ time spent on the phone. An elaborate system of surveys was created to measure results, linked directly to individual rep performance. But here’s the rub and where the customer got lost due to competing silo agendas: there was payout from the marketing silo for up-selling and cross- selling (read: “We care about this so we pay for it”). But there was no payout associated with achieving a customer-rapport phone call.

How Calls Went: With one eye on the timer clocking minutes and prompting them to end the call, the rep tried to build rapport. Then with talk-time dwindling, they’d rapid-fire offers to up-sell and cross-sell. This frenzy resulted in uncomfortable customers, disappointing additional sales, and frustrated phone personnel.

Disconnected Silos = Mediocre Customer Experiences
A single silver bullet was shot through the air to get more 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 and the reps trying to serve them. While the phone personnel wanted to build rapport, they also wanted to make their payout. 
The mixed messages about what was important compromised the results of both efforts.

Having held the role of Chief Customer Officer, reporting to the Presidents of Lands’ End, Mazda, Coldwell Banker, Allstate and Microsoft Corporations, I wrote Chief Customer Officer: Getting Past Lip Service to Passionate Action as the roadmap I wish I had back when I began my journey as a Customer Zealot.

Since the book launched, I have coached many Chief Customer Officers and Customer Experience Officers; helping them transition successfully into this pivotal role. And I have led “Chief Customer Officer Boot Camp” sessions around the world, building extensive new tools, content and materials that go beyond what’s penned in the book; to assist executive teams drive the customer profitability agenda inside their operation.

So instead of writing a new book – I’m giving you Chief Customer Officer 2.0, which is the content I’ve created since the book, “Chief Customer Officer,” was published. At no cost. Because I’ve walked in your shoes.

When I coach clients, we celebrate the successes and commiserate when we hit a wall. As you know, sometimes doing this customer work feels like you’re the only one in the room. This job is not like the others where scorecards are clear, we are in charge of our deliverables and have a budget connected to our actions.

Sure, you’ve been given the job, but is there commitment to move the work forward? Are you building and strengthening the competencies that you need to be successful in this type of a position?

As your virtual coach, one of the first things I’ll provide you with are the core CCO aptitudes that both you and your team should have to thrive, survive, and drive this work ahead. I will ask you the probing questions and provide you with the questions to ask inside your organization to test the commitment and determine if you are making progress. And of course, there will be tools and actions that you can go implement right away.

Chief Customer Officer 2.0 is my treat to you.
Because I’ve been there.
Because I want you to succeed.
I look forward to our conversations, to our debates and to helping you push the weight of that customer rock up the hill.

Contact Jeanne
Email: jeanne@customerbliss.com
Cell: 425-444-7654

Learn about Customer Bliss Services