Why Every Company Needs a Chief Consumer Officer

2. This article discusses the journey towards becoming ‘a consumer- centric thinking company’: a company that structurally collaborates with the consumer world within all phases of decision making across its departments and that has established an outside-in thinking company culture. It elaborates on possible starting points for consumer collaboration and the steps an organization needs to follow to start collaborating in a more structural way. It also mentions the different tools one needs along the way in order to bring all internal stakeholders on board and activate them to take relevant action based on the consumer input. And finally, the positive effects that internal and external leverage of consumer collaboration has on the company’s culture and performance, and their measurement are discussed as well. There will also be argued that a new board member needs to be installed to lead and coordinate this transformation from an inside-out to an outside-in thinking company: the ‘Chief Consumer Officer’. The piece is based on 15 interviews (Van Belleghem & De Ruyck, 2012) with senior executives from major corporations and best practices drawn from over 200 projects we conducted for our clients around the world, over the last 2 years. What to expect

3. Structural Collaboration with consumers

4. These changes in the consumer and the business world ask for an adaptive mind-set within companies and more outside-in thinking. Organizations need to become more open and agile in order to become one of the winners of tomorrow. They need to embrace the empowered consumer by having a continuous dialogue with the outside world and starting to collaborate with consumers. This way, they will be able to react quickly on new trends, emerging consumer needs, expected improvements to products/services and anticipate the actions of the competition. Today, consumers are empowered. Through social media channels, they have the power to make or break brands. And, they want to have a say in the future of the brands and product categories they have emotional or functional affinity with (Van Belleghem et al, 2012). Moreover, most businesses need to operate in an economic climate that is harder than ever before. They have a hard time; but consumers do not show any compassion as they expect even more service and better products from companies, almost by the day. Finally, new entrants with new technologies or business models are disrupting many industries and are changing competitive landscapes at the speed of light (De Wulf & De Ruyck eds., 2013). “If the rate of change on the outside exceeds the rate of change on the inside, the end is near” – Jack Welch

5. Finally, more people brings a certain richness and diversity of consumer input to the table and ‘more time’ makes that we can really work together with people in different stages of, for example, product or campaign development (De Ruyck et all, 2010). Having a Consumer Consulting Board makes you a more open company as you invite consumers to be a part of the decision making process. But this does not mean you are also more agile per se. In order to reach that second goal, you need to start using the Board in a structural way: almost every single day, for most decisions that affect the consumer, across different departments of the organization. By doing so, companies will be able to make better decisions faster and create more successful products, services and marketing campaigns that can be constantly improved (De Wulf & De Ruyck eds., 2013). An online consumer community or Consumer Consulting Board is an efficient and effective medium for such consumer collaboration. It is an online closed platform on which one brings together a larger group of consumers over a longer period of time. The platform is invitation only, so the companies’ secrets are safe.The fact that it is online makes it convenient for the participants (no travel involved) and it results in having no boundaries - nor in geography (it is easy to bring people from different parts of a country together), neither in time (one has 24/7 consumer input at his/her fingertips).

6. Stakeholder involvement and building the right culture are crucial

7. Our interviews with senior executives from around the globe have taught us that it is not possible to create a consumer-centric thinking company overnight. A step-by-step approach is needed. And every project and initiative needs to be rather seen as a part of the way towards the end-goal, than as the ultimate solution itself (Van Belleghem & De Ruyck, 2012). On the next pages, we elaborate on the 5 steps to go through in order to get the most out of consumer collaboration initiatives and how it helps one to create a more consumer-centric thinking company culture, one project at a time. Finally, it is discussed how crucial the role of the Chief Consumer Officer will be in terms of leading and coordinating these projects and the overall transformation of the company into a consumer driven one. Having consumer knowledge within the walls of your organization is one thing, but using it all the time is a different one. The former is a matter of having the right consumer collaboration tools and initiatives; the latter is about creating stakeholder involvement and building the right company culture. A culture of empathy, consumer understanding and willingness to take action upon that knowledge in order to serve consumers in the best possible way while at the same time taking the company into the right strategic direction. It is about creating a culture in which consumers are not seen as an asset, but as a reason of existence.

