What skills do CCOs need?

This week, a brief overview of the skills and experiences chief customer officers bring to the table.

No time to waste, let's dive right in...

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You might be tempted to think the role of Chief Customer Officer is a customer success leader on steroids.

But it's not.

Indeed, making customers successful is a key results of anyone with the title, chief “customer” officer. But as I wrote last week, the CCO is a business leader. And business leaders aren't only responsible for their functional department(s) of the company, but the performance of the business as a whole.

Therefore, the CCO holds a dual mandate of setting customers up for success while solving for the company’s financial goals and business objectives.

Many customer success, services, and support leaders aspire to this role. Given the broad remit, I thought it would be helpful to outline some of the most important skills and experiences required.

Skill: Financial Literacy

At the executive level, your first team becomes the executive team. And this team’s primary interest is in achieving periodic financial objectives.

The goal of a business is to solve a problem for customers, make money doing it, and thus return value to shareholders over time. In SaaS, shareholder return usually comes when enterprise value [1] grows and the business is sold, in whole or in part, to a new owner. The elusive exit.

Profit & Loss (”P&L”) performance drives a business’s enterprise value. Owners and investors use a range of metrics which stem from the P&L to come up with valuation, such as revenue or ARR growth rate, gross profit margin, operating profit margin, free cash flow margin, Net Income, EBITDA, etc.

As a CCO you don’t need an accounting or finance degree, but you do need a working knowledge of these metrics because you play a critical role in delivering against them. The executive team’s number one goal is solving for enterprise value, especially if the business has taken any form of institutional funding (e.g., venture capital, private equity, or public).

A CCO, like any other business leader, must be financially literate to maximize their impact.

Skill: Operations

P&L and financial targets serve as constraints within which you operate a business. A company must build products, acquire new customers, and set them up for success within the envelope of an expense budget.

Collectively, people-related costs (i.e., salaries and benefits) are the largest expense category on any SaaS P&L. Support, professional services, customer success, account management are often rather large teams, so CCOs often wind up overseeing large swaths of the company’s headcount. In my last role, I was responsible for a team of about 160 people, roughly 60% of the company’s staff and roughly 45% of our headcount expense [2].

As a company scales, the efficiency of these teams has a direct impact on the profitability of the business. Efficient growth is about reducing the cost of adding one more customer or one more dollar of revenue over time.

As a startup, you invest in customer success at all costs. You need to build stories and case studies. But eventually, you must scale it in a sustainable way. Just like marketing, sales, and every other function.

The CCO should know how to identify bottlenecks within their teams and across the business. They must be able to strip a processes down to the bare bones and determine what’s critical vs. optional, and enact plans to transform them. Although it’s not a hard requirement, many CCOs, especially in larger companies, have a background in Lean, Six Sigma, or other process improvement methodologies.

On one hand, the CCO cares about each individual customer. They are the primary champion (along with the CEO) of the customer across the company. But they spend most of their time working at the process and customer segment level.

I often wonder if the CCO isn’t a new, outward facing version of the Chief Operating Officer in a SaaS business [3].

Skill: Go-to-market and Growth

Do CCOs need to have direct selling experience? It doesn’t hurt, but no, I don’t think so. But most of the successful CCOs I know have spent significant time supporting and enabling sales.

Every year, companies establish top line revenue and growth targets. CCOs work closely with their counterparts in sales, marketing, and product to develop and mobilize a company-wide plan to meet these targets. This is called strategy.

CCOs must be attuned to where the growth will come from, e.g., new business, expansion sales, cross selling, and determine how they will put their considerable headcount resources to work in support of growth objectives.

This isn’t about who owns renewals. Who owns cross selling. Who owns upselling.

It’s about making sure that we know where ARR growth is going to come from, aligning the entire company around the opportunity, and coordinating the day-to-day activities of each department to go make it happen.

Of course, customer retention is a critical element of growth. But it’s far from the only lever. It’s the ante. The price of entry. It’s expected. And while important, it’s not strategic. Once you’ve won business the expectation is that you’ll maintain it at or above rates corresponding to historical performance of the business and peer benchmarks [4].

Growth is still the number one driver of enterprise value in tech. If you want to become a CCO, you must play a role in the company’s growth story.

Skill: Customer Journey Management

Let’s not forget that the CCO brings considerable expertise in driving the customer journey including onboarding, activation, support, renewal, expansion, and advocacy. Many CCOs rise through the ranks of one of these key supporting functions, e.g., services, support, customer success, or account management.

But the the customer journey is about how everything works together from the customer’s perspective.

CCOs build institutional understanding of what success looks like for customers. Where they get discouraged, stuck, and drop off (precursors to churn).

They understand that ongoing engagement is just as important as initial onboarding.

The world is a crowded and noisy place for your customers. You only make it more noisy with product releases, advocacy requests, and upselling efforts.

The best CCOs, like marketers, know that they are fighting for attention every day. Many take on the customer marketing team where they directly oversee and champion coordinated, helpful, and engaging customer communication strategies.

Even with bulletproof customer engagement you can’t decouple customer success from the product experience. In addition to driving the customer experience outside the product, the CCO must also exert influence on product direction.

I spent three years of my career from 2010 to 2013 in product management, an experience that’s proven invaluable to me as a CCO. Product managers sit at the intersection of customers, the business, and myriad internal stakeholders. They receive “helpful” input from every conceivable direction.

The CCO’s teams behave like an extension of Product Management. They know how to communicate product direction to customers (and can do so reliably at scale). But they also aggregate inbound feedback to summarize needs across various customer segments and correlate them to retention and expansion opportunities.

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The point of all of this is that the CCO isn’t just a customer champion. It’s a true, cross-functional business executive role.

As such they'll also need the tactical, mostly people-related skills, we expect from most other executives, like:

• Designing, building, organizing, and leading teams

• Communicating with board members, individual employees, and everyone in between

• Facilitating continuous change

• Analyzing and interpreting data

The Chief Customer Officer role is up-and-coming, and is one of the most demanding, dynamic, and rewarding roles in a SaaS company. Our industry needs more leaders to play it.

Are you a current or aspiring chief customer officer? If so, which of these areas are you most focused on?

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[1] Enterprise value [EV] is a technical financial term I’m using loosely in this context. EV is Market Capitalization + Total Debt of a business. You can easily find a publicly-traded company’s market cap by multiplying its share price by the total number of shares outstanding. For private companies, market cap is more subjective and based on a range of industry-standard metrics evaluated on a less frequent basis.

[2] The median salaries in support, customer success, and services roles are typically below those of engineering and some sale roles which is why the difference in headcount (60%) and budget (45%).

[3] Versus a more traditional COO role that oversees finance, business operations, IT, and Human Resources responsibilities.

[4] There is no one-size-fits-all standard for gross retention in tech. Industry standard gross retention rates depends on the type of end customers your serve—consumers, prosumers, small businesses, enterprise businesses, etc—as well as the importance of the products you sell.