If you are wondering how chief customer officers (CCO) are really impacting the bottom lines of the companies that hire them, the CCO Council has some clear answers. The bottom line CCOs -- those focused on the customer experience, customer engagement, and customer loyalty -- are proving their worth.
Last week, we offered some results from a CCO Council study that are quite telling. It turns out 67 percent of participating companies saw positive fiscal effects during the tenure of their CCOs, reporting an average "growth excess of industry of 5.98 percent."
Researchers computed company growth excess of industry by subtracting industry from company growth for each year evaluated. In this case, that adds up to hundreds of millions of dollars. By way of comparison, 33 percent of companies experienced an average of 5.2 percent decrease in growth excess of industry.
As a follow up, Curtis Bingham, founder and executive director of the CCO Council, is offering insight into the key takeaways as well as some keen recommendations. Let’s look at his top four points.
A Two-Year Investment
In a recent blog post, Bingham made it clear that developing and improving customer strategy is a profitable but longer-term investment. In fact, he said it takes at least two years for the CCO's activities to flow through the company and make a significant impact on top and bottom line results.
The good news: Once the results start pouring in they tend to grow in line with the dollars invested. He also noted that B2C industries tend to see results more rapidly than B2B. Also, industries with intense competition show a greater impact from CCOs.
“CEOs and boards must commit from the outset to support and invest in the CCO and his/her initiatives for a minimum of two years to ensure the highest ,” Bingham recommended. “In turn, CCOs must manage the expectations of the CEO and board to allow for this two-year probationary period.”
Long-Term Contribution Needed
The study results show companies have demonstrated measurable improvements in revenues and profits while employing CCOs. In some cases, Bingham noted, overall revenue drops after the CCOs' leave their companies. The overarching takeaway, he said, is that CCOs can and should be accountable for improving top and bottom line results, although the impact may not be measurable on a quarterly basis.
“CEOs should expect the CCO to provide, in addition to intermediate metrics, quantifiable impact on revenue and profits, and ensure the systems are in place to properly track the CCO's contribution,” Bingham said.
“The CCO should begin by providing a clear line of sight from his or her actions to revenue and profitability. In some cases, the CEO and CCO may need to begin by agreeing upon an intermediate goal of driving loyalty and accept academic research proving that loyalty drives revenue and profit. However, this can only be temporary,” he added.
CCOs May Prevent a Slide
Could CCOs actually prevent a slide in the absence of growth? The study does suggest the presence of the CCO in some industries that experienced negative growth helped stem the decline caused by competition. CCOs also helped those companies maintain revenues and profits through stronger customer relationships and trust.
“The CCO must ‘bank’ customer trust and loyalty to protect customers against hard times,” Bingham said. “CEOs need to take a less transactional view of activities that may pay dividends at a later date.”
Every Company Is Not Customer-Centric
Customer-centric is a popular buzzword but the CCO Council study shows that not all companies put their money where their mouths are. In fact, Bingham said many publicly-stated company policies remain company-centric rather than customer-centric, and in the end, those whose actions are aligned with their customer needs are more successful.
“The CCO should, with the support of the CEO, examine the policies, actions, and restrictions to ensure that customer needs are met on balance with business needs,” Bingham said, noting that the study clearly shows one thing.
“CCOs are adding value to the bottom line. While growing steadily from fewer than 30 in 2003, CCOs are the newest, and by far the smallest, component of the C-suite," he said. "Many companies look at the CCO position and question if they can afford to add it to their C-suite team, but the numbers turn that question on its head and ask how they can afford not to do so.”