The rise of the Chief Customer Officer (IRM56)
Giles Delafeld, Chief Information Officer, Clarks, shares his opinion on the importance of customer experience and asks whether you’ll be hiring a Chief Customer Officer in 2016?
Almost everyone talks ‘Customer Experience’, or CX, these days and many retailers and consumer brands across sectors state it as their mission to ‘put customers first’ but they rarely achieve it. In my experience, this is usually down to one or both of the following reasons: cost or expertise.
Understandably, retailers assume that focusing on the customer experience is less profitable than not doing so; as the effort to design or resource a best in class experience is perceived to cost more. Secondly, CX expertise is scarce in the labour market as the discipline is still relatively new.
This is a vicious circle, as without a clear understanding of what CX can do for business revenues, not having this capability within the business constrains thinking and often results in investment decisions being centred on projects that more overtly appear to drive sales or profit. I believe that organisations that don’t build a CX capability will in the end fail as they will be disrupted by new market entrants or marginalised by key competitors that transform their businesses through embedding CX management within their organisations.
In 2004, having spent 5 years in consumer-focused roles at Mercedes-Benz, I joined retail bank Lloyds TSB as the first ‘Internet’ Customer Experience Manager; I was responsible for the online customer experience. At the time, ‘Customer Experience’ was new and shiny and hardly anyone knew what it meant. Often when I met new people in the bank or in the retail and internet sectors, I would find myself being asked to describe what CX really is. Twelve years later CX has matured and become a business discipline but it is still the case that many companies don’t fully understand what it is or how to do it.WHAT IS CUSTOMER EXPERIENCE?
Since those early days, ‘Customer Experience’ has become an overused phrase in part because it is popular to be seen to focus on customers. Additionally, as all of us are customers ourselves most of us have an opinion on what makes a good or bad customer experience. Assuming you can talk for customers, simply because you are a customer yourself, is one of the biggest traps executives fall into. Putting your ‘customer hat’ on, to try and improve the customer experience in your business is better than doing nothing at all, but this is a common mistake and undermines the real value that can be generated from building a CX capability.
Often businesses that are yet to create such a capability make an assumption that all employees are responsible for the customer experience, as if it is a cultural norm, and therefore there is no need to build a team specifically for this purpose. However, in most instances this means no-one owns the customer experience and the business falls short of delighting customers.
In the narrowest sense, for a retailer that operates an online channel, CX is often used to describe what is in actual fact ‘UX’ (User Experience Design). Even the definition of UX is often debated within our industry. However, in the main, most practitioners can agree that UX refers to the usability, accessibility and satisfaction that a user has with a digital or physical product. Whilst UX is without doubt a critical success factor for most online businesses, organisations must broaden their thinking and embark on professionalising their Customer Experience management capabilities if they are to remain competitive in the short term and survive in the medium term.
Customer Experience is not soft and fluffy, it’s not (just) usability or customer service. The customer experience that a business provides is the perception of the brand that a customer has after every interaction no matter which touchpoint they have engaged with.
It is rare that a brand or retailer has such a strong customer proposition that the CX does not matter. In my opinion, it is only where the product is either scarce e.g. concert tickets; or unique e.g. houses; or that the price offered for a product is easily comparable and unbeatable e.g. branded electrical goods, where customers may be prepared to endure a suboptimal experience to purchase the product. Even in these minority market segments increasingly consumers prefer to buy from sellers that focus on CX at some stage in the customer lifecycle.OPPORTUNITY FOR TRANSFORMATION
During the last 20 years, our industry has been responsible for the transformation of retail through leveraging new technology and the internet. In the 1990s, this typically meant building brochure websites and early online stores, whereas in 2016 we are now developing deeply integrated multichannel customer propositions enabling consumers, for example, to shop and pay with their smart phones or watches and start purchases in one channel, complete in another and receive goods or services in another; often within the hour.
Since most leading retailers now have ecommerce operations in addition to physical stores, the integration of channels coupled with the growth in digital has led to ecommerce directors becoming multichannel or omnichannel directors. As ‘digital’ has introduced more choice, and therefore more complex shopping options for customers, the recent trend is for executives with a digital background to take on the wider remit of the Chief Customer Officer.