9. #1 consumer collaboration: think big, start small

10. All companies are different, so there are also different ways to get started. An easy way to start is for a specific strategic project within one unit or team: consumer collaboration will help that team to craft the strategy. If that team is excited about the results of the ad hoc collaboration, they can opt for a more structural integration of the voice of the consumer within their team to constantly fuel the strategy. An example of the former is the ad hoc project we conducted for PepsiCo Turkey (De Ruyck et al, 2013). They wanted to reposition their Ruffles chips brand. To do so, we confronted the whole brand team and their ad agencies with the target group for 6 weeks, to discover insights and shape the new strategy together with us - consultants - and the end consumer. An illustration of fuel the strategy is our always-on Board at Heinz in the Netherlands: the Food&Co Community allows the whole marketing team to ask feedback from and co-create with consumers almost every single day. All aspects of marketing across different brands are constantly checked with consumers to make well-informed decisions fast. In our book ‘The Consumer Consulting Board’ (De Wulf & De Ruyck eds., 2013), we admit that it will take several steps within a company before structural collaboration is a true fact. Our advice is to start with a pilot consumer collaboration project in order to get the ball rolling. A successful pilot project will result in new projects and applications and step by step the company will move forward. By demonstrating and communicating the value of the consumer dialogue and collaboration with consumers well internally, even stronger support from higher management is earned and a more consumer-centric thinking company culture is established one step at a time. True involvement of employees through confrontation and connection with consumers is crucial in order to be successful here. Employees need to feel the need and urgency of consumer collaboration first hand. Let me do and I understand.” – Confucius “Tell me and I forget. Show me and I remember.

11. In larger, more complex organizations or in changing environments; it can be beneficial to first gain ground for a pilot project. We do that by setting-up a program that needs to change the mind-set of the employees. Examples here are the projects we ran for Unilever R&D (De Ruyck et all, 2011) and Mars Pet Care. Unilever’s R&D plant in Vlaardingen (the Netherlands) moved from inventing functional laundry products to creating more emotional beauty products. This asked for an immersion into this new consumer world first, before diving into specific projects from the new category. At Mars Pet Care in Verden (Germany) the leadership wanted to emphasize on the importance of listening to customers’ needs and wishes, as the goal of the project was to demonstrate the value of consumer input and feedback. In both companies the whole plant was involved in the project and confronted with the consumer world, resulting into a feeling of urgency to do this more and a clear belief in the value of consumer collaboration.

12. The end-goal should be that the companies’ strategic goals are managed through constant consumer input across all departments of the organization. We are currently rolling this out at Marktplaats (part of the eBay Classifieds Group). NPS is one of their key metrics and it is managed by a constant stream of relevant user feedback towards the appropriate team within the company. This system is empowering every employee to do his/her part of the work involved in reaching the user satisfaction and service recommendation targets. As Marktplaats is a smaller organization and as we had management’s buy-in from the start, they were able to move immediately from an ad hoc pilot project (on the creation and roll-out of their renewed online classifieds platform) towards full integration and activation of consumer collaboration and the revolving knowledge within the whole company. It was the well-designed internal communication plan about the pilot project and the constant activation of all stakeholders along the way that paved the path here. As one can see, creating a more consumer-centric thinking company is a journey, not a destination! For many CxOs starting that journey is one of their current top priorities. According to PwC’s Global CEO Survey of 2013, 80% of the world’s top CEOs believe that customers should have a significant influence on a business’ strategy (PwC, 2013). The path towards our goal is known now; let’s take a closer look at the different steps to take along the way and the consistency and persistency that will be needed once we get closer to that goal.

13. #2 Activation of internal stakeholders to take relevant action

14. There are 3 stages to leveraging consumer knowledge within an organization and to get the most out of it from a company culture and a marketing perspective after every ad hoc project - or continuously, if the organization has already installed a structural way of collaborating with the consumer world. First, you work on the hearts and minds, then you work on the actions of all employees and finally, you need to leverage this new way of working towards the external world. Let’s take a detailed look at internal leverage first:

15. Hearts and minds This phase of internally levering the results of consumer collaboration is about engaging the organization with the consumer world (creating empathy through consumer connection and confrontation) and inspiring the employees with relevant consumer knowledge (create consumer understanding). This happens via the use of the right stakeholder activation tools. Here are short illustrations from different client projects of those techniques that can be used to create stakeholder involvement:

