Laura Jones: 00:10
Are you ready to dive into a world where empathy meets the algorithms? Is personalization overdone and creepy, or is it actually driving business growth? And what is going to happen when we have more and more AI powering it? I'm here today with Dave Edelman, one of the forefront leaders in customer strategy in the age of AI. He's just written this new book, and I'm really excited to be bringing him to you all today.

Laura Jones: 00:41
I'm Laura Jones, and this is Opinion Party, the marketing podcast where we would dispel the most pervasive myths in marketing. Welcome to the party, Dave.

David C. Edelman: 00:50
Thanks, Laura. Pleasure to be here.

Laura Jones: 00:52
Yes. Absolutely. So, before we get started into this myth, in an AI world, will all content be personalized, Which, wow, that's a lot of content.

David C. Edelman: 01:01
Yes.

Laura Jones: 01:02
I heard a little fact about you. Uh-oh. From back in your Harvard undergraduate days. You were quite the producer and theater person staging a David Bowie musical, was it?

David C. Edelman: 01:14
Correct. Yes.

Laura Jones: 01:15
And hair?

David C. Edelman: 01:16
Yes.

Laura Jones: 01:17
How is that how has the theater and the arts impacted your life?

David C. Edelman: 01:20
Theater and the arts have been a just a foundation, and they continue to be. I mean, there's so many things we can learn in the business world from theater. Things like how to work together in groups where you really have to have accountability, but you have to work as a team. You've got deadlines. You got to move fast in terms of speed.

David C. Edelman: 01:41
And one of the most important things is balancing the left and right brain. The right side, which is all the creativity that goes into how we are going to do this. How are we going to make it edgy? What's going to be new? But then all the left brain of the logistics, okay, you got to block the show.

David C. Edelman: 01:58
You got to get the harmonies done. You got to teach that. I was the music director, for both of the shows, and the whole nature of constantly being on my toes balancing that is something that has stuck with me. It's probably why I went into marketing because it has both of those every day.

Laura Jones: 02:17
Absolutely. And myself as well. I'm a former theater geek, and now I've got two little girls in the arts. And all of the things you mentioned, just really foundational life skills are learned in the theater. So well, I'm so excited that we share this passion for theater and the arts.

Laura Jones: 02:35
And, yeah, let's dive in. So, you've got your new book here, Personalized Customer Strategy in the Age of AI. Yes. I have to tell you; my favorite part is how you work the A and the I into the word personalized. Things like that are actually what got me into marketing as well.

Laura Jones: 02:52
And the reception has been amazing, hitting best-selling lists and lots of buzz. So, can you think of a time where personalization can actually add to the experience or detract from the experience? Give us an example.

David C. Edelman: 03:06
Sure. I think we have to be careful not just always thinking that personalization is tuning content, putting your name in something, saying something is appropriate for you, Laura. Sometimes personalization can just simply be the right time when it's relevant for you, given what's going on in the context of your life. It could be the way you're going to interact when you go online to get something done, and the app already knows enough about you, like when you do Uber, Spotify, Amazon, that you can get things done dramatically faster than you could before. And we're constantly now seeing brands that are basing their value proposition on how they're using information about you to add value.

David C. Edelman: 03:56
And we're being drawn to that every day, but it's a fine line. And one person's service can be another person's creepiness, and that's not necessarily a hard and fast line. It's something you've constantly got to test. But there are things for which personalization is not as relevant. And as you go earlier and earlier in the customer journey, general brand experiences, events, we want things that are shared experiences with others.

David C. Edelman: 04:29
That's part power of being human, is being able to talk about things that we have in common, that we experience, that we saw. So, whether it's sports sponsorships, local events in a particular city, even broad-based ads, billboards, those are not necessarily going to be personalized nor should they, because it's part of just the shared experience that gets a brand buzzed and talked about. And from a consumer's perspective, it's impossible to see how that could be personalized, and it's likely to be pretty creepy if it was.

