How to Design Your CX Organization

I’ve heard from countless CX executives, both seasoned and new, about how much more successful they would be if they reported to their CEO and owned all of the resources needed to execute their strategy. This way of thinking is almost always a trap.

There are scenarios where total control makes for a strong CX foundation. But being overly focused on reporting relationships and ownership of resources can lead you astray. Your CX program, given the wrong organization model, will either be suboptimal or — even worse — counterproductive.

How to Establish the Right CX Foundation With the Right Organization Model

It’s never as simple as just ownership of resources and to whom you report. As you look to build a new CX program or tune the one you’ve got, consider five factors:

1. What are the core cultural characteristics of the company?
2. What key capabilities and priorities define the CX strategy?
3. What is the best approach for exerting authority across the organization to develop and execute the CX strategy?
4. Who does, or should, the CX executive report to?
5. How are peer-level partnerships managed and which partnerships are the most important?

As with any other key strategy for the company, we need to look at each of these to guide us on organizing for effective and efficient CX.

1. What Are the Core Cultural Characteristics of the Company?

Modern business research is replete with cultural models. The one I see the most often, which is particularly well-articulated and put to use by professors at the University of Michigan, suggests that there are four types of culture that drive organizations:

• The Clan Culture — collaborative, focused on teamwork.
• The Adhocracy Culture — focused on innovation and risk-taking.
• The Market Culture — where the bottom line is the main priority.
• The Hierarchy Culture — following the traditional structure and chain of command.

It’s also not hard to peg companies as predominantly sales-driven or engineering-driven or singularly focused on Wall Street financials (much like the Market Culture).

None of these labels are intended as judgments; they simply describe styles, behaviors and belief systems that help define the company. Most companies exhibit several or all of these characteristics in varying degrees, but I believe that every company has a lens through which most things (including tough decisions) are fundamentally viewed.

The organization where I was chief customer officer for 12+ years is decidedly engineering-driven and has a strong Hierarchy Culture. This is not a bad thing at all. It aptly defines a company with a product orientation that has built one of the broadest and most competitive technology product portfolios in the world. And the company is driven from the top down by a true visionary. You could also call it acquisition-focused, data-driven and uniquely competitive.

I could go on, but you get the idea. My thesis is simply that you need to understand various characteristics and consider how they affect leadership styles — and especially CX leadership.

Related Article: CX Decoded Podcast: Jeb Dasteel and Brian O’Neill on CX Leadership

2. What Key Capabilities and Priorities Define the CX Strategy?

Ask 20 CX leaders what the scope of their role is, and you will get 20 different answers. Layer onto that lots of ever-shifting priorities (due to internal and external factors), and you will get a large number of answers reflecting a diverse view of how CX is defined. There is a great variety of industries, business models, and markets.

In my experience, however, you can find common ground — and a consistent way to think about CX strategy — in a core set of CX capabilities. I assert that these are:

• Customer Feedback, Data, & Analytics — collecting, analyzing, interpreting and reporting on customer input, as well as managing customer data across the enterprise. Consider programs such as the voice of the customer, customer data management, analytics, storytelling, customer segmentation and customer advisory boards.
• Customer Engagement — interacting and collaborating with customers through programs that focus on account management, awareness-to-buy engagement, post-purchase engagement, executive sponsorship, issue resolution, user experience and proactive “white glove” customer care.
• Customer Success — capabilities focused on effective product or service usage, customer communities and platforms for sharing best practices, product adoption and value realization.
• Customer Marketing — developing customer content and related marketing campaigns, account-based marketing, customer references and reward/referral programs.
• Customer-Centered Transformation — orchestrating business transformation and change management programs through the lens of customer experience and outcomes.

You can find much more on these capabilities, and related metrics, in my earlier article on the subject here.

3. What Is the Best Approach for Exerting Authority Across the Organization to Develop and Execute the CX Strategy?

There are countless leadership styles to drive CX strategy development and execution, but we can focus on just a few key ones:

• An own-it-all model — where the CX leader owns most core CX functions providing direct authority over much of the CX strategy.
• A federated model — where the CX leader owns relatively few functions and manages the overall CX strategy by influencing their peers.
• A distributed model — where there are several CX leaders for different lines of business or business segments.
• No central approach to the CX strategy — self explanatory.

I think we can readily agree that the last option is the clear loser. Each of the others will be the best choice depending on the other factors in play.

