Along with supply chain issues, the rising cost of raw materials and other lingering business challenges stemming from the pandemic, a big focus in the C-suites of many of the world's largest corporations has been the creation of a new executive rank: Chief Customer Officer.
Over the past few quarters, companies across the economic spectrum — from McDonald's, CVS Health, Under Armour and Walgreens to wholesale grocer United Natural Foods — have added the top job to help the boardroom better stay in touch with a rapidly changing landscape of the consumer.
Pre-pandemic, customer happiness was often tracked across talking-points lists from various internal teams passed up to the C-suite, but now it's being seen as critical to make one senior person responsible for influencing employees across the organization to become more tuned into customer wants.
"A lot of organizations have been product-centric or channel-centric, but now there's this growing sense that there's this need to be more customer-centric," says Augie Ray, vice president analyst covering customer experience at Gartner, a research and advisory firm. "Certainly the pandemic has caused a lot of organizations to realize that they weren't in touch with their customers — they realized that they need to listen more."
Delivering better customer experiences and developing stronger customer relationships were their top two highest priorities over the next two to three years, according to a 2021 survey of 3,000 CEOs from the IBM Institute for Business Value.
Digital's role in driving new sales
The phenomenon isn't exactly novel. Many companies have had a version of this role — chief consumer/customer/experience officer — over the past decade. But the extent to which people's use of the internet skyrocketed during the coronavirus pandemic isn't expected to abate. More than three-quarters of executives say changed customer behavior will continue after Covid-19, according to the IBM study. As the balance between physical and online shopping permanently shifts, customer chief roles in boardrooms are reaching critical mass.
Ninety percent of 401 companies said their company employed a chief experience officer, according to Gartner's 2019 Customer Experience Management Study, which was up from 61% in 2017. Gartner expects the number to be higher today; results of its next survey come out in the next couple of weeks. "We're getting into the middle of our bell-shaped curve in terms of companies creating these roles," says Ray. "The role is a recognition in many cases of what's already been happening — a lot of organizations that have had a V.P. of customer experience promoting someone into this new CCO role."
The role of a chief customer officer, who reports directly to the CEO, can be defined differently across industries and vary greatly from one organization to another. Typically the post is some amalgamation of marketing, branding and maybe sales, with digital and data being the roadmap. The rise of mobile computing led to a wave of chief digital officers who were responsible for the digital interactions with customers.
"That progressed into the chief customer officer, who looks more holistically at customer experience," said Paul Papas, global managing partner in business transformation services at IBM Consulting.
The glut of online customer data gathered during the pandemic has spurred some of the new thinking about C-suite structure. "Sales and marketing got pulled apart in big companies, and e-commerce and data have driven them back together again [to enable] the rise of a chief customer officer," said Ivan Pollard, leader of marketing and communications at The Conference Board and former CMO at General Mills. The increase in data has led to "a billion one-on-one conversations with customers that can be managed to affect a corporation's strategy," he added.
Many brands are embracing an omnichannel strategy in which online, and the data collected, reinforces physical footprint rather than being seen as threat to bricks-and-mortar's continued existence.
McDonald's and new consumer habits
Manu Steijaert, who was appointed in July as McDonald's first global chief customer officer, is leading a team made up of the company's data analytics, digital customer engagement, global marketing, global restaurant development and restaurant solutions groups, with a focus on "each physical and digital customer touchpoint," according to the company's statement on the role.
Steijaert has a solid roadmap to follow, given McDonald's reputation for embracing technology and customer centricity since its 2015 turnaround, including the firm's pre-pandemic success with the all-day breakfast menu, an example cited in a recent Morningstar analyst note.
"When people are ready for the McPlant, we'll be ready for them," said CEO Chris Kempczinski on the company's third quarter earnings conference call, talking about plant-based burger menu items. McDonald's declined to comment.
McDonald's also launched a new business strategy in 2020, built around changing consumer needs early in the pandemic. Investing time and money into delivery, digital and drive-through are key focuses; pushing food delivery service "was meeting a customer need that I don't think any of us fully appreciated even maybe a few years ago, so it's here to stay," Kempczinski said on the call.
Steijaert will likely play a role in how McDonald's interprets customer data from its new loyalty program, where underlying information offers a competitive edge with the ability to build up a database of order history and timing and which promotions are successful, according to Morningstar.
His background of working at his parent's McDonald's stores while growing up and then later, leading the company's restaurant innovation team, says something about where McDonald's is headed with how the company rethinks its physical spaces as the pandemic continues to impact in-store dining.
"People are saying the pandemic will be all about drive-thrus and delivery — obviously some of those habits will stick," says Ray. "But there's also a strong desire to get back to normal … humans are still physical creatures and you have to understand peoples' needs in the physical world and in the way that they're using your product there, too."
Same-store sales are key to growing the business, and "data will play a key role within that to drive frequency of visits and drive ongoing rises in tickets," says Edward Lewis, a research analyst with Atlantic Equities. "If you think about it, an awful lot has happened and having someone responsible for overseeing all these areas is important and clearly something that McDonald's felt they needed to do."
Under Armour appointed its first CCO in October. Massimo Baratto will oversee global marketing, e-commerce and retail for the sportswear brand as it continues its turnaround and chases market leaders Nike and Adidas.
"In terms of driving the brand forward, we're going to be continuing to follow our strategy, which is ultimately a consumer-led strategy," said CEO Patrik Frisk on the company's third-quarter earnings conference call. Under Armour declined to comment.
Baratto will guide the company's relationships with customers likely by adapting to how buying habits of sportswear and athletic footwear consumers changed during the pandemic. According to Matt Powell, vice president and senior industry advisor for market research firm The NPD Group, digital sales of athletic footwear represented 30% of the overall market in 2019 and 40% in 2020, where they have held. More people are buying shoes via smartphones than laptops, and conceptually, customers are focused on activities that allow them to stay fit while continuing to socially distance.
"I think brands have started to understand how much of their business comes from their best customers," Powell said. "They're ramping up their loyalty programs and taking that knowledge of what a customer buys to use it to shape their assortments going forward."
Data flowing in from loyalty programs — like customer buying habits — is one way CCOs will be able to use context to better humanize each customer experience. Data can also help call center staffers gather context about customers during phone calls, like what webpages they were looking at and detailed histories of buying behavior, which can foster a longer-lasting connection, says IBM's Papas.
While a CCO's core job — satisfying customers and making them loyal to your brand — is a goal analysts say all firms need to lean into, it's too soon to know whether the new executive position keeps a long-term seat in the C-suite. "CCOs aren't responsible for touchpoints — they don't have a product team or digital team reporting to them," Ray said. "Ultimately it's a role of great power, but it's a power that has to be used to influence leaders and front line employees across the organization to become more customer centric in their day-to-day operations."
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A new top job at McDonald's that is all about understanding the customer - CNBC
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