Who Owns the Customer Relationship?

I'm often asked whether competing analysts know each other, and if so, do we somehow collaborate.  I suspect that most folks would be surprised to hear that yes, we know each other (we meet at industry events), and some of us really enjoy working together.  While we don't formally collaborate (though I think a cross-industry analyst consortium would be pretty cool), we can't help but be influenced by one another since no one lives in a cave.

So It's in this context that I'd like to pick up a conversation I started back before Thanksgiving with an analyst from another firm who I really like and respect, though has a vastly different opinion from my own about who "owns" the customer.  I believe if we're trying to influence customer behavior across a lifecycle -- how a customer is engaged (mindshare captured), how the transaction is effected (exchange of "currency"), how the fulfillment works (product/service delivery) and how the service looks (post-sale service and support) -- we must have visibility into and the ability to effect change among each lifecycle stage.  If we buy this notion, then to me this means the customer relationship must be coordinated/directed centrally -- and NOT from within any one of the disciplines in the lifecycle.  I've always said that if for example you have a marketing hammer, then you'll be hammering marketing nails.

So I think that the customer relationship must be coordinated by something like a Chief Customer Officer (CCO) organization, which doesn't live in sales, customer service, marketing or product, but exists independently (reporting to the CEO).  And as such is able to create segment-specific treatment plans (down to segments of 1) that have involement across the lifecycle.  My friend believes (though she's too polite to put it exactly this way) that the notion of a CCO just a bunch of idealistic, unrealistic crap and that since marketing has most of the information about the customer anyway, marketing should own the relationship.

I think this is THE key issue to getting more targeted.  For my money, if I'm going to do more targeted marketing, then I want to take the next step and actually apply differentiated lifecyle treatments based on the (current or future) economic value of that relationship.  If marketing "owns" the relationship, I don't see how it's possible for that organization to credibly influence/direct activity for particular segments say in Customer Service.

I think taking a more targeted approach requires us to think beyond marketing and thus the relationship should be owned (i.e., coordinated) from "on high."  My friend thinks taking a more targeted approach requires us to dig very deeply into behavior-based marketing and that while information could (and should) be shared across organizations, marketing should ultimately control the treatment plans.

What do YOU think?  And does customer ownership really matter at the end of the day?  Or is it just something us analysts like to talk about?  Let's hear it!

Comments

[Marketrman]

Nice post, customer ownership does matter since creating relationships helps keep a customer coming back and improves word of mouth marketing. In the end, this helps reduce marketing costs.

[Kevin Hillstrom]

You provide an interesting hypothesis. I recall hearing similar arguments as far back as the early 1990s. You wonder if Penney or Sears had similar discussions back in the early 1900s?

Personally, I believe our industry has it backwards. We don't need another overpaid executive in charge of a theoretical opportunity. The Chief Marketing Officer should be able to build the relationships that allow this function to happen.

We do need to pay frontline staff an acceptable salary, and give frontline staff the authority to make decisions that result in our customers having trust in our businesses. I believe this will provide more value to the organization than a lifecycle targeting strategy owned by a Chief Somebody Officer, or a series of data mining activities that result in a few nuggets of actionable strategy.

[Andrew]

Hi Liz,

Sometimes I think that we have more CXOs than we know what to do with. What happened to the days when there were four VPs (Marketing, Operations, Finance, Sales)? Anyway, I digress. At the risk of being even more idealistic than you are -- I think that the customer should be owned by everyone in the business (sales, marketing, support, etc). An organization has to develop a customer-centric culture that is supported by the compensation structure of the business. If sales only gets compensated on revenue, marketing on leads, support on number of cases closed (etc), then each function isn't really looking out for the customer's best interest, but their own metrics. A CCO may be an important role in transition, but as a stand-alone office, customer-centricity becomes "some else's problem"... (i.e. "we hired someone to do that, now close that deal/case!").

[liz_roche2002]

So I agree with Kevin in theory when he writes that, "The Chief Marketing Officer should be able to build the relationships that allow this function to happen." The issue in my mind is that what *should* happen isn't usually what *does* happen. Even if the CMO was compensated on cross-functional metrics as Andrew rightly suggests, there is still the reality that a CMO doesn't own the resources to commit to differing customer treatment plans. And while influence is one thing, span of control is different.

And Andrew hits the nail on the head when he writes that "....the customer should be owned by everyone..." But doesn 'owned by everyone' imply that no one would be responsible?

Here's another interesting question: doesn't the CMO have way too much on his/her plate to take on such a huge responsibility as that of a CCO? So wouldn't it get delegated to sonmeone further down the food chain, and wouldn't this compromise the ability to influence across functions?

[Graham Hill]

Liz

I sympathise with your proposition that larger companies need someone to represent the customer in strategic matters (the proper role for a C-level executive). The customer is too often seen as a cashcow to be milked rather than as a valued partner in consumption.