Laura Jones: 05:07
Absolutely. Kind of when that broad mainstream based, if you saw your name out on a billboard as you were driving by, I think we'd all start to question reality, right? So, in the book, you talk about the five promises. Yes. And they are a foundational aspect of the book.

Laura Jones: 05:26
What are those promises of personalization?

David C. Edelman: 05:28
Sure. So, when you're using information about somebody to provide value to them, you have to build trust. And trust is based on delivering and keeping So that's why we call them the five promises. The first one, which is actually the most important, is to empower people. To enable them to get something done that they could not do before.

David C. Edelman: 05:51
Discover something. Find something. Do something faster. Do something cheaper than they can do before. Give them an ability because their information is there.

David C. Edelman: 06:02
And that is what mostly attracts us to many brands who are using personalization. But in order to do that, you had to do the second promise, which is to know me. You have to have information about me that I'm comfortable that you have, that you've gotten in a way that, again, is not going to violate my sense of trust. It could come from the direct interactions that I have with you. It can also come increasingly from just asking people.

David C. Edelman: 06:31
It's astonishing to me how rarely brands ask people questions. One of the things we cite in the book is Marriott, where Peggy Rowe, the Chief Experience Officer at Marriott, talks about how they have an explicit strategy of slipping in questions to ask people. You're a frequent business traveler. Where do you want to go on your next family vacation? You know, questions like that, and they build that up over time.

David C. Edelman: 06:58
You can go look at what they have about you. You can edit it, and they use that to provide more appropriate offers and services. It's shocking to me how few brands do that. And now with AI, there's also other ways of knowing. Because sometimes I expect you to know that I just had a customer service problem, that I was having trouble using your product.

David C. Edelman: 07:21
And all of those information sources are usually separate. And there's a whole chapter that we talk about how now AI can do things like how you integrate data, help you source data from conversations that you may have online. So, the ability to know people is way richer than it was before, but it has to be done appropriately. And the next promise is the one where there's a lot of danger, which is reach me. So, if you've got that, you've got to reach me at a time that's going to feel comfortable and not bombard me.

David C. Edelman: 07:58
It's astonishing how many brands bombard you. So, for example, I recently moved, and when I did, I upgraded my coffee machine to a Nespresso. And so, I get the Nespresso machine. It comes with 100 pots. Three days later, I'm getting bombarded by Nespresso to buy more pods.

David C. Edelman: 08:20
I just got a 100. You know I'm a resident and not a small business. Why are you bombarding me every single day? And then it got worse. The next week, they're pitching buying another machine to me.

David C. Edelman: 08:32
So, who's orchestrating? Who's actually thinking about me as a person and how I'm experiencing your outreach? That's another important part of personalization. It's not just the content; it's also the timing and the way you reach out. So, we've got empower me, know me, reach me.

David C. Edelman: 08:54
The fourth is show me, and that's where personalized content comes in. And personalized content can be very creepy. It can also be though incredibly valuable. When I was chief marketing officer at Aetna, health insurance company, we found that most people didn't understand their health plans. And that's a problem.

David C. Edelman: 09:14
If you're running a business and people don't know how the product you're selling works. They call into the call center, they're upset, all of that. So, we had a team that was working on how we change the onboarding process for new members. And we came across a service called Sunday Sky that enables you to create personalized videos. So, Laura, as a new Aetna member, you receive a personalized video explaining your health plan, who in your family is covered.

David C. Edelman: 09:44
Oh, your partner does not have your spouse does not have a primary care physician. Here's three in your area who are taking new patients. Click here to schedule. And on and on. It explains it all to you in a video.

David C. Edelman: 09:57
Completely personalized, very appropriate. Calls to the call center went down by over 20%. We told people about urgent care centers near them, so they wouldn't have to go to an emergency room. We cut unnecessary emergency room visits by 75%. So that the ripple effects of that are enormous.

David C. Edelman: 10:19
So, thinking about content in way that actually helps people can truly make a difference, and it positioned our brand in a very different light. And then the last is delight me. As you learn more and more about me, as you learn more and more about what works and what doesn't work, make it better, make it more special. So, of course, you see this in terms of every time I open up Uber, depending on if I'm in New York, it only lists the possible destinations in New York that I would go to, not in Boston where I live. It's learning.

