Why are there no CXOs at Australian retailers?

What is a CXO and why does CX need to have such a senior position within a company? For verticals like telcos and finance, the role of a CXO is already highly valued. This may be because these types of brands are in a constant battle to ‘make customers hate us less’. Retailers are usually in the enviable position where all they need to do is ‘make customers love us more’. In most cases a CXO is viewed as a luxury that can’t be afforded, or not high on the priority list.

The pseudo role of head of CX is usually inherited by either the heads of technology and operations; COO, CTO, CIO or Digital, or by marketing; CMO, Marketing Manager. Very rarely do we see retail or service managers put their hand up for the responsibility as they are too busy keeping the lights on.

So why is having a dedicated head of CX so important for retailers all of a sudden? First let’s explore the modus operandi of some of the other senior team members. You may need to excuse a few broad generalisations used in order to make my case.

IT and Ops uses the business to solve business problems

Heads of IT and Operations are all about efficiency and cost savings while maintaining (and hopefully improving) the broad technical capabilities of the brand. It will use the platforms and people it already has access to. Sometimes they bring in new technology and partners to replace ageing kit or to add new capabilities. The prioritisation of the tech roadmap has some alignment to broad business goals, but it typically is more defensive than offensive.

The brand’s customer is not typically a big factor in the decision making process for IT, and in some cases customers and the staff that serve them are seen as a mild annoyance.

Marketing uses customers to solve business problems

Marketing is the custodian of how the brand is presented to the market. Using traditional and digital advertising techniques to create ever-more sophisticated messages that are sent to the right person at the right time in order to meet awareness, preference and ultimately sales targets.

As the size and sophistication of the segments becomes more fine-grained, the demands on the marketer to manage several concurrent cohort strategies increases dramatically. Their toolkit of segmentation and personalisation is stretched, using a huge amount of time and resources — in many cases at the expense of the time required to manage the core image and personality of the brand itself.

When a brand is over-stocked in jackets because of an unseasonably late start to winter, the marketer can deploy promotional communications via advertising, to known customers using email, and via store signage to address the problem. The issue is that ‘having a jacket’ is not the customer’s real problem right now — it’s still hot remember! But hey, they can’t knock back 40% off can they…

Customers are viewed more as an audience of potential transactions grouped by high level attributes. The staff that serve customers are there to deal with any fallout between a mismatch in customer expectation and reality.

CX uses the business to solve customer problems

Where CX is different is that it remains focussed on customer problems. A helpful framework for understanding this can be found in ‘Jobs to be Done’. We need to make sure that we don’t try to boil the ocean here and focus on the problems that we have a chance of addressing for our customers.

Customer journey mapping is a great way to move the focus away from segments and more onto the short, medium and long term journeys that our customers have with all the brand touchpoints. Reframe these interactions to the job that the customer is trying to do, and assess how good we are as a brand in making each experience meaningful and successful. This is not about creating ‘seamless’ experiences that make our brand fade away completely as prophesied by Thinkerbell’s Adam Ferrier. It could be as simple as re-thinking how each touchpoint works or what its called so that they become more recognisable and relevant to our customers.

In Australian retail we still have a set — 6 at my last count — of basic CX problems opportunities that most brands could get on top of to make a big difference to the loyalty and advocacy of the customers they have already fought so hard to gain. Once they are under control, differentiation and success will come from a deeper understanding of evolving customer problems and jobs to be done.

Front line staff are a major influencer on the CX team’s decision making process and the closer they are aligned from a KPI and reporting point of view, the better.

The metrics that matter to a head of CX will usually be:

  • Known Customer Asset Value
    Dollar value of our known and influenceable customers

  • Customer Satisfaction (CSAT) 
    High level indicator of customer loyalty

  • Net Promoter Score (NPS) 
    High level indicator of customer advocacy

Changes and trends in these scores are a great barometer for the CX success of the brand.

The economics of Customer vs Transactional centric strategy

The head of CX can articulate the short (90 day), medium (annual) and lifetime value of their known customer asset. This is not average order values or basket sizes, but rather the long term spend and advocacy value that each customer brings. We should know in dollars what last week’s new customer acquisitions will generate, and how much future revenue was lost due to lapsed or opted out customers.

Key CX initiatives like shipping/return processes and fees will not stack up financially if they are judged solely on the single transaction they relate to. When compared to the longer term value of the customer who uses these features, you can start to see how user centric (rather than transactional) brands like Amazon and Uber can justify some of the services they give their customers.

This approach can also fundamentally change the way you invest in things like your eCommerce platform. Imagine if your website budget and team was solely linked to the online revenue it generated! You’d be doing a huge disservice to the significant proportion of store sales that are directly attributed to a recent ‘consideration’ phase on the brand’s website. By allowing customers to track their online and instore visits you can better attribute the role that store and site plays in generating long term customer value.

To summarise

Only a dedicated head of CX can:

  • Ensure that the largest portion of customers choose to track as many interactions and transactions as possible against their personal profile for their individual benefit — This is done through incentives and experiences that make sense to the customer

  • Prioritise initiatives across the brand that increase the value of the known customer asset

  • See the business from the customer’s point of view to identify opportunities that would otherwise be hidden from a digital, marketing, IT or operational standpoint