Advice to the Chief Customer Officer: Beware the Silos

For most organizations, annual planning is a time when each line of business or silo hunkers down inside its own operation to determine priorities and budgets for the following year.

And this is exactly why companies continue to make less-than-stellar advances on the customer front. The silo-by-silo approach to annual planning is at odds with what customer experiences require: an across-the-enterprise approach to defining priorities and focusing company resources on a unified plan for improvement.

Here's a simple example that illustrates this point. A great American apparel company prided itself on its packaging, labeling and customized information provided with each product. It also included things like shoe horns, extra buttons and cedar blocks to store wool sweaters—items that customers came to know and cherish the company for.

Buyers for each product line were charged with developing these items and for managing their cost within their product margins. Over time, buyers began to drop these items in the name of tightening margins.

Leadership was savvy to the fact that dropping these items would erode something more than margins and, therefore, made the call to remove the costs for these items from buyers' margins.

Funding for perpetuating this important part of the customer experience was placed in a corporate customer investment account. And it was handed over to someone who made sure that these bits of folklore continued.

The company was Lands' End. The person it was handed over to was me. And procreating that folklore became one of the most enjoyable parts of my job there.

Accomplishing this at Lands' End was an easier task than most customer zealots face. To get to a company-wide customer investment plan, customer leaders need to take these three steps:

1. Align with the CFO, CIO and CMO. Begin by making an ally of the CFO in building a customer investment plan. The CFO will welcome an approach that brings together resources for the execution of a common objective and begins with the objective of eliminating duplicate spending. Also align with the CIO. Every program that comes in for IT spend has the CIO's team as part of the budget process. If you are ahead of the game in proposing and gaining companywide alignment on the priorities, you have just simplified the work and rework that teams go through. And instead of pricing multiple projects, trying to go after the same issue, you focus the company on the key issues that need resolving and IT resources. Finally, customer data is the domain of the CMO, so make sure that marketing has a seat at the planning in the beginning of the process for agreeing and driving companywide alignment on customer targets, data and plans for the upcoming year.



2. Aggregate intelligence to identify the most important investments: Breathe life into an annual customer plan. Give yourself plenty of time and bring together members of the organization to identify and agree to the most pressing customer issues. Partnering with the CMO, identify the customer segments most critical in need of growing and rescuing. Identify the biggest customer issues. Gain senior management agreement to work on plans in concert with one another for solving these issues. A customer champion must sit in the eye of the storm and get the organization to take stock of where they have advanced in:
   
   
   1. Building relationships with priority customers
   2. Issues that impede customer relationships
   3. Points of differentiation and big bets



3. Pull together the customer investment budget. By starting with the customer priorities, the company will have a much better perspective on how and where to budget. Lines of business and operating areas can then budget their pieces of the overall plan, this time with the perspective of how each piece fits in with all the others. This will drive collaboration on budgeting that is not naturally occurring in the process. You may find that a budget is too difficult to get to for pricing the varied investments and programs and processes required to fix the issues. The process of determining the solution may take you into the following year. In this case, work hard to get senior management to set aside a customer investment budget to be used for customer investments. The key here is to align the organization in focusing on the four or five critical things to fix with the aggregated resources of the organization.

These actions will cement your role as a customer zealot. As you implement the three steps, your organization will have newfound appreciation and understanding for the CCO function and the role that you play. You will provide a service that is sorely lacking by pulling together the separate factions of the organization to see the business comprehensively and from the customers' perspective. Through taking the functions of the CCO "to the street" and applying them to the budgeting process, you'll gain traction and build momentum you can apply as you drive the organization closer toward customers throughout the upcoming calendar year.