David C. Edelman: 10:52
It's constantly getting smarter and smarter over time. Testing and learning and building that capability, that engine of learning to feed the AI to get smarter, that can build competitive advantage. So, the five promises, empower me, know me, reach me, show me, delight me, is a very useful framework for leaders who are thinking about getting into a more personalized way of delivering value.

Laura Jones: 11:21
Wow. There is so many great things in there, Dave, and where to begin? I want to call back to something that you said, which is who is running this? And you've got some great advice in the book as to who should be really the quarterback orchestrating the whole thing. How can organizations organize this and set this up?

Laura Jones: 11:43
Who should be running it?

David C. Edelman: 11:44
Yep. I think it's an amazing opportunity for marketing leaders to step up, but they can't do it by themselves. It takes a village. There's lot of coordination across the c suite to make a personalization strategy happen. You need air cover.

David C. Edelman: 12:01
You need collaboration. Especially if we're talking about something that isn't just simply advertising and the first part of, let's say, a sales funnel in order to get to conversion. If you're thinking about personalization in terms of the whole customer experience, you've got to coordinate product delivery, service. There may also be compliance issues depending on your business, where you've got to get legal involved. You're going to have to invest in technology.

David C. Edelman: 12:31
The CFO and finance organization has to be involved. There's a lot of people, and there's a whole chapter in the book that goes across the c suite and the roles that each play. But marketing is who's close to the customer. Marketing should be the one to spot where should we be empowering people. What are the compromises that people are making now because they can't do what they really want to do?

David C. Edelman: 12:58
And how can we break those compromises by unlocking customer information about them? How can we bring that to the forefront? So, marketing should be the one laying out that strategy, bringing it to the table, and we're already seeing in a lot of the work I do, I have my own independent consultancy, and I do some work with BCG, that more and more marketing leaders are taking on customer experience leadership roles as well. I was in that situation when I was at Aetna, and I'm seeing that more and more because it can't just simply be about advertising. It's got to be about the whole end to end experience.

David C. Edelman: 13:40
And so, there's a leadership there for marketing, but there's definitely a whole corporate coordination that needs to happen, which is why it's about strategy. It's changing the way you're interacting with the customer. That's your value proposition. That's what you are about as a company. So, you have to have everybody on board.

Laura Jones: 14:00
Yeah. Absolutely. And when you were the CMO at Aetna, you led digital transformation and that great example you just gave of all of the personalized videos. Are there tools that exist now that you didn't have back then that you wish you had, and what would you do differently?

David C. Edelman: 14:16
Yeah. Sure. There's an amazing range of tools now that are available that weren't before. Let me just I'll cite a few. One of the most important things in doing personalization is I know that I want to that it's in Laura's best interest to do something, but so I know who and what I think you should do, but I don't know how to get you to do it.

David C. Edelman: 14:40
So, you got to test and learn, test and learn, test and learn. And being able to do that at scale in rapid cycles had been a challenge. We had to create a lot of handmade ways of doing it. Now there are tools that enable you to do multivariate testing instead of just simple a b split test. There's, for example, a company called OfferFit, and they're mentioned in the book.

David C. Edelman: 15:06
That enables you to think about as many as five or six different variables that you want to test, such as what might be the creative look and feel, the offer, the timing, channel. All of those are different variables. And it's not just a question of what's the best combination in general, it's what's the best for Laura versus Dave. And so you've got to figure out how to do that at scale, and the AI figures out who should be in which test cells, how to minimize the number of test cells after the actual interaction happens, and you see whether Laura responded, how to feed that back into your systems to make them smarter, OfferFit manages that. We did not have that then.

