Five Critical Mistakes Chief Customer Officers Say Must Be Avoided

There are fewer than 400 executives in the world with the title Chief Customer Officer. They are pioneers, not unlike the first group of open heart surgeons.

Regardless of the size of your organizations, you can learn important lessons from the customer-centric programs these visionaries have devised and implemented when establishing your customer strategy.

While the role of the CCO is still relatively new, poorly defined, and often poorly understood by executives and customers alike, CCOs are of one mind when it comes to five critical mistakes they say MUST be avoided in developing long-term customer satisfaction, retention and loyalty:

1. Failure to treat customer relationships like a marriage.
   Hard work and mutual empathy are required. Like a spouse's devotion, you cannot take customer loyalty for granted.
   Successful couples learn as much as possible about each other before making the marriage commitment. And once they've "tied the knot," they do whatever is necessary to meet and hopefully exceed their partner's expectations for support and affection.

   Similarly, cultivating a profitable customer relationship also begins with discovering what their needs are, both as business customers and on a personal level by building a relationship with key decision makers. Most companies have key accounts who are responsible for the majority of their business, so get as close to these most valuable customers first. Devise and implement a regular program of customer surveys to determine how satisfied and loyal your key accounts are, and dig deep into their responses to gain detailed insight into what makes them tick and how happy they are with the service and support they're getting from you. Be sure to ask questions that pinpoint who the key decision maker is so you can develop a personalized relationship with that person to enhance customer loyalty and retention.

2. Treating all customers alike.
   Stars may all look alike when scanning a nighttime sky filled with them. But each is different, and a company's customers must be properly segmented so each specific group receives the level of support they need while keeping a careful eye on customer service costs.

   As mentioned above, start with your key accounts but also segment your customer base by product type, geography, vertical market and other metrics to develop corresponding customer strategies for each segment. Your key accounts are customers whom you cannot afford to lose. By the same token, you have a list of strategic accounts who perhaps are lower in terms of sales volume but hold promising revenue potential or have particular name recognition that makes up in part for lower revenue. Then there are customers of any revenue size in new vertical markets you want to penetrate, or initial customers of your latest product that are important as proof of concept. Segment all of these customers at granular levels so you begin to spot similarities that can lead to valuable add-on and cross-sale business that you would not have discovered without careful segmentation of your customer base.

3. Making decisions on customer service without gathering and analyzing relevant customer data.
   Similarly, failure to take action on what the customer data is telling you. If you've analyzed your customer survey data and segmented your customer base properly, then it's crystal clear you cannot make customer service decisions with a "one size fits all" philosophy. You've learned a considerable amount from these first two exercises, so use that insight to guide your customer service decisions.

   Service contracts are a classic example. Don't apply contract terms uniformly to every customer who is using a given product. Instead, look at their service requirements and expectations gained through the customer surveys and account segmentation and develop service contracts that fit like a glove. Your customers will clearly understand you are not treating them merely "as a number," and will respond with higher degrees of satisfaction and loyalty, which will boost your customer retention rate and profitability.

4. Underestimate the power of corporate culture that tends to resist adapting the company to embracing a firm customer-centric mindset.
   Southwest Airlines ran a TV commercial recently about how most airlines charge a steep fee when a customer changes an existing reservation. Southwest Airlines does not do this. The TV commercial was based on a courtroom trial where the attorney for the "big airlines" pleads his case before the judge and jury (jury members were Southwest Airlines employees). The judge rules against the "big airline" attorney, which prompts the lawyer to grouse, "We're focused on money. Southwest is focused on customers."

   That's precisely the challenge many organizations encounter when they try to become customer centric. It's just not intuitive to organizations who look only at the bottom line and regard customer initiatives as either unnecessary, too expensive, or both. The difficulty of changing this kind of corporate culture to one of customer centricity can be a formidable challenge, but never unwinnable.

5. Not focusing on the "4th sale first."
   All companies want to lock-in long-term repeat business and customer retention but often make the initial mistake of selling a first-time customer what the company wants instead of what the company knows the customer really needs – which is usually a less expensive solution. This "rush to revenue" up front tends to discourage a new customer's loyalty and trust in the company that can cost the firm the long-term buying behavior – the 4th sale – that it really wants to secure.

   This adds a bit of psychology to the discussion, and further demonstrates the challenge of overcoming mistake #4. This talks to lifetime customer value and not just the size of the initial order, and is a key consideration in maximizing customer satisfaction, loyalty and retention.

While few of us will ever reach the elite position of chief customer officer, we can all improve the effectiveness of the customer-centric programs we help manage at our own organizations by learning from these five customer-centric mistakes that must be avoided.