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<p>The UK Chief Customer Offi cer Report Nish Kotak May 2017 /02 In theory it’s very simple to talk about wanting to put the customer at the heart and centre of everything you do, but how do you achieve that when you have been created as a product-led business? /03 The purpose of this report is to provide a benchmark and basis for understanding how the role of a Chief Customer Officer is emerging in UK businesses. The report identifies the degree to which this is happening and aims to provide some insight as to why. Talecco conducted extensive research in the first quarter of 2017 with the aim of identifying how companies are reacting to the challenge of becoming more customer-led. This research is the first of a number of planned activities that will help define and describe the rapidly changing landscape of the Chief Customer Officer and customer-led thinking. This particular research piece focused on the individuals that are being appointed as CCOs and the companies that hired them. We aimed to identify: • What sort of businesses are hiring CCOs? • What types of people are becoming CCOs? • What are the requirements of a CCO in terms of core skills and abilities? The aim of this research is to help those who are: • Thinking about hiring a CCO • Considering what the benefits of such a hire might be • Trying to understand where customer thinking might fit into their business • More broadly interested in how successful businesses are changing The research was conducted through a combination of extensive desk-based research, social channels and direct conversations with over 50 business leaders and existing CCOs. It shows the incredible growth of the function in British businesses, the wide range of backgrounds from which the new generation of CCOs are drawn and the breadth of skills encompassed by the role. Nish Kotak Director Talecco www.talecco.com INTRODUCTION Nish Kotak is Managing Director of Talecco, a talent business helping organisations throughout their journey of becoming customer-led, from hiring at executive level, through the transformation process, building and upskilling teams. He has been working in executive search and placement for 15 years and was previously a management consultant with PwC and has held roles as strategy and business development manager at both Great Universal Stores and United Business Media. ABOUT NISH KOTAK Talecco provides a complete solution for building and developing your Customer function and team. We too are constantly learning from our Community of CCOs. We run the largest community of Chief Customer Officers and Customer executives across Europe. The forums and seminars that we hold provide a real insight into the ways that CCOs are being engaged and the challenges facing them as they join a business. ABOUT TALECCO /04 EXECUTIVE SUMMARY • 84% of UK CCOs are new to the title/role • The CCO role is crossing the border from B2C to B2B Who are the new CCOs and where do they come from? • There is no clear and consistent background for CCOs, although many come from previous positions that were either customer facing or operations • The rapid growth in CCO numbers is likely to raise competition in hiring for those roles • A business’s own digital maturity, marketplace, and legacy situation has a huge impact on the specification of the CCO role • Because the skill set and job description are so new and poorly defined, companies are going to have to educate themselves or seek support in order to make good hiring decisions What creates the need for a CCO? • Customer focus and customer-led leadership are increasingly hot topics and indicators of commercial success • To become customer-led requires a shift in the DNA of a business with new requirements in leadership • In addition to requiring the buy-in of the CEO, customer-led thinking requires its own internal champion – the CCO What’s happening in 2017? • The US has led the way in this thinking but European markets are now rapidly catching up • Customer-led businesses tend to have a commercial advantage over those that do not put the customer at the heart of their thinking and delivery • In the UK the number of CCOs has risen from 14 in 2014 to 90 in 2017 • 46% of all UK CCO roles have been created in the last 12 months To become customer-led often requires a fundamental change in the DNA of the business. /05 In theory it’s very simple to talk about wanting to put the customer at the heart and centre of everything you do, but how do you achieve that when you have not set the business up that way? To become customer-led requires a fundamental change in the DNA of the business. This can have an impact on the way that all departments interact with each other and with the customer. It changes the way that internal and external performance is measured and requires a new way of thinking about how you create and service new solutions for your customers. To achieve successful change of this type is not something that can be done overnight. It’s also not something that can be done without the full backing of the chief executive of the business. The CEO will not only need to sponsor such a move, but will also need to appoint a leader who can guide the business through that journey. That person is a Chief Customer Officer (CCO). This report is derived from a number of sources, these include discussions with CCOs in the UK, on-line media, including LinkedIn, Twitter, web based research and publicly available company reports and postings. This initial report is not intended to be exhaustive in terms of this rapidly moving marketplace, but it does provide a perspective on the UK CCO market and forms the basis for future research currently being developed. For the purposes of this report we have concentrated on those who actually have the titles Chief Customer Officer and Customer Director. There are a number of variants which have similar responsibility. These include Employee Experience Officer (internally focused), Customer Experience Director (can be front end/digitally focused), Customer Success Director (found mainly in software and Cloud based businesses). These will be included in future research reports. REPORT BACKGROUND AND FINDINGS WHAT CREATES THE NEED FOR A CHIEF CUSTOMER OFFICER? A CEO cannot move these days without some research or report stating the benefits of being customer-led. /06 THE UK CHIEF CUSTOMER OFFICER MARKET The Chief Customer Officer is the executive ultimately accountable for both customer strategy and all customer initiatives across the business. They effectively become the voice of the customer in all business decisions. The role, in its purest form, has oversight over all functions within a business where there is a Customer touchpoint – including those areas creating products and services for customers. Please note that in this definition there is no distinction between Business to Consumer (B2C) and Business to Business (B2B) customers. The CCO role has been prevalent in the USA for the last 20 years. The first officially titled Chief Customer Officer was Jack Chambers, appointed in 23 years ago in 1994 as CCO of Texas New Mexico Power. Businesses who have a CCO have been proven to outperform their marketplace competition. Although the CCO role is more established in the USA, it can only be considered as in the early stages of maturity. Other countries are not even at this stage. The USA experience has paved the way for businesses in other countries to start looking at the CCO role and understand how they could take these learnings and apply them in their own territories. THE RISE OF THE CHIEF CUSTOMER OFFICER There are currently 90 CCOs in the UK. They vary in terms of seniority and influence across their businesses, but based on the research, and validation discussions with CCOs, this report identifies the core facets of the CCO role. The Talecco research shows that UK has, over the last 3 years, seen a significant increase in the numbers of CCOs appointed. /07 Businesses who have a CCO have been proven to outperform their marketplace competition. /08 The outlook for CCOs in the UK market is very positive. In 2014 there were only 14 such roles in the country. In 2017 this number has risen to 90 This number is rising on a weekly basis. Although the scope of the role varies from business to business, the need for the role is recognised in all sectors. We have seen continued validation – from Forrester, Gartner, Harvard Business Review, and also from all of the large strategy houses – of the benefits to adopting a customer-led approach to running your business. We will, over time, reach a general consensus about the responsibilities of the role. It is equally certain, based on the US experience, that the way this role is embedded into a company will vary significantly between businesses. Jeanne Bliss1 one of the leaders in this space speaks of 4 different models that the Customer functions can take within a business. • manager with dedicated team • director with dedicated team • manager with dispersed team • director with dispersed team We are already seeing derivatives of these in the UK, with models ranging from the CCO as a senior executive with a full range of responsibilities (any department with customer interaction reporting in to the CCO), to businesses whose CCO leads a small lean team. The latter can be an executive/ senior leadership team role, but tends to work within a matrix as an influencer rather than a having direct control over key areas. In either case the core responsibility of the role is to put customer considerations at the heart of the business’ operations and thinking. 1 Customer Bliss: http://www.customerbliss.com/how-to-build-a-cx- structure-to-influence-change-and-drive-action/ OUTLOOK /09 The CCO role is often seen as being specifically applicable to B2C. This research indicates that this is not the case. The rise of the CCO has been seen in both B2C and B2B companies, some of those identified in the research operate in both markets. There is no great surprise that there are more B2C companies who are employing a CCO. The origins of the role stem from a customer experience perspective and B2C companies have historically been more focused on delivering good customer experience. What might be surprising is the number of B2B companies who are adopting the CCO role and the customer-led approach. B2B’s interest can be explained in two ways. On one level a customer is a customer, they need the same level of attention and understanding if you are aiming to put them at heart and centre of your business. In addition to this there is a recognition that B2C companies are ahead of the game when it comes to enhancing customer experience. There is also wide recognition that these activities create more successful businesses. As the link between customer focus and corporate success becomes better understood it is inevitable that forward thinking B2B companies would want to follow this lead to gain a competitive advantage. Interestingly, the same also applies to public sector organisations in the UK where we are seeing a real growth in customer focused roles (although to date there are few specific CCO appointments). IS THE CCO ROLE ONLY APPLICABLE TO B2C BUSINESSES? As the link between customer focus and corporate success becomes better understood it is inevitable that forward thinking B2B companies would want to follow this lead to gain a competitive advantage. /10 THE GROWTH OF THE ROLE OVER THE LAST 3 YEARS These figures show the growing emphasis being placed on the customer agenda, they also show that the historical lead of B2C continues. The market is seeing a level of growth in CCO hires that is projected to continue. Organisations who are looking to hire a CCO are likely to face increasing competition as the demand for the skill sets increases. Equally importantly, potential CCO candidates now really need to understand the broader range of skills that such a role demands. 