David C. Edelman: 15:51
We kind of handcrafted our way to it in a, you know, kind of makeshift way. But a tool like that, I have seen that repeatedly with other companies using it. It's exceptionally powerful. Sunday Sky, the company that did the personalized video, it's now all using GenAI. So, you can actually just describe, just type into a chatbot what you want that video to do, where to pull the information from, make sure Sunday Sky's got permission to pull that information, and you can actually, I have seen it, create a video in ten minutes.

David C. Edelman: 16:26
And then you can generate thousands of different videos for different people at scale. One more that I want to bring up. One of the challenges in knowing me, and I referred to this a bit earlier, is integrating information about you from different places. So, you've been in customer service, you've called in, you've used the app, you may have had a sales interaction that's in a call center separate from a marketing interaction. Bringing that data together has really been a challenge for marketing, spending a lot of money on data lakes and customer data platforms, CDP.

David C. Edelman: 17:07
Well, now generative AI doesn't just generate content, it generates code. And so, you can actually use a system, one is from a company called Narrative, that has a product called Rosetta, like the Rosetta Stone. It can look at one dataset, understand its schema, look at a second dataset, understand that schema, and then write the code to combine those into a third repository, normalizing and standardizing all of the different data fields. That and that happens in minutes compared to months that you would have had data engineering trying to create pipelines and managing those. So those are all KBOs.

David C. Edelman: 17:49
We get caught up a lot in the content creation side of things, and, of course, coming back to OfferFit, if you want to do multivariate testing, you can now spin up with a tool like Jasper or Writer multiple different versions to test. That's the obvious stuff now. What I'm very interested in is some of these other capabilities around it that AI is enabling.

Laura Jones: 18:12
Absolutely. Wow. There's just so many more options and only seems to beg the question, not really can we anymore, right? Which is what a lot of companies struggled with, was just legacy systems. I'm sure Aetna had so many sources of disparate data.

Laura Jones: 18:27
But to your point, should we and how should we? And there's a lot of companies right now seemingly rushing into personalization. Where are you seeing companies stumbling?

David C. Edelman: 18:39
Companies stumble when they're not thinking from the customer's perspective. I know that sounds obvious. And marketing should always be about bringing the customer's voice to the table, pounding on the table about what does this really mean for our customers? How are they going to experience it? And the problem I see is, for example, the Nespresso example that I said before, who's looking from the customer's point of view at how things are hitting them?

David C. Edelman: 19:12
And so, you may know something that I'm a new customer, but don't just then dump me into a list to just get bombarded with pitches for pods. I mean, when I became chief marketing officer at Aetna, I also became an Aetna health plan member. And so, as a new member of my health plan, I got to see what was sent to members. I got to see a lot of crap that was sent to members, a lot of overwhelming stuff in my first month that seemed completely irrelevant, like discounts for magazines like Good Housekeeping that you get access to as an Aetna member. Why is that relevant to me?

David C. Edelman: 19:49
Why is that taking up my inbox? It's turning me off. And so, when we did a scatter plot that looked at how much we sent to you versus what percent of the time you opened it, if we sent you more than four things in a month, you tuned out. Completely tuned out. And we couldn't get you back, because you just saw it as spam.

David C. Edelman: 20:10
So, one of the biggest ways is not thinking through how to orchestrate contacts and make it timed and relevant, not bombarding them. Second is to think about personalization, just simply to make it look like we care about you. So, one of my clients has dogs, and she posts a lot on social media about her dogs. And a software company, a business software company, sent her a box with dog biscuits in it, saying, you know, this is for I hope your dog enjoys this, courtesy of the name of the company. And she was appalled.

David C. Edelman: 20:54
She was completely disgusted that they thought sending her dog biscuits is going to get her interested in their software. There's no connection. It's completely irrelevant, and it's totally creepy. So, who was really thinking about how somebody on the other side would receive it? So, the number one thing is that.

David C. Edelman: 21:16
The second thing though, is not testing and learning enough, not being geared up to do that at scale. So, one of my clients is a major pharmaceutical company, and you think, okay, drug marketing, they better be careful. They have a lot of compliance. But still, to take thirteen weeks to get something out the door is a very long time, with over 13 people touching it along the way, and you're never going to get results back fast enough to figure out what worked, what didn't, how to change it. It's just simply too slow.