16. Consumer quotes and pictures At the ad agency Famous, consumer quotes and pictures in the lobby remind the creatives about who they work for: normal consumers that are not as hip and trendy as they are. Moreover, it is also a great way to remind them of the fact that 300 consumers are there to help and inspire them on a daily basis in the two Consumer Consulting Boards of the agency. Online quiz For stroller manufacturer Quinny, we developed an online quiz about the most striking findings about young urban parents that came out of their global Consumer Consulting Board. The marketing and R&D teams could play the quiz of ten questions before the closing workshop of the project. The game confronted them with the new consumer knowledge for the first time and evoked curiosity about the final presentation and the brainstorm.

17. FanFace In order to confront the journalists and editors of the magazine Flair (a Sanoma title) with the true face of their readership of young females, we built FanFace, a Facebook-like profile page of the average reader that employees needed to complete. Afterwards, we compared the profile of the perceived reader with the profiles of the readers in our community. Confronting the editors and journalists with the differences between both was really eye-opening for them. It created a sense of urgency to get to know more and to work together with the readers in a very intense way during the process of reworking both the design and content of the magazine. Fanface for Sanoma’s Flair

18. Bus safari Belgian public transportation company De Lijn has sent its management on a bus safari: they had to use their own services to experience the issues passengers were discussing in the Consumer Consulting Board first hand. The confrontation with customers’ daily reality has pushed things forward faster than ever before. Weekly newsletter At the Italian pasta maker Barilla, the internal stakeholders received a weekly newsletter about the main topics discussed on their Board that week. The newsletter was created in a way that every stakeholder received only the content that was relevant for his/her job.

19. Consumer news platform In our project at Unilever R&D, we immersed the whole company into the world of the consumer by launching an internal consumer news platform. Every single day, two news articles about the main findings from the community discussion were shared, over the course of 3 weeks. Reporting in an easy to digest format during a longer period of time fitted the objectives of this project very well: it truly immersed them into the world of consumers. Based on a pre- and post-survey we know that knowledge about and confidence to work within the new category went up with 81%. It also made R&D employees discuss consumer feedback at the workplace among colleagues and at home among friends and family (rise from 12% before to 55% after the project) (De Ruyck et all, 2011).

20. Interactive infographic When it comes to offering consumer understanding in a creative manner, our interactive infographic for Heineken’s ‘The Club of the Future’ project is a nice example: we guided the design team that needed to work with the results through a night out, in 6 different sceneries. Each of the sceneries consisted out of 5 key consumer insights that were well visualized and made concrete via a design action. The interactive format fitted very well with the creative process designers go through. From the in-depth interview with the 19 designers after the project, we know that the tool was used by them on a daily basis while they were making sketches and at the end, during the review round, to make final decisions. The 30 insights have led to 8 new and innovative concepts that have end-up in the final pop-up club (De Ruyck et all, 2012). Magazine A last example of sharing results in an engaging and inspiring way is the magazine about its business readers, which we created for Bloomberg. Here, storytelling and visualizations were used to bring consumer knowledge alive within the company.

21. Actions Engaging and inspiring internal stakeholders is crucial. By doing so continuously and in a consistent way, step-by-step, a more consumer- centric thinking company culture is created. But, it is important to take the next step as well: activating employees to take relevant actions. this phase is about activating employees and making them process the new information. We need to activate them to take relevant actions based upon the newly gained knowledge and consumer understanding. Two nice illustrations of how to do that during workshops come from projects we conducted recently for IKEA and Heineken.

22. During the final workshop of our 2014 IKEA Catalogue study, we defined strategically important areas to focus on in the next edition. In the brainstorm session at the end of the day, the team members were confronted with relevant quotes from the community. They were asked to make an interpretation and turn the quotes into relevant insights. That process made them think deeply about the subject and it demonstrated the power of consumer input first hand. In the next phase they used the newly generated insights as a springboard for ideation and creativity.