But I also sympathise with Kevin's proposition that the only relationship with customers is owned by front-line staff, (self-service systems) and the product in use.

The challenge is to have a big enough hitter in the C-level suite to enable the right decisions to be made to grow customer business. In most product-focussed compaines this is rather challenging.

But a CCO by himself will achieve nothing. The right middle managers are also required to translate what the CCO wants done into the action. And of course front-line staff need empowering to deal with customer contacts along the end-to-end customer experience.

All this takes a lot of flexible collaboration. It is in effective collaboration that I feel the most effort should be placed, rather than on the decision to have a CCO or not.

Graham Hill

[Andrew]

Admittedly, I may have been a little sloppy with the wording in my post. What I meant to say was that the customer relationship should not be designated to a single office or person -- of course specific functional tasks need ownership and accountability, otherwise there will be chaos. I agree with Graham that the customer relationship is bigger than just a single C-level manager. If the business is going to truly become customer-centric, it needs to happen at all levels.

[Andy Cutler]

I think the concept of owning the customer relationship gets us off on the wrong track -- leads us to a hierachical stucture, rather than a collaborative one.

I believe that there has to be a central strategic group that is responsible for the client experience; and that group should have the authority to determine message timing and content within customer channels.

This concept does not necessarily require a Chief Customer Officer that "owns" all communication channels, but there should be a C-level position that owns the strategic group that is designing the customer experience for various customer groups (e.g. value, lifecycle segments).

Since we are marketers, let's come up with a more descriptive name for this group -- maybe "Customer Stewards" or "Customer Partners"?

[Gonzo]

Excellent topic, and I must say the comments are equally pertinent. I agree customer relationship should be owned by everybody in a company, but that would simply equate to nobody. On the other hand, I am not convinced a C-level executive is the panacea, unless it's a CMO in a company where marketing drives the strategy AND the execution(operations).

If we are to ask who owns the customer relationship, allow me to be naive and respond: it's the customer. Then, marketers would be in a similar position as front line staff, operations, finance, etc. Perhaps we need to re-evaluate the whole "need" to have an owner of the customer relationship...

[noel margol]

I don’t think any one function or person in the company should own the customer relationship, customer experience or treatment plans. This is important if the whole organisation is to be aligned to customer needs.

But what I do believe is that there should be segment managers who each oversee a few high-level strategic segments. These managers should have budgets for the segments with P& L responsibility and influence across product, sales, marketing and service functions.

This should work in a more matrix style collaborative organisation rather than a pure hierarchical one. Other key roles would be to have process owners/managers who oversee the disciplines in the specific stages of the customer lifecycle in the same fashion.

Today most organisations are still, to some extent or another, organised around products. With many different, disparate and inflexible legacy systems, processes and functions designed around them.

For most large organisations to be truly aligned to the customer requires a huge change effort. This is where the start-up, or smaller more agile companies, can have competitive advantage over larger ones. They can better align their people, systems processes and functions to customer needs. Although I can think of a few incumbent larger organisations which are winning back market share after going through major and effective transition.

[liz_roche2002]

Noel, I couldn't agree with you more -- that the way to execute a customer-centric organization is via a matrix of segment managers who own the P&L for a particular segment and process owners (e.g., the "engage" process which includes lead-to-opportunity and opportunity-to close, and might involve sales and marketing organizations). The thing I still wrestle with is how the portfolio of segments would be coordinated/managed. If I'm a segment manager, I'm not going to want to hear that company strategy suggests that my segment has diminished in importance, and thus my budget has decreased. In other words, how would the "customer portfolio" remain aligned with the organization's business strategy?

By way of another point of view, check out this article on CCOs posted on CRMGuru.com by Jeanne Bliss.
http://crmguru.custhelp.com/cgi-bin/crmguru.cfg/php/enduser/std_adp.php?p_faqid=1811

Jeanne Bliss was formerly with Lands End where she was leader for the Lands' End customer experience.

Gonzo suggests we put ownership of the relationship in the hands of the customer. But if we agree that some sort of customer management position is important (and that's where I personally still come down), then perhaps we take Andy's advice and come up with a new name/less "squishy" mandate. Perhaps "Customer Portfolio Manager"?

Can we market our way out of this one????

[Jeanne Bliss]

Okay, here's the deal. As much as it would be great for the CMO to layer on the task of driving the customer DNA in the organization, let's review the realities of making that happen:

1. The CMO is focused on the process of building business. They have focused for years on the actions of campaigns, customer data and driving the strategic understanding in the organization for the brand. There are some that focus also on DEFINING the brand delivery, but this often falls short of operational implementation and accountability.

2. To drive the customer into the DNA of the organization requires skills that often don't exist naturally inside the CMO. These are process change, metrics, aligning the organization.

3. Let's face it - marketing has had it pretty good in that they could conduct their function within the boundaries of their function. From time to time, some connection has been required to the other departments. Certainly in the context of connecting the data, there has been work to do to get everyone to define the data, its fields and the rules for usage on the same page. How well has that gone in your organization?