David C. Edelman: 21:55
And so, we have moved them now to a much faster cycle. We call it agile marketing, just like software agile, where we have pods of five people who are empowered to do a lot more. Compliance is at the table as well, and they are getting things out the door in two to three weeks. And its faster cycle, faster cycle, test and learn, because you've got to feed the AI, you've got to learn what works and what doesn't for whom, and it's the way of working that can hold you back if you can't constantly get smarter. So those two things, a strategy that is not adequately focused on the customer, and a way of working that's not aligned to constant learning, those are two of the biggest stumbling blocks I've seen.

Laura Jones: 22:46
Yeah. Sounds like organizational transformation is a big piece of putting into place this type of strategy, and I know for a fact we've also transformed our organization into an agile marketing organization, and just having those small, empowered, end to end teams. You know, lot of people think agile just means fast, and that really bugs me because it's a word that's just thrown around, but when you really understand the principles of agile and working in sprints and cycle time and reducing cycle time and all of the different metrics that go into it, you really can see how transformative it can be. So really great advice here. Now, I read in the book that there's a little bit of generational shift happening with the way that certain people are open, perhaps, to personalization.

Laura Jones: 23:33
Can you discuss a little bit about that?

David C. Edelman: 23:35
Yeah. So as part of the research of the book, BCG did a very broad-based survey globally of thousands of consumers about their attitudes towards companies using information about them. And it was interesting. It was about 80% on average across the world are comfortable with companies’ using information about them if they feel they're going to get some value out of it. And by value, they define that as convenience, a better deal, or better discovery and entertainment.

David C. Edelman: 24:13
They lump those two together. Now it varies a bit based on country, not dramatically. Europe's a little lower, the more conscious of privacy. Asia's actually much higher in terms of comfort levels, but it's about 80. It even doesn't dramatically change by age group because seniors are getting more and more comfortable with it.

David C. Edelman: 24:37
But what is interesting is the flip side. Two thirds of people say they have stopped doing business with brands who they felt used them inappropriately. And there you see older the older you are, the higher that number's going to be. The younger, people are a bit more tolerant. They'll give you another chance, but I think that's going to change as well.

David C. Edelman: 25:02
So, the bar is high, but there's value in that bar. And interestingly, another study that we did as part of the book was to create something we called the personalization index. Because if we're advocating that you should be more personalized, how do you know you're making progress? So, we came up with a two-part way of measuring. One is looking at the capabilities that you have in place, and then the experience that you actually deliver.

David C. Edelman: 25:33
And so, we did mystery shopping, and we talked to customers of over 200 different companies across sectors. And using that, came up with an index from zero to 100 to rate the personalization capability and delivery of a brand. And there were spreads across almost every sector, but the top decile performing brands grew at over 10% per year, 10 points faster than laggards. So, and this is across the board. We've now done this for two years in a row.

David C. Edelman: 26:13
BCG's actually going to talk about it later in Conn. And the data has held that personalization leaders grow faster than their competitors. And if you do it looking at total shareholder returns or net promoter score, the value is the same. So, there's value in doing this because people are willing to have their information being used to add value, but you got to do it right.

Laura Jones: 26:39
Absolutely. It sounds like there's a negative asymmetric effect in a way. Right? Lots of lots of downside, but get it right, and you really can drive that value. And I love that you brought up value because we're here at the IRG, Institute for Real Growth, and creating value for all stakeholders, not just shareholders, is something that's really important to the philosophy.

Laura Jones: 27:00
You touched on it a little bit, but can you just recap how personalization in the age of AI can really create value for all the stakeholders involved?

David C. Edelman: 27:11
Yeah. Sure. So, there's different party’s stakeholders, in terms of customers, which is really how you get value back as a company in and of itself, you're providing higher value. If you're doing it right and you're in a category where it makes a difference, difference. I would argue for a lot of packaged goods, it's not where you're going to invest.

