The Organizations That Chief Customer Officers Oversee
In our continuing research on the emerging role of the chief customer officer (CCO), we recently looked at the kinds of authority their firms vest in them to drive change across the organization. This authority can affect the activities they do, the composition of the teams that report into them, and the budgets they control. For firms considering putting this kind of senior customer experience leader in place, Forrester has identified three archetypal models that characterize the most typical modes in which CCOs operate.
Advisory CCOs Play A Coaching Role
Companies that are early in their customer experience transformations are often reluctant to commit too many resources or cede control of core company processes to a CCO. These firms tend to place CCOs in an advisory or coaching role for peers with operational responsibilities, particularly if the company has had past success with centralized teams to drive change management efforts. CCOs running these teams have little control over decision-making and execution and instead derive authority through their expertise and personal reputation within their companies. A mandate from senior leadership in a business unit, the executive management team, or the CEO bolsters these CCOs' ability to change behaviors in other departments. These CCOs:
- Build core capabilities and spread awareness. Because they don't directly control operations, advisory CCOs and their teams focus on building core foundational customer experience capabilities and standards as would a center of excellence.
- Oversee small teams and budgets. CCOs in advisory organizations — such as those at BMO, John Deere Financial, KeyBank, and OpenText — manage small teams as well as budgets and often borrow capabilities from other departments, such as customer insights, market research, or process re-engineering groups (e.g., Lean/Six Sigma). The typical makeup of a simple two- to six-person team includes: business analysts, program managers, and a communications expert.
- Create momentum but risk being a "nice to have." The advisory model works well for firms that need to develop foundational capabilities and create buy-in for customer experience efforts because they are relatively early in their customer experience transformation. However, because they hold no operational authority — only the influence authority bestowed by senior leadership— advisory CCOs risk having department and business-unit leaders view customer experience as a "nice to have" rather than something for which the firm holds them directly accountable.
Matrixed CCOs Create Accountability For Customer Experience Standards
Firms that have already built momentum for their customer experience efforts — or balk at establishing a standalone centralized team to drive change — still seek to drive additional accountability for customer experience performance standards deeper across departments and business units. These firms tend to put a CCO in a matrixed role, giving this leader the power over specific activities that affect the customer experience but no direct operational control over specific departments. CCOs in this model derive authority from a seat on the executive management team or as the head of a cross-functional steering committee that has a high level of buy-in from influential senior leaders. CCOs of matrixed organizations:
- Drive a customer experience strategy across departments and business lines. CCOs in the matrixed model orchestrate a cross-functional team to develop a customer experience strategy . . . and then work to drive it deep into the operations of key departments and business units. Matrixed CCOs also establish governance mechanisms to prioritize a steady stream of projects and mediate conflicts when solutions cross departmental boundaries or require changes to key business-unit metrics.
- Manage few but sway budgets. Like CCOs in advisory models, these leaders have relatively small direct-report organizations and budgets. Instead, matrixed CCOs influence the project portfolios within existing business units and functional departments through the review process of a cross-functional customer experience steering committee.
- Spread competencies wide but still lack operational control. CCOs in matrixed structures have more authority to drive accountability for customer experience across the organization than do advisory CCOs. Although matrixed CCOs wield influence through governing steering committees or dotted-line reporting structures, they nonetheless lack operational control over department-level decision-making and execution.
Operational CCOs Exert Direct Control Over Major Company Operations
As companies mature in their customer experience transformation, many recognize that they hit limits unless they reorganize their operational structure to more closely reflect customer needs. Other companies make a decision to change their business models from product-focused to services-focused models. These firms typically elect to put their CCO in an operational role, directly overseeing large parts of a restructured organization. CCOs in this model have far more direct control over experience execution than do counterparts in other models. CCOs acting under operational models:
- Realign activities around customer needs. Operational CCOs restructure key aspects of operations to better match the way customers interact with their company. For example, USAA's CCO owns all of marketing, sales support, and distribution channels (including all call centers, digital channels, and retail locations).
- Oversee large numbers of people and control budgets. Unlike their counterparts in other models, operational CCOs control hundreds to thousands of people and budgets running into the hundreds of millions of dollars
- Can enact changes quickly but may neglect areas outside of their control. Because they have direct control over a restructured organization, these CCOs can move quickly to align internal business processes to more closely match customer needs. However, CCOs in this model run the risk that leaders in other parts of the company will view customer experience as irrelevant to their operations.
Firms considering putting in place a CCO should treat customer experience as a long-term change effort and:
- Pick the model that works for their company's culture or that the company has had success with in the past.
- Alter the model as their company's culture evolves.
- Build core capabilities — regardless of CCO model.
For more information, read the full report, "The Chief Customer Officer (CCO), 2012."