I’ve known David Edelman since his days at McKinsey and without question, he is someone I absolutely admire and respect and he unequivocally “gets it” — which if you know me, is the single highest compliment I give anyone, regardless of their chosen field or profession.
When it comes to the world of marketing, David Edelman “gets it” and then some. For those not familiar with him and his work, over the past 30 years, as a CMO and as an executive marketing strategy leader with BCG, Digitas, and McKinsey, David Edelman has been a sought-after advisor on digitization, go-to-market strategy, branding, marketing organization, and agile operations.
I was thrilled when he agreed to become a contributing writer to The CMO Whisperer. He was already part of my “family” for sure but having him share his thought leadership with my readers is truly something special.
Customer Experience in the Age of AI
Not all that long ago David, along with Mark Abraham, penned a piece by that title for Harvard Business Review (HBR.) I came away from that piece with more questions legally allowed. I reached out to David to set up a follow-up, if you will, to the HBR piece.
As you’ll see, I had to restrain myself from asking ALL of my questions now vs. spacing them out, i.e. Part 2, which is surely coming at some point and no, I am not calling you Shirley.
Here’s Part 1 of my Q&A with David Edelman:
SO: The opening line to the summary of your HBR piece read: “Companies across all industries are putting personalization at the center of their enterprise strategies.” The cynic in me wants to ask ‘Hasn’t this always been the case? Haven’t companies, at least for the past X amount of years wanted to put personalization at the center of their strategies?’ Or am I just a curmudgeon? LOL.
DE: Well, yes, and I have been talking about “Segment-of-One Marketing” since I published an article about it in 1989. But while personalization was on executive’s radar screens, it simply was not that easy. In many cases, hard enough that they just could not justify the capital in database systems, content management, operations, etc. Yes, having a call center rep greet you by name is one thing, but having that rep prepared with knowledge of everything you did with the bank and a clear script based on that is another. When trying to get more economies of scale, reducing all interactions to an average was just too tempting.
SO: Is the difference now all based on what’s at companies’ disposal, i.e. AI/machine learning, etc.?
DE: Yes, the capabilities now available are drastically cutting the diseconomies of scale from coming up with endless variations of how to interact with somebody. AI tools such as OfferFit can test hundreds of combinations of copy, offer, creative, timing, etc. without manual intervention. Personalized video services, such as SundaySky can put together an experience for a customer in real-time by assembling components and personalizing the language in snippets of video that they stitch together. CRM platforms have evolved, such as Salesforce Experience Manager, to stay on top of the workflow and manage the sequence of touches across a journey. The capabilities are real, and they are delivering.
SO: I love the part where you reference Brinks and how, in less than two years, increased their A/B testing from two or three tests a day to roughly 50,000 a day. But I can see many people thinking out loud: “We could NEVER handle that many tests!” with the implication being that they don’t know what they don’t know when it comes to the sheer power and capabilities of AI. Sound about right?
DE: Yes, the challenge for companies is just to come up with the innovation on WHAT to test. That still requires humans. But the systems then take all the possibilities and work through all the combinations of how to test them on their own.
SO: Perhaps the single most-provocative line in the entire article is this: “Digital-advantage supremacy has gone well beyond the boundaries of traditional marketing to become a much broader C-suite issue.” I could literally hear CMOs across the globe saying ‘hallelujah’ en masse! On the other hand, I can hear these same CMOs worrying aloud that now ALL those in the c-suite will want to have a say in how a company operates in the digital world. Which of these scenarios do you think is more likely to have had occurred?
DE: I think it is both. The CMO role has always been precarious, with a Venn diagram around it having many possible overlaps with Chief Digital, Chief Data, Chief Growth, Chief Customer, etc. The important, regardless, is to take the leadership position by helping the business understand how these new personalization capabilities change the game in helping the company achieve its strategic and financial goals. You have to tie it directly to that, and not just simply say “we can personalize.” Which use cases really matter? Where should we start? You have to be deliberate, as well as visionary.
SO: “Most brands don’t personalize customer experiences at the scale or depth necessary to compete with the world’s leading companies. Personalizing an end-to-end customer experience requires orchestration across channels—a capability that no brand has fully mastered.” After I read this excerpt my initial reaction was Why? Why don’t brands personalize at the scale needed and why is there no orchestration across all channels? So I will ask you, why is this?
DE: Customer experiences naturally flow across mobile, web, call center, and physical. But often the systems of record for each and the operating technologies have been separate. It is just how IT software has advanced over time. It is also how businesses organized themselves. So, bringing these together challenges authority, forces new kinds of teams, and from a capital perspective, requires investment in new data integration systems, such as CDPs, and implementation of APIs that can talk to each other, all of which are very new to most companies.
SO: I am absolutely intrigued by what you deem the 70/20/10 rule. 70% of the effort of changing an organization—its processes, ways of working, key performance indicators, and incentives—involves people. 20% entails getting the data right. The remaining 10% is about the technology foundation. My guess is there are many skeptics when it comes to this rule and many may even be wondering ‘Why is there so much focus on people compared to technology? I thought the point of this article was to talk about AI?’
DE: As I mentioned above, the organization and culture of a company have to change to make personalization work. You have to get teams working together across marketing, sales, and service. Across channels. You have to have a mindset of relentless testing and learning, and you have to see the core data as your most important asset. That’s a huge change for many.
SO: There are MANY more questions I have – maybe we do a Part II – so for now I will stop here with one final query: It ties into the very last paragraph of the HBR piece, specifically the following: “Most CEOs and their C-suite colleagues claim to recognize the importance of the customer experience. But we often see more talk than action.” Now, I could not agree more with your assessment. However, let me play devil’s advocate for a second. Let’s say I am a CEO or other c-suiter, even the CMO for that matter. And as I review our KPIs/goals/etc., I see we are “hitting our numbers” every quarter, even surpassing some of the metrics. Why then should I care about CX? Why should I care about delivering an orchestrated experience across all channels? Isn’t hitting or surpassing my numbers what it’s all about? I have my own answers to this, of course, but I very much want to hear yours.
DE: Not a question that every executive has to “hit their numbers.” But the challenges will come from new competitors who can hit your business from angles that you never expected. Are your targets high enough? Are there underlying numbers below that could be a sign of weakness, such as higher attrition, which you are making up for by working harder at acquisition? Are you giving away too much in renewal offer margin which could be reinvested in better service? You have to look strategically ahead and see where your customers could have alternatives or were you leaking away potential. And my bet is that many companies are merely pushing back the day when they will need to bite the bullet, rebuild their foundations on a solid data foundation, inject AI into more of their operations, and change the nature of how they will be interacting with their customers. We see it in media, retail, travel, and banking already. I saw it coming into healthcare. B2B is next. The opportunity is just too real.