5 Ways CIOs Benefit From Facetime with Customers

The customer is always right, but how would you know? Few CIOs truly understand what external customers want and why they act the way they do. Running IT can all too easily keep CIOs internally focused, making sure fellow employees have the technology they need to do their jobs. That’s important work, but it’s not strategic.

CIOs who don’t look outside the office and mingle with the people who pay money for the company’s products and services miss the chance to get ahead–of customer complaints, of competitors, and in their own careers. A CIO who knows how to interpret customer behavior can come up with ideas for new products and fixes for systems that don’t quite work the way customers expect. CIOs with experience on the front lines of the business may even be able to help shore up relations with customers being courted by competitors or spot new business opportunities.

“The magical stuff with IT is great applications that run the business better. That can’t happen when IT stays in a corner,” says Wayne Shurts, CIO of Supervalu, a $37.5 billion chain of grocery stores that include Albertson’s, Jewel-Osco, Shaw’s and others.

Most CIOs don’t do much customer outreach, according to our latest State of the CIO research. Just nine percent of 596 CIOs surveyed said they spend time studying market trends and customer needs to identify commercial opportunities–the same as last year and a drop of three percentage points from 2010.

Not understanding customers can lead to poor decisions, says Bruce Temkin, managing partner of the Temkin Group, a customer-experience research and consulting firm. As senior executives, CIOs are involved in critical corporate decisions about mergers and acquisitions, divestitures, investments and business strategy. But those who hibernate, focused on IT operations only, may lack the customer-related information needed to do the job well, Temkin says. “More CEOs are looking for their staff to be better aware of customers,” he says.

Our survey shows CIOs expect that paying attention to customers will become a bigger part of their job. Twenty-seven percent said they want to be doing this kind of work in three to five years.

What it’ll take to get there is dedication. Many CIOs bring back tidbits from informal encounters with customers outside the office. “I heard from my neighbor that our bank’s branch in town could really use a Spanish-speaking teller…” That’s helpful, but limited. To be most valuable, collecting customer intelligence must be a sustained and focused effort that permeates not just the IT group but the whole company, says Michael Capone, CIO of Automatic Data Processing (ADP), a $9.9 billion human resources and payroll provider.

Capone tries to spend at least 20 percent of his time with customers and prospects, which helps erase the line some enterprises draw between IT and the rest of the company. He doesn’t wait for the business to devise strategy for IT to enable, he says. Instead, his customer knowledge informs strategy decisions. “We help envision what’s possible with technology.”

Progressive CIOs offer five ways to get close to customers.

1. Venture Into the Wild

A time-honored way of connecting with customers is to work in stores and offices with front-line employees. For CIOs serious about studying customers, this is not an ivory-tower exercise but the chance to uncover how IT can make practical changes to advance the company’s competitive position and generate new business.

For example, one of the first things Starbucks CIO Stephen Gillett did when he was hired in 2009 was work as a barista for a week. Starbucks has since pushed hard to get customers to use mobile technology in an effort to speed up checkout as the restaurant chain battles back from a rough recession.

At Supervalu, top executives see understanding the customer as paramount in turning around the company, which lost $1.5 billion last year. “It’s real easy, especially in IT, to get lost in what you’re doing and lose sight of the mission,” Shurts says. “We are a grocery retailer that serves customers. We have to bring customers in.”

Craig Herkert, Supervalu’s president and CEO and Shurts’ boss, started a Not-So-Undercover Boss program in 2011. All senior executives must work on the front lines twice a year to understand employees’ jobs and customers’ behavior. In December, Shurts worked at a full-service bakery at a Cub Foods near Minneapolis. He ruined a few cakes, he says, but gained fresh information about how customers shop.

“When I go to a store, I’m not looking only at IT. The customer doesn’t think of the store as a technology experience,” he says. “I’m looking for ways to improve the overall experience, whether that includes IT or not.”

He asked people about grocery prices, how they liked the new fruits and vegetables the store offers, and how they shop. Do you print coupons from the Web? Can you find everything you want?

Customers love the store locator on Cub Foods’ website, he says, but want some help once they wheel their carts inside. A few conversations that day solidified an idea the IT group had been contemplating: a mobile application that tells shoppers where to find products within a given store. Shurts is researching such a tool, with features such as suggested navigation routes based on a customer’s electronic shopping list.

Robert Juliano, CIO of Brandywine Realty Trust, approaches his job with one goal: Lease more space. The $573 million real estate company rents commercial and residential buildings, and even as CIO, Juliano must think of that as his first priority, he says.

