By Matt Blumberg, Cofounder and CEO, Bolster and George Bilbrey, CEO, Signpost
If you’re new to the Chief Customer Officer role, we’d like to share some advice we wish we had learned earlier in our careers. There are a few common misconceptions about customers and the service organization. If you don’t realize these as misperceptions, you can spend a lot of time dealing with issues that are not real, but perceived. We have identified five of these common misperceptions, although we are sure there are more.
In a lot of organizations you’ll see the service organization be measured solely on customer churn. If you really think about it, there are many elements that come into play that impact churn, including:
How the customer is sold
The quality of the product
How easy it is to onboard the customer
How easy it is to use the product
How easy it is for the customer to understand what kind of value they’re getting out of the product
Of course, the service functions do have a critical role, but they’re not the only functions in a company that impact churn. The responsibility for churn also lies with sales, engineering, marketing, and other teams. One reason why you need a C-level senior person in charge of all service operations is because you need someone who understands the customer experience broadly and that person has to work cross-functionally to ensure customer retention.
In many businesses, if a function isn’t generating new revenue, it’s seen as “second class.” From our perspective revenue retained is revenue gained and the service organization has a big impact on retaining revenue. In addition, the account management portion of a service organization is often in charge of up-sale and cross-sale opportunities which can be huge areas of growth. CCOs should work within their company to alter that misperception of service as a cost center because the service organization can have a huge impact on revenues.
I’ve recently found a situation where the customer success team is built to focus on the clients who have raised their hand and said, “I want to leave.” This reactive approach drives low job satisfaction and isn’t the “best and highest use” of a service team’s time. By the time a customer is frustrated enough, or isn’t seeing the value enough, that they want to leave — you’ve missed a window of opportunity. The right focus should be proactively helping customers reach their desired business objectives. If you can do that, most customers will stay. That’s the theory behind the rise of the customer success team and that’s what great companies are doing today.
There is a widespread practice of covering for product issues by throwing service at the problem. That certainly can work, but it’s not optimal. The superior approach is to focus the service team on becoming a trusted advisor for customers, helping those customers achieve their desired outcomes. To do that, the CCO will have to work cross-functionally with the product team, the marketing team, and the sales team to drive a more friction-free customer experience.
There is a wide-spread misperception that working in the service organization is boring. It’s mundane, it’s tactical, it doesn’t appeal to people who think strategy is grander than tactics. I don’t agree with that at all. A great service organization starts with a strategy. It starts with an understanding of customer segmentation. It includes thinking about the different customer personas and how to define an appropriate and valuable customer experience. That core strategy actually takes a while to develop. Once the strategy takes hold, it is core to driving retention over time. And, while a lot of people perceive that the service organization jobs are boring, or just answering trouble tickets or reacting to client problems, that’s not the whole role. It is a strategic role as well.
The Chief Customer Officer has a big impact on the success of a company, especially startups and scaleups, and their function touches nearly every aspect of a company. To give your company the best chance of scaling, the Chief Customer Officer should understand, pinpoint, and manage misperceptions so that they can devote their time, energy, and resources to the real problems that help customers.
Matt is the founder and CEO of Bolster, the marketplace for on-demand executive talent. Prior to that, Matt was CEO of Return Path. He serves as Board Chair of the nonprofit Path Forward. He is the author of Startup CEO: A field guide to scaling up your business (based on his blog StartupCEO.com), StartupCXO: A Field Guide to Scaling Up Your Company's Critical Functions and Teams, and co-author of the forthcoming Second Edition of Startup Boards with Brad Feld and Mahendra Ramsinghani, to be published fall 2021 by Wiley & Sons.
George Bilbrey has been a technology executive leading product management, analytics, service, and customer success organizations. He is currently CEO of Signpost.