Organising for customer focus: the case for customer clusters

I recently wrote a blog on organising for customer focus, spurred by the debate about whether a Chief Customer Officer or Chief Marketing Officer should be primarily responsible for the customer experience.  My view was that who ‘owns’ the customer experience is less important than how companies engender the collaboration that is necessary to deliver a winning customer experience.

Reflecting further on the issue, whilst I believe collaboration remains key, dismissing reporting and organisation structure is a cop-out for two reasons.

First, organisation structures still dominate much of the practice of organisation design; they are embedded deep in the psyche of many managers as the solution to many performance problems.  Not providing an answer is therefore not helpful.  Second, a good structure can, as part of an holistic approach to organisation design, facilitate collaboration just as a poor structure can obstruct it.

The key challenge is getting rid of the silos that so often slap customers in the face as they seek answers to what they see as simple problems.  Sandra de Castro, until recently the CMO of NAB (National Australia Bank) said, “There is an opportunity to create a revolution in customer experience, but you’re only going to do that if you forget the silos. And there’s the rub.  You must step across boundaries and look at everything from a customer’s perspective and challenge the fundamental tenets of how we do business.”

So why don’t we do just that: get rid of the silos.  I believe this is possible and propose the introduction of ‘Customer Clusters’: teams of people dedicated to a defined group of customers.

Customer Cluster

A cluster is made up of specialists in different capabilities/expertise that report into a single point – let’s call the role a Customer Cluster VP.  The Cluster is responsible for the end-to-end relationship for the prospects and customers in that cluster.  The key capabilities that make up a cluster are marketing, sales (new business) account management/customer success and support/operations.  Depending upon the type of business,  product management may also be part of the cluster.

The clusters are supported by common services for each of the skills in the cluster and functions such as finance and HR.  They support the clusters by providing (in some cases mandating) common processes and systems.

Implementing this approach involves the following:

Create the foundations

The executive team must be clear about and communicate the company’s core strategy, value proposition and target markets; the latter providing the base from which the choice of clusters is made.

Design the clusters

Clusters may be built around e.g. industry sector, life-stage of the customer or customer business model.  Wherever possible, the choice should be based on data that describes the key customer characteristics.  Once the basis of the clusters has been agreed, decide what skills are needed in the cluster. Marketing, sales and account management/customer success are essential elements.  Including operations in the cluster is appropriate where the offering has a high-level of service delivery, such as professional services, investment banking and technology solutions.

The cluster is responsible for key operating metrics of cost of acquisition, sales, retention, margin and customer satisfaction.  To deliver the numbers each cluster will build its own business plan, comprising:

  • The value proposition – what we sell
  • Definition of target customers – who we sell to
  • Customer journey/experience design – how we acquire, service and retain customers
  • Goals and delivery standards/SLAs – the financial goals and operating targets needed to be competitive

Establish a common infrastructure

Clusters should focus on the customers they serve.  Company-wide capabilities like Finance, HR, IT and Procurement  should be delivered by experts in each field.  They continue to follow the traditional departmental structure model.  Additionally, each expertise area in the cluster should have a small team responsible for implementing common processes and systems used across all clusters.  This is essential to maintaining coherence and minimising costs.  That said, these important enabling functions should view the clusters as their customers to drive the outside-in culture further.  These teams also play an important role in fostering learning across clusters – identifying best practices and encouraging the clusters to adopt these.

Emperor’s new clothes?

Isn’t this just matrix in a another guise or a highfalutin way of describing a team based organisation?  I believe not.

A matrix organisation has dual reporting lines with equal influence over individuals.  This is a cause of great confusion and stress to many employees as they become the arbiter of what are often conflicting demands.  The more powerful personality or perceived more senior person often exerting greater influence on teams and individuals.  A cluster on the other hand has a single reporting line, removing the inherent conflict of a matrix structure.

Team based structures tend to be more transitory; for example where projects are the focus of the value proposition.  Clusters are a continuously evolving structure.

I do not claim that the idea is unique but I do think it is now well-suited to the demands placed on companies by today’s empowered and demanding customers.

Not a panacea

I do not believe clusters are a panacea; they will not benefit every company.  They are better suited to business-to-business companies and unlikely to be workable in companies employing fewer than 100 people.  The teams must have a certain size to be effective: I suggest a minimum of four.  Below this threshold the team will struggle to generate the dynamics needed for a high performing team.  Companies that have a traditional, departmental focus or a track-record of poor collaboration will also struggle to make this approach work.

Clusters will be easier to implement in companies that have a clear view of their target markets and worked on defining ideal customer profiles.  Anyone implementing account based marketing and selling as an approach will probably benefit from introducing customer clusters.

What do you think?

Anything we can do to make our organisations more customer focused has to be beneficial to both the customers we serve and the companies we work for.  I would love to know what you think – for and against.  Please share any thoughts by commenting below or tweet withe hashtag  #customerclusters.

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