As he and his staff walk Brandywine’s buildings regularly with on-site engineers, they learn what kinds of questions tenants ask, and what kinds of problems arise. He says he then ponders what he or his IT group can do to smooth things out for both tenants and staff. For example, although Brandywine rents to big companies, such as Northrop Grumman and Wells Fargo, many tenants are small and midsize companies that Juliano goes out of his way to help. In one common scenario, a small customer may be configuring an office and run into problems with their own telecom or network providers reworking installations for them, he says.

“Even though it’s not our problem to fix, I have access to vendors that they might not have,” he says. Sharing IT expertise can lead to stronger, long-term customer relationships. But he wouldn’t know about some of those situations if he didn’t visit company properties, he says. “They’re not paying us directly, but it’s another way we can help serve.”

2. Cultivate CIO Buddies

Striking up relationships with the CIOs of your big customers provides intelligence about the customer’s business while you spread the word about your company’s products and services. For example, Jeff Hutchinson, CIO of Maple Leaf Foods, a $5 billion consumer packaged-goods company, eats lunch often with the CIO of his company’s biggest customer so they can maintain a good relationship and swap IT leadership tips.

Anuj Dhanda, CIO of PNC Financial Services Group, a $3.1 billion financial services firm, seeks out CIOs at industry events and meetings of professional groups. By talking informally with the CIO of a local insurance company, Dhanda got additional insights into how the bank should work on a payment clearinghouse system designed for healthcare companies, he says. The insurance CIO talked about some business intelligence features he’d like in such a system.

Capone, ADP’s CIO, routinely meets with customer CIOs when he travels to major cities. At a lunch meeting in Atlanta last year with three fellow IT leaders, Capone discovered that they didn’t know about ADP’s new mobile applications that let people access their benefits statements from smartphones and tablets. Capone took out his iPad, had another CIO sign in to his company’s ADP-administered HR system, and demonstrated the features that those CIOs could activate for their employees.

When he got back to the office, at a gathering of IT and marketing managers, Capone shared the story that led to the development of a new publicity campaign for the free mobile apps. “We’d done media, but somehow we had not pushed our story out,” he says. Within a few weeks, ADP customers signed up tens of thousands of users, he adds. That lunchtime CIO meeting proved fruitful. “There’s a lot of opportunity out there.”

3. Get Your Staff Out

At Supervalu, CEO Herkert’s enthusiasm for customer contact inspired CIO Shurts to create his Business Immersion program in early 2011. Every year, all 1,200 members of his IT staff are required to work for at least one day, and often several days, at stores and distribution centers. Similarly, Capone’s Know Your Business program kicks in soon after someone joins IT. He or she spends time listening to customer support calls, going on sales pitches and working on technology implementations at customer offices. He requires his executive staff to participate and encourages it for all others.

Such programs offer participants customer input in many different forms, Shurts says. “This connects us with reality and re-grounds IT.”

Temkin agrees. “A well-informed CIO is good. One with a well-informed staff is better.”

Job rotations aren’t new, but the idea is frequently pushed aside as a luxury that ever-leaner staffs can’t afford. But rotations can create stronger, more creative IT leaders, according to research released last year by the CIO Executive Council.

At PNC, Dhanda at first gave his staff a quota of hours to spend in the field, a heavy-handed approach that deterred people, he says. Now he doesn’t dictate time spent, but explains in a matter-of-fact manner to his staff that they are expected to know the details of how customers interact with the bank. “This is part of your job and how you will succeed,” he tells them.

Sometimes mid-level IT employees who interact with customers can bridge gaps that develop between how technologists imagine a customer uses a system and what a customer actually does.

Sanmina-SCI, a $6.6 billion company that makes medical devices, military equipment and other electronics, created an IT team that works directly with external customers. These customers have outsourced the manufacturing of their products, or parts of their products, to Sanmina-SCI, explains CIO Manesh Patel.

“When they were building everything themselves, they had the systems to manage the process within their four walls,” he says. “Now some of the data has moved to us, and the two of us have created this divide.”

Patel chose people from his IT group who are customer-savvy and good with business processes to work closely with clients to make sure each party has access to the right data. If a medical device company wants to analyze product trends but some of the needed data resides at Sanmina-SCI, Patel’s team might write code to extract the data for the customer, he says. Sanmina-SCI sometimes charges for this work but mostly sees it as a way to strengthen bonds.

Brandywine’s Juliano motivates his staff to think like customers by tying incentive pay to how well projects “reduce friction” between the company and its customers by, say, improving a business process. “I’m not incenting my guys on throughput in the data center. That doesn’t move the ball forward.”