David C. Edelman: 27:36
You might do personalization down to the store level, but maybe not to an individual. You know, an individual, you know, can Nutella necessarily do much personalized for me? I'm skeptical how far you can take that, but at an individual store level, think about the stores as your customers. Yes. Absolutely, you can.

David C. Edelman: 27:58
So, for customers, as we said, by going through the five promises, you can deliver new kinds of experiences that help customers break compromises, that releases value, and it grows their loyalty to your brand. And you we see that, as I mentioned earlier, in terms of higher growth rates. For employees, what we've seen is not necessarily personalization in itself, but a lot of the things that I talked about, a strategy that's focused on customers, working in agile pods to get more done, the act of doing that creates so much more energy in terms and I have seen this repeatedly. We saw this at Aetna. We saw I've seen this in all the companies that I work with, where people are working faster, but getting more done, seeing the impact of what they're doing faster, working in tighter teams so there's more camaraderie, and they feel empowered because they're learning and they're doing more than just being in a narrow specialty where you just hand things off.

David C. Edelman: 29:05
And you're doing so in a to create more customer value. And so repeatedly, I have seen retention rates in these companies go up, employee satisfaction goes up, so it's a way of engaging the work force as well in all of the activities that are involved in personalization. From a stakeholder perspective and from the community, there's a number of different ways you can actually look at that. From a shareholder perspective, I talked about the increase in shareholder value from actually doing this. I think from a community perspective, a lot of it has to do with how you're the nature of the value that you're actually creating.

David C. Edelman: 29:51
Are you creating growth and opportunity? There's different ways you can think about aspects of personalization. You know, as far as just community impact, I think the main thing is if you're driving growth, and you've got employees who are doing well and thriving, and you've got customers who are doing thriving, that's helping the community overall. So, it's a complex of factors that go into it. It's hard to necessarily have direct attribution, but those companies are creating a flywheel of value, and then we have seen that now in two different years of looking at the analysis.

Laura Jones: 30:30
I love how you brought it all back to people because the concept of humanized growth is something that really is the bedrock of IRG, and it sounds like get that right and all the pieces will fall into place.

David C. Edelman: 30:43
Definitely. Which is why when you talked about the challenges, the number one is customer perspective, customer insight. Put yourself in that customer's shoes. Are they going to feel it's creepy? Are they going to feel it's appropriate?

David C. Edelman: 31:01
How are they going to react? What value? How can you empower them more than they could be beforehand? And that's all about humans. The AI isn't going to tell you how to do that.

David C. Edelman: 31:14
No way. You've got to decide how you want to do it. You've got to think about new ways to constantly innovate and make that experience better. You could use AI data to see where things go wrong, where customers, let's say, might be using your app, having a problem, and calling the customer service center. Okay.

David C. Edelman: 31:34
That's an opportunity. The AI can help spot all of that, but how you fix it, how you make it better, how you make it amazing, that's got to come from people.

Laura Jones: 31:48
Absolutely. Well, thank you so much for joining me today. Is there anything else you'd like to tell our audience? Where can they find out more about personalized customer strategy in the age of AI or anything else that you work on?

David C. Edelman: 32:01
Sure. So, I am extremely active on LinkedIn, and I'm posting all the time in terms of observations that I've had from interactions, discussions I have with CMOs, work that I'm doing. I do a lot of advisory work both for larger companies trying to adopt this, but also, I do a lot with venture capital startups in the AI space who are creating the capabilities to make this possible. And so, from those observations, I'm posting, I'm doing interviews, so you can connect with me and message me on LinkedIn. The book's available at Amazon or wherever you want to buy books.

David C. Edelman: 32:39
And I love to hear actually stories of people who have been doing this because I want to learn even more as well.

Laura Jones: 32:47
Amazing. Thank you so much for joining me, Dave, on Opinion Party. That's all the time we have. If you like our episode and want to hear more about Dave's book or any of the topics that we discussed, check out the show notes. And that's all the time we have for today.

Laura Jones: 33:03
Thanks for joining Opinion Party. I'm Laura Jones.