23. For Heineken we worked together with consumers to gain insights about the ideal lounge experience. To let the results come alive after our presentation, we went lounging with the design team. During that Lounge Tour we gave them an observation card. On the observation card they had 6 tasks or themes to observe that seemed to be crucial in the experience of lounging, based on our presentation. They were asked to take pictures of those aspects. The day after, together with the Heineken team, we organized the second part of the workshop in which they used their pictures and comments to define the 6 areas again and to brainstorm about possible design actions. Activation workshop on day two for Heineken’s‘The Lounge of the Future’ project

24. #3 inspiring and empowering employees at all levels

25. This experiment showed us that ideas from consumers while being perceived as less unique than those of marketers (7 of the ‘uniqueness’ top- 10 came from employees), score higher on perceived consumer relevance (8 of the ‘relevance’ top-10 came from consumers) and buying intention. An experiment with the ad agency Famous with a campaign for Nutricia on baby food, showed that in an online ad campaign, copy created based on consumer stories did a better job in reaching the target group than copy coming directly from the creative team. The consumer driven ad was 50% better at reaching the right socio-demographic. It is clear that collaboration with consumers brings ‘relevance’ to the table. Activating internal stakeholders to take relevant actions should result in products, services and marketing campaigns that are created or improved based on consumer input. Previous research has taught us that those products/services and campaigns are more successful in the market. An experiment we made in collaboration with Heinz compared ideas for new cold sauces coming from marketing and R&D people with consumer generated ideas, in a concept test among a representative set of the Dutch population.

26. So, consumer collaboration pays of, but there is more needed than just the insights and the collaboration with consumers on the platform: activation of internal stakeholders. The right internal people. Research at MIT (Whelan, 2011) indicates that the difference between organizations who are successful in integrating the voice of the customer into their strategy and developments, differ from the ones that fail, in the regard that the former are good in identifying the movers and shakers within the organization and in giving them a leading role and all the support they need. The platform that we use to distribute consumer input within organizations is able to identify these so- called scouts and connectors. The scouts are good at spotting new opportunities in what they get back from the outside/consumer world. The connectors are great at bringing together the right team to realize it. It is important to identify these people as early as possible and bring them on board within the core team that will realize the transformation of the company (culture). They will play a crucial role in embedding the philosophy and practice of consumer collaboration and outside-in thinking within their team or department.

27. We may conclude that in order to make consumer collaboration initiatives successful within organizations, you first of all need the right consumer collaboration tool. From that point, it is all about engaging, inspiring and activating senior managers with the newly gained knowledge. In this phase, it will be crucial to identify and support the ‘scouts’ and ‘connectors’ within the organization so that they can make it happen. But it does not stop here. If you want to become a true consumer-centric thinking company, you need to make sure that not only top and middle managers understand consumers and act upon that. It is important that everyone within the company knows the basics of who the customer is and what their wishes are. Also, the people who are running the frontline of the business need to be inspired. At De Lijn, the bus drivers are also immersed into the world of the consumer through their own magazine and articles/videos on the intranet.

28. Within their specific role they now know what drives passengers’ happiness and what they can do about it. Kitchen appliances manufacturer ATAG trained their sales staff on what they can do in different phases of the customer journey, based on insights and stories coming from the members of their Consumer Consulting Board. Leading to a more emphatic sales talk and so, better sales results. This means empowering line-managers and frontline employees by giving them knowledge and allowing them to take relevant actions. Doing so will have a positive impact on customer experience, satisfaction and recommendations (NPS). Hotel Radisson Blu Edwardian in London, for example, allows every employee facing guests to take action (up to a certain investment involved), to do everything to make guests happy. All of this leading to high levels of customer satisfaction and word-of-mouth. And in this case, a happy guest definitely leads to a happy employee as well (Pantelidis, 2002).

29. Becoming a company that is more and more driven by consumer input also means that you need to let go of something else: being a process, product or technology led company. Employees have a natural inertia for change. It is important to take away as much burdens as possible and to trigger the right motivations at their end to make the new way of working a success in terms of adoption. It is important to make the process of engaging, inspiring and activating/empowering employees a fun learning experience. That can be done through gamification (the quizzes we play before a workshop are a great example) and the format of the used communication tools (think of things like the interactive infographic for Heineken). Next to that make the information relevant for the receiver at the moment of reception and make sure it is bite size (the platform we are rolling-out for Marktplaats is a perfect illustration of how that can be done). Furthermore, it is vital that they feel close to consumers, so that, if possible they experience the consumers’ feedback first hand. Especially if one wants to involve all employees at all levels of the company (line managers and frontline employees) the inspiration needs to be very short, lively, sharp and clear. It is also crucial that stakeholders and employees immediately see how the shared info helps them to do a better job in the short and long term. That is where the measuring bit will pop-in later on.