4. Study the Data

Get deeply immersed in market research about your customers and industry. Broad consumer trends should inform your internal IT capabilities and the products and services your company provides. IT professionals can educate themselves using the fancy business intelligence and analytics tools they supply to colleagues in marketing and finance. Javier Polit, CIO of Coca-Cola’s Bottling Investments Group, studies detailed demographic and psychographic data about Coke drinkers so he can supply effective analytics tools to Coke’s marketing and distribution people.

The ways in which consumer technology proliferates will eventually affect your company’s products and services. At ADP, for example, Capone keeps tabs on national surveys and buying data about smartphone usage. Are Android phones surging? Do iPads have any real competition? His thinking: The people who buy those devices will want to bring them to work. Since ADP does business with the majority of the Fortune 500, its HR and payroll products will have to support consumer devices. He also watches consumer sentiments about privacy and monitors what’s happening with legislation in states, at the federal level and in other countries. ADP, which handles terabytes upon terabytes of personal information, wants to “stay conservative” on privacy issues, he says.

5. Go Beyond the Dog and Pony Show

Especially in industries where technology is the product, such as financial services, CIOs are often asked to join the sales team to pitch to prospective customers. Acquiring and retaining customers is expected to be the biggest IT accomplishment this year for 16 percent of CIOs who responded to our State of the CIO survey.

IT leaders typically explain in these meetings how the technology works and answer questions about privacy and security, for example, or compliance with government regulations.

But there’s another advantage to sitting in on these sales calls. Questions from potential customers may reveal a competitive advantage IT can build into corporate products, says Dhanda at PNC. He goes on several sales calls per year and urges other CIOs to try it. Sales situations are rife with useful information. If you simply smile and deliver a rote PowerPoint presentation about the IT wizardry inside the company to try to close a deal, you leave behind valuable nuggets, he says. Instead, listen closely. During a meeting with a large federal agency a few years ago, senior executives peppered the PNC team with questions about data warehousing. Dhanda’s ears perked up as he realized they were preparing to expand their applications and revealing just what they had in mind. With this early tip, PNC later won a contract to build a large data warehouse for the agency.

Some CIOs go further than sitting in on sales pitches. Clive Selley, CIO of the $12.5 billion BT Group, spent a “most stressful” day as a real salesman.

Last year, Selley, who is also CEO of the company’s IT group, BT Innovate and Design, went with four of the telecommunication company’s CIOs, the CFO, and four other executives to a call center where they received training about BT products, then donned headsets and took calls. Customers–happy and unhappy–and curious prospects called all day, schooling Selley and his colleagues on BT’s strengths and shortcomings.

“It feels very different when you’re the guy on the hot seat trying to match their needs with our products,” he says. “That’s a very powerful way of learning about what customers care about and, very importantly, how, in their minds, our products stack up against competitors’.”

He found that BT’s call center applications didn’t always provide enough information to agents trying to make a sale. Callers asked about tariffs for various regions and how channel packages compared with those from competitors, Selley says. “Customers really drill you.” He returned to his office with a list of tweaks for his developers–such as more detailed information to serve to agents earlier in the sales process–that are due to be implemented early this year.

He also brought back an insight about a potential new feature. One woman asked Selley to set up phone service for her elderly mother in another town. She wanted to pay for the basic service every month while her mom would cover the calls. This would require BT to parse its costs and issue two bills to two addresses. “That kind of billing arrangement, we don’t support. But there was a real customer there with a real need,” he says.

The caller bought services that day, under a regular billing plan. But the conversation got Selley thinking. “Maybe in a Western world with an aging population, more customers will want that billing arrangement.” He passed along all executive feedback from the day to BT’s consumer group for consideration.

An Unfiltered View

Getting out of the office to mix with real customers can teach executives a lot. But CIOs in particular should guard against taking too narrow an approach to the experience, Temkin advises. Technology leaders sometimes see the world through engineering eyes, he says. What new thing can I build to make this better? But customer interactions include sensory components such as accessibility and emotions. By asking broad questions of the customer in front of you, you learn more. How can we make this easier for you? How do you feel about what you’re doing?

At Brandywine, CIO Juliano tries to keep the big issues in mind when he’s out with customers. “The farther [you get] from the field, the more filtered information you get. But you go on the front line and you get an unfiltered view of the world, not theories.”

Senior Editor Kim S. Nash can be reached at knash@cio.com. Follow her on Twitter: twitter.com/knash99.