Can Customer Value Be Calculated Within Executive Months?

Posted by Alan See on November 14, 2008

1 comments | 4655 reads

Statistics show that nearly 11 percent of executives will fail in their first year on the job, and according to Manchester Inc. nearly 40 percent won't make it past the first 18 months in a new position. When it comes to average number of months at a position Chief Marketing Officers have the shortest tenure of all. In fact, as you can see by the chart, they barely get beyond two years before they are gone.

CEO 44 months
CFO 39 months
CIO 36 months
CMO 26 months

As Business Week commented in an article on the subject, “The CMO job is radioactive.” The problem as explained in the article quoted a well known research company as stating that 70% of the companies don’t know what they’re looking for when they recruit a CMO. It could be that just as many companies are not sure of what they are looking for when it comes to Customer Value. In Graham Hill’s recent post “Take Three Bites at the Customer Value Cherry” he identifies three different components; Customer Transaction Value, Customer Referral Value and Customer Network Value. It’s a really good post and you should take time to read it.

The point that I want to raise is that no matter what measure or measures you settle on your customer value initiative will take time to unfold. And like many projects, it will probably take longer than you originally thought. After all, data sources may need to be identified and perhaps even activity based costing systems put in place. By the way, once you’ve measured the customer value are you really going to do anything with it? Are you fully prepared and committed to change processes and procedures based on your new information?

The sad fact is that the long-term view of almost every organization is really composed of a sequence of short-term views or short-term plans. It is disastrous when someone goes into an organization thinking they have six, nine or 12 months to get up to speed and then want to see the ten-year plan to align their goals accordingly. At most companies, there is no such thing as a ten-year plan, and most organizations, even the non-profits, are not thinking in those terms anymore.

So, the question to the CXO’s out there. How are you marshaling internal support to keep your customer value initiatives within executive-months so to speak? How about the vendors and SI’s? How are you helping to accelerate customer value initiatives and reduce the CXO’s risk?

Alan See

Alan See is CMO and Vice President at MindLeaders. His background also includes time as an associate faculty member at the University of Phoenix where he facilitated courses in Marketing and Management Theory. He holds a bachelor of arts in business and an MBA from Abilene Christian University.

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Curtis Bingham

November 25, 2008

Tenure & Customer Value

Alan,
I think it is interesting that the CMO tenure trend actually increased to 26.8 months in 2007 from 23.2 months in 2006, reversing the slight decline from each of the 3 years prior. Is the CMO role maturing?

While all the data are not in yet, I'm seeing something similar with Chief Customer Officers (CCOs). The average tenure of the CCO seems to be about 18 months, with some notable exceptions on either side of the average.

The CCO role is suffering from some of the same issues as the CMO, namely that their role is ill-defined, most executives have no idea how to quantify the CCOs contribution to the bottom line, and many results take longer than 1-2 quarters to realize.

However, the most successful CCOs are addressing these issues.

Some of the early CCOs expanded their role until it burst and they either burned out or were fired. Now, the notion that they have to own all customer-facing functions is being replaced by the need to own the customer-facing processes. The CCO can improve the customer experience by streamlining the customer-facing process without having direct reporting authority.
CCOs are beginning to run their organizations using accepted metrics to quantify and justify their impact on customers and their organization. These include internally focused, "value captured" metrics such as satisfaction, renewals, churn, profitability, lifetime value, and interestingly, more "value provided" metrics such as customer estimates of improved business capability as a result of the business relationship.
Performance metrics are increasingly tied to profitability. Those whose metrics don't include profitability haven't lasted long. As much as it is "the right thing to do", pure customer delight doesn't impress the CEO and the board.
Balance between short- and long-term customer results is very difficult. While they may be given a 3-6 month "bye" to make changes, those that last the longest can prove they provided a near-term lift in revenue and profits while tracking towards the longer-term changes that are inevitable in a customer-centric journey.
Curtis

Dramatically increasing customer acquisition, retention, and profitability through customer strategy
Author of the forthcoming book, "The Key to Customer Strategy: The Rise of the Chief Customer Officer"
Web: www.predictiveconsulting.com
blog: http://www.curtisbingham.com

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