46% 63% of all UK based CCO roles have been created in the last 12 months of these newly created roles were in the B2C markets /11 WHERE DO YOU FIND THESE CCOs? By definition there is no readily available pool of talent (certainly in the UK). Businesses are going to have to hire and upskill. They will also have to look further afield to find candidates with the right combinations of talents and aptitudes. Companies face a huge challenge in defining both the role and the skills required to be successful. We have found in our research that 84% of all UK based CCOs are new to this particular role, only 16% having had a CCO or Customer Director role before. /12 Forward looking businesses are clearly aiming to develop the ability to use customer experience and understanding as a point of differentiation and to deliver competitive advantage. There is a clear trend of CCO hires in industries where there is limited opportunity to differentiate in product or service. WHICH SECTORS ARE EMPLOYING CCOs? 28% The largest number of CCO appointments have been made in the UK retail sector. /13 Not surprisingly, a large number of new CCOs have previous experience in customer facing positions or roles where there is a strong customer interaction. There are, however, 20% of the CCO population who come from an operations background. This can be explained by the central role operations plays in facilitating the customer journey throughout the organisation. Those with a strong operational background have a very good understanding of how every department influences customer experience. 43% of businesses promote internal candidates into the CCO role. These people will already most likely have a very good network in the business and good understanding of the business operations and their customer base. There is also a recognition that moving skills across sectors (B2C to B2B) can be hugely beneficial. 43% of businesses promote internal candidates into the CCO role Currently there is no specific career path for someone to become a CCO. Our findings indicated that there are 5 broad categories where CCOs in the UK are recruited from a variety of backgrounds. WHAT IS A TYPICAL CCO BACKGROUND? /14 FUNCTIONAL REQUIREMENTS OF A CCO The CCO needs to: • Be strategic to create a customer strategy • Understand data and insight be detailed, numerical and understand trends and feedback • Be commercial be able to see how changes to the ways that customers are interacted with lead to measurable financial returns • Run design and innovation to deliver proposed changes in/create new products and services • Be digitally savvy have a very good understanding of digital/omni-channel solutions • Be able to deliver solutions have a strong delivery focus moving solutions from the design and innovation phase, to physical products or services for their customers • Create listening platforms once delivered the business needs to understand what the customers think of these solutions, so the ability to create measurements and platforms for measuring to really understand how the products and services are meeting the customers’ needs. • Be a change agent with any customer programme there is this change in the DNA of how the business operates. This cultural change underpins the success of any Customer initiative (small or large), thus being able to manage cultural change is pivotal to the success of the role. The breadth of this skillset and degree of emphasis on each of these depends upon the businesses own particular needs. The result is that the business needs to be an educated buyer or at the very least take advice from an advisor who can help them really understand what they are looking for. Any such hire is likely to need some form of personal development; understanding this upfront is also key. In hiring a CCO, the business needs to be an educated buyer or be prepared to take in-depth advice from an advisor who can help them really understand what they are looking for. The CCO role is both new and encompasses a range of skills and knowledge that has traditionally either been dispersed through an organisation or not present at all. /15 This research highlights the shift in how businesses are viewing their customers and the customer agenda that is dominating a lot of board- room conversations. The journey to becoming customer-led can be a long one and needs not only executive sponsorship, but someone to drive the agenda and to be the voice of the customer for the business. If the USA experience is an indicator then we are likely to see a significant number of CCO board appointments over the coming years. The CCO is a key role for a business, but as demonstrated in this paper, there is no clear path to choosing the right one for your business. There is no specific historic role that aligns exactly to the CCO role. The choice is further affected by a range of factors, including, but not limited to sector, maturity of the business, digital capability, ambition, and ability to drive change. It is also becoming increasingly clear that many more businesses are coming to recognise that this is an essential conversation. Customer-led thinking is likely to be a key driver of business performance. There are probably a number of questions that businesses need to ask. • Do you recognise or measure the potential for commercial gains through being closer to your customers? • Can you identify competitors that have already started this process and are potentially gaining ground? • Do you have the clearly defined will to turn customer focus aspirations into DNA changes within your organisation? • Are you able to articulate the skills required within your business to lead, define, and execute the necessary changes? • Do you know how to find the people and partners you will need to help you through this process? SUMMARY Customer-led thinking is likely to be a key driver of business performance. 1 East Poultry Ave, London, EC1A 9PT hello@talecco.com www.talecco.com </p>