30. Finally, it is vital to have a clear mission & purpose as a company and summarize this in a catchy phrase. No matter what, the consumer should be central in this one, next to strategic goals. IKEA's mission for example is to 'create a better everyday life for the many people'. Aligning the goals of consumer collaboration with this mission & purpose will help employees to see the importance of the initiative. It is clear by now, that it not only takes the right consumer collaboration platform to become more consumer-centric, it is also about distributing the respective results internally in the best and most impactful way. It is about activating the internal stakeholders and let them bring the new knowledge into practice. They need to integrate it into their new plans and strategies (among managers) and by doing so making consumers happy with more relevant products and campaigns that are tailored to their needs; or they need to improve their day-to-day way of working and behavior to create more customer happiness (for frontline employees and customer service helpdesks).

31. #4 leverage the collaboration initiatives and the culture externally

32. It is great to be proud of the fact that you listen to consumers and that you act upon what you have heard. But you also need to talk about it to the outside world. Not communicating about it to the external world would be a missed opportunity as it evokes positive effects as we will see later on. To consumers You can communicate this to consumers, but also through them. The first option is telling the world that you have a Consumer Consulting Board, and that you are looking for members for it to help you out crafting a new product, like the CEO of Telenet (a Belgian telco company) did during a live press conference. Or using the insights from your projects as marketing material just like Chiquita used consumer insights and quotes in the campaign to launch their new smoothie offering into Europe. Another option is to do what Heineken did and show-off ‘The Club of the Future’ you co-created with consumers to the press and the (design) world. A final way to show that you are an outside-in thinking company is by combining closed collaboration with open crowd-sourcing (an open call to the world for ideas through the company’s social media channels). It gives a wider group of consumers the opportunity to take part in something and, from a marketing perspective, it will built awareness about your way of working and great company culture. The generated ideas can serve as input for further collaboration and fine-tuning in the closed Consumer Consulting Board.

33. Through consumers The other option is to communicate about it through consumers. At Marktplaats, four members of the Consumer Consulting Board that helped them make the right decisions while renewing their online platform introduced the new platform and its features to a group of 50,000 beta users. It was much more powerful when done by ordinary consumers who were part of the project than if Marktplaats executives had done this announcement via a short video message. A Consumer Consulting Board member announces the new features to beta users in a video

34. By consistently following and continuously repeating the different steps we outlined above - working on the hearts and minds by engaging and inspiring employees, activating them to take relevant actions and communicating about the consumer collaboration initiatives undertaken to the external world – for every single project; this is how a company works on becoming a more consumer- centric thinking company project by project.

35. #5 Measure the impact on the company’s culture and performance

36. What is the impact of all of this on the performance of a company? We ran a series of experiments with a series of clients that taught us it has a positive impact on a companies’ company culture, the performance of their employees and products/services/campaigns and the perception the external world has about the company as a whole and their respective brands: Company culture By constantly engaging the internal world with the external world and by inspiring them with what drives consumers’ happiness, it becomes clear that passion for the consumer within the organization is vital. It makes employees more service oriented towards the outside world, but also towards their own colleagues, which is a positive side effect. Both at Mars Pet Care and Unilever R&D employees who were part of the project indicated that this was the way forward. KPIs here are ‘employee happiness’ and ‘internal believe and support’ for the initiatives.

37. Performance Both managers and front-desk employees create more empathy for the consumer and know better how they can play a role in ensuring happiness among customers. Managers do this by creating more consumer relevant products and services, frontline workers for example by knowing exactly what to do and how to behave. Being in constant touch with the consumer world makes a company more successful, also in its marketing actions that will become more relevant to consumers as well. KPIs to keep track of the performance of the company can be: consumer satisfaction and the success in the market of co- developed products/services and campaigns.