Today the digital customer experience is often so entwined with other channels and customer touchpoints that businesses are increasingly concluding that they must create a single directorate that is accountable for developing a capability which drives Customer Experience efforts across the entire business. This is a positive development but in the same way that when many of us found our way into ecommerce careers 20 years ago, without possessing ‘Digital’ skills, it is today the case that many Chief Customer Officers are not CX practitioners – or do they necessarily even know what CX really is?
In addition to retailers coming to terms with the new norm of being digitally disrupted, retailers are increasingly competing for the best Digital and CX talent across sectors facing similar challenges to their business models. The speed at which CX as a discipline has developed has meant that the labour market has not kept pace at a time when customer expectations continue to grow exponentially. This market dynamic requires retailers to identify employees and external partners with the right set of skills and ambition to quickly form a CX capability and embark on a journey to grow a CX talent pipeline and transform the business. The specific skills required will, in part, depend on each business but the potential benefits are clear.
Much research has been carried out into companies that have embarked on a Customer Experience business strategy. Typically organisations initially focus on finding and fixing gross negatives within key customer journeys. This early activity can generate cost savings and customer loyalty whilst also being used as a driver for culture change to motivate employees to focus on and understand the value of CX. This activity alone is unlikely to create long term competitive advantage, which can be gained from transforming every end-to-end business process and customer journey, but it will build momentum within the organisation and convert disbelievers.
The business discipline that is ‘Customer Experience’ has matured and even though it is hard to do, it represents a strategic opportunity for retailers to transform, by deeply embedding customer centricity within the company operating model, values, culture, behaviours and business processes. Creating a great customer experience is no longer something that a business can pay lip service to; it has become a commercial imperative and an opportunity to create long term and hard to replicate competitive advantage. Will you hire a Chief Customer Officer in 2016?
Restructuring to improve the customer experience
House of Fraser has a vision to really put customers at the heart of what it does while having decisions driven by data and everything operating seamlessly. Sarah Baillie, House of Fraser’s Head of Digital Product Management, spoke at the recent InternetRetailing Conference about how the retailer is restructuring under it Chief Customer Officer to put the customer at the heart of the business and to get “ultimately to a place where we don’t talk about multichannel or omnichannel but one business”.
As part of the transformation, the company has been changing internal structures and employees’ roles so that trading, insight and development teams are better integrated for omnichannel retailing. A process that started 18 months ago has resulted in a digital development team made up of the project owners each responsible for a different part of the customer journey be that “find it, evaluate it or buy it”. People who were head of apps, for example, are now responsible across devices for one part of the journey. Matrix team working means that the UX team is also working throughout the end-to-end journey . “You have to work incredibly close together,” she says.
The trading and category management teams are now integrated and sitting together and the marketing, brand and content creative teams are designing across all channels – and sitting together too.
The restructuring resulted in new roles being created, mainly filled by business analysts in the insight team who are able to analyse the amount and complexity of the retailer’s data to support the whole business. “Data has been a huge step change,” says Baillie since people cannot debate robust data and strong insight so it makes decision making easier. She gives examples of the central buying office calling upon the insight team and how the team can predict long-term trends and recognise whether or not something is a passing fad.
The hardest, and most important, part of digital transformation is taking the people – hearts and minds – along with you, explains Baillie who says that the company took a “bottom up” approach, interviewing everyone affected by the changes about the barriers to doing their job. “It’s better to take time and do it right rather than quicker,” she says.
Practical things take time and cost money and it is ongoing, she explains, and you have to ensure that there are no skills gaps and you are re-training and re-enforcing the physical and cultural change journey in people’s minds.
Baillie is surprised by the speed of the benefits being felt but does point out that processes have to keep being revisited.
Restructuring has also enabled new metrics to be brought into place with financial metrics coupled with softer metrics such as advocacy and customer satisfaction.
This guest article has been written for InternetRetailing by Giles Delafeld, Chief Information Officer at Clarks. Clarks has been making shoes since 1825 and operates in over 75 countries across the world; with offices, distribution centres and factories in the UK, Europe, Asia, North and South America.https://uk.linkedin.com/in/gilesdelafeld www.clarks.com