The New C-Level Executive


Tim J. Smith, PhD
Founder and CEO, Wiglaf Pricing

Published August 28, 2002

Getting a handle on the customer moves to a new corporate hierarchy: The Chief Customer Officer, the outgrowth of “customer centric” initiatives.

The question is, trend or fad? Evidence supports a trend. Just as ten to fifteen years ago the CIO (chief information officer) and CTO (chief technology officer) positions started to populate corporate officialdom, the same thing is happening with customer service today. It is being fueled by the realization that “growth” is driven by the long-term relationships with customers.

The META Group estimates that by 2003 over 25 percent of global 2000 companies will have created the position; Gartner says 15 percent of U.S. companies will have a customer czar by the end of 2003.

To date most CCO appointments are found at young “startup” or “shakeup” businesses. These firms have the luxury and need to build their management structure from the ground up. For startups it’s easier, they have a clean organizational chart, and are inclined to be more customer-sensitive realizing their future depends on solid customer relationships. In a shakeup environment, the timing, necessity, and implementation steps can be easily incorporated into the re-organization process. These firms have a greater need to systematize due to past performance levels that might have been influenced by decreased customer satisfaction.

What is interesting is that few Fortune 1000 corporations have a CCO or similar position title because it is difficult to retrofit the position into a larger established business, or the concern is that the customer czar is likely to shake the organization to its very foundation. Another reason given, is this position level might create internal confusion regarding who is responsible for the coordination of sales, marketing, and customer service? Apparently the skeptics in these larger firms are the traditional C-Level’s, CEO, COO, and yes even the CIO. Many feel the CCO is an inflated title cooked up in reaction to the latest management mantra of customer-centricity.

Regardless of the company size or market served, the most important factor in deciding whether a customer czar is needed is senior managements “risk tolerance” levels. Within a startup or shakeup firm customer relationships are either poorly established or failing at best, therefore, discarding traditional methodologies become far more risk tolerant. However, at the more established company, a properly chartered CCO will make waves and possibly enemies while cutting through the traditional lines. The decision is a higher-risk strategy, and often time takes place as part of a phase-in process.

In its basic form, the customer czar maintains a proactive role by using technology as a means of opening customer communication channels with the company. This management level represents the customers voice by measuring their satisfaction, then using those measurements to improve the customer quality for doing business.

In the more advanced phase, the CCO is the first step to creating a customer-centric operation. At this level the enterprise needs to form a cross-functional mentality. A process that tests, analyzes, and determines what high-value customers want, what benefits and values they expect, and how-to blend internal operations into a positive and productive customer experience.

A great deal of CCO success is dependent on professional creditability, and management backing. Analysts support the notion that when creating a CCO position within an existing company, it is wiser and more likely to succeed if human capital selection is from within the ranks. A professional seasoned in company culture, technology, and business goals and objectives. This position also requires the unwavering backing of the chief executive officer in order to maximize the outcome from proposed action steps.

The appointment of a CCO should not be viewed as a miracle worker. The decision to create this groundbreaker position should be driven by the desire for customer retention directed to sustained profitability and long-term-value. Success can only result if expectation levels are achievable, time frames are realistic, budgeted expenditures accommodate staff re-training, system modifications, and supports human capital incentives.

The cliché that claims the “customer is always right” is a reality that both online and offline businesses must face. The customer is the asset that perpetuates future growth.

How important are customers to the future of your company? Is a CCO the management direction your company needs, and could benefit from?

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About The Author

Tim J. Smith, PhD, is the founder and CEO of Wiglaf Pricing, an Adjunct Professor of Marketing and Economics at DePaul University, and the author of Pricing Done Right (Wiley 2016) and Pricing Strategy (Cengage 2012). At Wiglaf Pricing, Tim leads client engagements. Smith’s popular business book, Pricing Done Right: The Pricing Framework Proven Successful by the World’s Most Profitable Companies, was noted by Dennis Stone, CEO of Overhead Door Corp, as "Essential reading… While many books cover the concepts of pricing, Pricing Done Right goes the additional step of applying the concepts in the real world." Tim’s textbook, Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures, has been described by independent reviewers as “the most comprehensive pricing strategy book” on the market. As well as serving as the Academic Advisor to the Professional Pricing Society’s Certified Pricing Professional program, Tim is a member of the American Marketing Association and American Physical Society. He holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.