38. External communication Research by the University of Wageningen (van Dijk, 2011) has shown that products that claim to be created together with consumers are perceived as being better and that companies who show that they listen to and work together with their customers are seen as more contemporary, consumer relevant and genuine. Out of the member satisfaction survey that we run on all the Consumer Consulting Boards of our clients we learn that consumers who have closely collaborated with a brand or company become what we may call emotional shareholders of the brand/company. They become very involved and start to perform consumer brand related actions for the company: recommendations, content creation, etc. Moreover, happiness of customers due to great service by frontline employees leads to online and offline word of mouth as well (Pantelidis, 2002). External KPIs can go from measuring brand perception and brand identification to word-of-mouth, NPS and all kinds of other consumer brand related actions.

39. In conclusion, a company needs to be consistent and give constant feedback to its Consumer Consulting Board- members and the consumer world in general about what it does with the results of consumer collaboration initiatives. In this new world of perfect information (all information is available for all online), companies need to be very transparent and open about their actions. Especially the younger, digital native and marketing savvy generations (Gen Y and Z) will get after a lie or pure marketing stunt without real impact and hunt a company down. An interesting case here is Starbucks. They do a great job on social media in terms of consumer listening and collaboration, but when it comes to their financial structure they act against what is perceived as ethical. This hurts their brand perception and is counterbalancing the positive effects of their listening and collaboration initiatives.

40. The Chief Consumer Officer change manager and ambassador

41. This white paper describes the process of changing the culture of an organization from one that thinks inside-out to one that has an outside-in vision. As described above, this asks for a step-by-step approach, but also a clear vision and strategy behind it is needed. The latter emphasizes the need for coordination by a new member of the company’s board: Chief Consumer Officer.

42. What are the tasks of a CCO? 1 Creating buy-in among top management for structural consumer collaboration; 2 Guiding the company through this transformation from an inside-out towards an outside-in thinking company. Leading the change and coordinating the strategic projects; 3 Identifying the ‘movers and shakers’ within the organization, supporting them and giving them the necessary responsibilities within the project so they can bring their department or team on board; Embedding consumer listening and collaboration through-out the company: making it part of every phase of decision-making across different departments and at all levels; 4

43. 5 Linking consumer collaboration to the long term strategic goals of the company; 6 Making sure that every project is leveraged internally: maximize the impact on actions and the company culture; 7 Convince the Board of the company that it is not only about being proud, but also loud: making external leverage happen to get positive marketing effects; 8 Defining and measuring KPIs at different levels of impact as described above; It needs a senior executive to take on this role. The person needs to be networked very well within the organization and be able to turn a vision into reality. It is a challenging new role within a company, but those who accept know that the journey will be at least as exciting as the destination!

44. References

45. Van Belleghem, S. and T. De Ruyck (2012). ‘From Co-creation towards Collaboration’, InSites Consulting Working Paper Van Belleghem, S. et all (2012). ‘Social Media Around the World’, InSites Consulting Working Paper De Wulf, K. & T. De Ruyck eds. (2013). The Consumer Consulting Board: Consumers Shaping your Business, InSites Consulting Working Paper De Ruyck, T. et all (2010). ‘How Fans Become Future Shapers of an Ice-cream Brand’, Proceedings ESOMAR Qualitative De Ruyck, T. et all (2013) ‘Think Big & Connect to the Max: How PepsiCo (Re)connected the Ruffles Brand with Generation Y’, Proceedings ESOMAR Congress De Ruyck, T. et all (2011). ‘Engage, Inspire, Act: 3 Stepstones towards Developing more Impactful Products’, Proceedings ESOMAR Congress PwC (2013), ‘Global CEO Survey 2013’, PwC Working Paper De Ruyck, T. et all (2012). ‘Designing the Club of Tomorrow: Consumer Understanding Guiding Creativity towards Success’, Proceedings ESOMAR Congress Whelan, E. et all (2010) ‘Creating Employee Networks That Deliver Open Innovation’, MIT Sloan Management Review, Volume 53, No. 1: 37-44. Pantelidis, I. (2002) ‘Implementing empowerment. The case of Radisson Edwardian, a hotel chain that dared take action, Proceedings CHME Conference Van Dijk, J. et all (2011) ‘The effects of co-creation on consumer perceptions’, Msc thesis, Wageningen University

46. Tom De Ruyck Head of Consumer Consulting Boards Want to know more about Consumer Consulting Boards? +32 9 269 14 07 tom@insites-consulting.com

47. Thank you! @InSites marketing@insites-consulting.com www.facebook.com/insitesconsulting www.slideshare.net/InSitesConsulting