In my ongoing research, an interesting view is emerging: 36% of respondents tell me that their current CX organization approach is the own-it-all model. 22% have the federated model, and 42% have either a distributed model or no central approach at all. If you look at the 36% with the own-it-all model, 81% say they would stick with it. 10% would move to the federated model if they could, and about 10% would move to the distributed model. A snapshot of current findings is in the figure below, based on the current sample of 230 respondents.

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4. Who Does, or Should, the CX Executive Report To?

This seems pretty straightforward, but it’s not. The CEO can give you needed clout to get things done, but only if they are actively (and aggressively) sponsoring your efforts, both internally and externally. If that level of support isn’t there you will likely be set up for conflict with your peers, and the strategy will be marginalized and confused. If you are the CFO and in conflict with your peers, you can be successful; if you’re the CX leader and are constantly vying for resources and authority, you’re in for some serious turbulence.

Some broader considerations to think through:

Report-to	Pros	Cons
CEO/COO	Built-in perception of authority; potential for strong sponsorship of programs	Potentially set up to be at odds with peers for a strong voice, resources and partnership
Sales	Built-in access to customers and relevance for revenue contribution; the easiest path to influence selling behaviors and processes; some implied authority in companies where sales has significant clout	Potential for too much of a transactional orientation; could get lost as just another sales support or enablement team (not that there’s anything wrong with that)
Marketing	Access to the marketing budget and the power of the marketing engine for internal and external communicating; the opportunity to remake marketing with a CX focus	Potential to be pigeonholed as brand and demand generation support; less influence over, or partnership with, other lines of business; potential for less access to customers, depending on the strength and orientation of the Marketing team
Engineering, Product Management	Close proximity to engineers and the product teams to influence product direction; opportunity to enhance customer engagement within product development processes; some implied authority in organizations where engineering has significant clout	Potential to be pigeonholed as an engineering support function; possibly less access to customers

5. How Are Peer-Level Partnerships Managed and Which Partnerships Are the Most Important?

Regardless of how your authority is exercised or who you report to, the partnerships that you, as a CX leader, build with your peers are essential. Are you a collaborator with the head of marketing? Are you a service provider to the sales team? Are you a customer of the engineering team? You may well be a collaborator, provider or customer to different functional organizations at different times. What that looks like and how you solidify and prioritize these relationships are important factors in organizing CX.

The organizations that I am researching on this topic indicate that their most important priorities for partnering are with customer success, sales, engineering/product and marketing. The least important are lines of business, operations and the CFO/finance.

In my experience as a chief customer officer, I found time and again that the most important partnership to cultivate was the one with sales. The more my team and I engaged with sales, the more credibility and relevance we had. And that meant that we were better positioned to effect change and accomplish a variety of objectives well beyond closing deals and helping individual customers to be successful.

Related Article: Courting Your Customers: Executive Sponsorship Is a Partnership

Critical Factors In Establishing the Right Organizational Model

In assessing other factors that go into defining the optimal CX organization structure, my research is looking at a set of CX leadership objectives. Research participants are asked to prioritize which objectives are the most important in establishing the right organization model.

Here are those objectives from highest priority to lowest based on the number of votes given for each objective. Company size matters:

Final Words: Designing a Highly-Effective CX Organization

As you work through the questions posed here, consider the following guiding principles for designing a highly effective CX organization:

1. There is no perfect CX organization model. But you can define the best one for your environment. The most important aspects of the model are how you structure your team; how you develop and deploy company-wide capabilities; and how you exercise influence across the company for creating and implementing the CX strategy.
2. Organize your team and overall program based on the capabilities you need to achieve your CX objectives. This will allow you to shift priorities over time while maintaining core capabilities that you’ll always need. 
3. Collaboration and communication trump organizational authority. You need your peers to feel unthreatened, cooperative and feeling strong ownership of their role in the CX strategy.
4. Your best friend is sales. Help them win business and solve customer problems. You’ll do the right thing for customers and will also build the credibility that you need to get many other things done.
5. HR is your second best friend. The employee experience mirrors the customer experience. And employee engagement is a crucial determinant of customer engagement.
6. Marketing is your third best friend. Think of just about everything you want to get done as a campaign — either internal, external, or both. You will need marketing to help you execute.
7. Don’t try to change the culture of the company. It’s almost always immovable. Sure, it may be possible to tweak it, but you’ll ruin yourself and sabotage your objectives if you go for radical change. Instead, utilize the culture that exists to change processes and behaviors.
8. Spend 80% of your time with customers. This was explains itself.

If you want to look at the full set of data and findings from the research referenced in this article, feel free to go here.