This is not a failure of marketing! It's been simply an under-estimation of the amount of work required to connect the separate silos, objectives, and metrics of the silos. It's leap frogging over the work of engaging and committing senior leaders. And it's been an abandonment of the corporation to work on the metrics, the mechanics of doing work together, and the hard work of aligning motivation and reward to driving collaborative behavior ACROSS the silos, in addition to DOWN the silos.

Today, CEOs are still actively managing down the silos or operating areas. But the customer experiences the customer across the organization.

Believe me, I am not a proponent of creating a fiefdom here. However, unifying the company in its actions and deliverables for customers is pretty much an alien skill to most corporations.

When a company really becomes serious about the customer and becoming a 'customer' company - they have to evaluate first their ability to work together toward common goals. Creating those skills of working together, defining the world across the company and identifying the hand-offs and the metrics key to delivering a customer experience is the work that no one does naturally.

So when the CEO says "everyone go focus on the customer," well, everyone does, but down their silo.

Net,net, as great as it would be to believe that the organization can somehow miraculously grow the skills to work together and unify their metrics and accountaiblities - this is just not realistic. At least not in most of the corporations I've led this work in for the past 25 years.

So, THAT becomes the work of the CCO. Working at the behest of the CEO, the work can reside inside marketing or service (the two most frequently tapped) - but this work can't be just something layered on to existing work. There must also be the evaluation and addition of the new skills required to be the human duct tape of the organization - connecting the company for customer growth.

I'll end this with some hope. The goal is that over time, the CCO works themselves out of a job. The whole point of the role, when it's deemed necessary, is simply to weave in skills and a way of working together that is not automaticallly natural. Once a company gets how to do that, then we can get to the nirvana of everyone owning and working on the customer experience together. Then, they'll be a chance that that grand hallucination we're all chasing could occur - because that muscle to do the work will have been developed through the gentle prodding of the CCO.

P.S: there's a reason I'm only 5'0" tall - it's hard work doing this- and the rocks have fallen on my head constantly as I've pushed them up the hill. So if you decide to go for a CCO, pick someone who has persistent as their middle name. JB

[noel margol]

Liz, re: In other words, how would the "customer portfolio" remain aligned with the organization's business strategy?

This case should not happen if the segments are devised from a top-down fashion.

So now that we have come full circle; no I don’t think there should be a dedicated CCO role. C-level in general need to take responsibility for it.

[liz_roche2002]

Jeanne, Awesome, pragmatic post.

Your height comment makes me laugh -- I'm 5'1" and I guess that means I've got a few more rocks coming my way as I too push up hill;-)

So I get what you're saying and am right there with you. However let me challenge something: the idea that the CCO work can reside inside marketing or service so long as it's not layered on to existing work.

In my experience, there are 3 issues with having a CCO reside within a business unit or shared service function, all concerning the perceived reinforcement of silo'ed thinking:
1. The perception on the part of other participants within the customer lifecycle that the CCO has a particular bias. For instance, if the CCO lives in marketing, the perception is that it's "just" a marketig role, no matter what is actually said. And we know there can already be systemic tension (usually around leads) between sales and marketing. Same with service: if my CCO lives in service, then the perception might be that there's a customer service bias.

2. "Burying" the CCO in an existing organization gives the perception that it's really not a critical, enterprise-wide role. Because if it were, the story might go, then surely this CCO would be on the CEO's staff and member of the executive team.

3. "Working at the behest of the CEO" is not the same thing as working FOR the CEO. The perception there the strategic importance of the CCO role is just lip service.

Now I understand that where a CCO work and what the CCO does are two different things. However who the CCO reports to a CMO or a VP/Customer Service, doesn't that at least symbolically de-emphasize the purpose of the role?

Opinions?

[Jeanne Bliss]

Liz:

Right on regarding your challenge that the CCO role can be held within a silo.

I've had the role within a silo and reporting to the CEO, and I can definately tell you that it works better reporting to the CCO.

The purpose for my post and coaching was to provide information in the realm of the real world that many people live in. What happens (as you know) with many conferences and books is that they give the formula for the world of nirvana, and then we have to adjust for the real world of the corporation.

So my post was meant to give guidelines in the world that many (and most of my coaching clients) live within in - which is that it would be great to report to the CEO - but that's just not happening right now. Given that, make sure that there's time and resources to do the job.

Liz, thanks for challenging my recommendation! It's what keeps me honest and passionate about doing this work! Keep pushing that rock up the hill.

Jeanne

[Javis Lounsbury]

Building customer relationship should be done by almost everyone in the company! Some may do it directly and others indirectly. It's important for everyone to keep in track of how their customer relationship is doing, because it can greatly affect their tasks - do they need to improve their performance or maintain it? But, improving the company in any matter is still the best way to secure existing and potential customers.