Personalized: Customer Strategy in the Age of AI (Part 2)

Welcome to Readers, the podcast for the lifelong learner. Join us on our weekly dose of wisdom where we talk about the real life lessons and applications of books. Enjoy. Welcome back to Readers, everyone. Today we are back with part 2 of Personalized Customer Strategy in the Age of AI with David Edelman. Welcome back to the podcast, David.

Oh, pleasure to be here.

Yeah, I'm looking forward to this part 2. You know, in the last part we talked a lot about what personalization truly is, right? What components make it up? The 5 promises that really set the standard for what it looks like in practice. And today we're going to be discussing actually putting this personalization into action through leadership, measuring our impact, and also the future of what personalization can even look like, right? So without further ado, let's dive right into Part 2, Leading the Transformation. So in the first chapter of Part 2, right, you introduce a pretty important question. Who actually leads the charge on personalization? Of course, now there are various models, organizations, and leadership structures, right? But they all must have someone in charge. You mentioned here that early on, CMOs handled personalization, but this all changed when service companies found a lot of value in managing customers through their whole lives, right? And then we saw roles like chief customer officers or, uh, chief growth officers, and other similar positions. Now, here you say that in reality, it takes a village to lead and manage personalization, right? The CEO must provide the rationale, the vision. The CFO manages the return on investments. The chief operating officer optimizes delivery system, the economics. And there's a lot more that you really dive into here, right? The whole point is while many companies have appointed one singular individual to manage personalization, it really just needs to be a group effort. So I just want to ask a little bit about what that kind of means, why you felt like that was the truth, that personalization needs to be this group effort rather than having one person assigned to that task, as is with so many other situations. And then also a little bit about what those roles may be and why you feel like it needs to be a collective effort.

Yeah, sure. And the way I'll talk about it is from personal experience, actually. When I was Chief Marketing Officer at Aetna, I was actually Chief Marketing Officer and Chief experience officer, even though we hadn't created that title. The CEO really wanted me to look across the end-to-end healthcare member experience to drive something that was dramatically more personalized. Now, the reality though is in Aetna where I work, but any company, many of those touchpoints, the operations for those are managed by other people. So, you've got call centers that are managed by service operations team. You have billing that's managed by a team that's in operations. You've got sales. You've got claims. There's medical support. All of this is run— the operations are run by all these different people. So, to think about how we can use personalization to stitch that together and make sure the information flows across that, we needed to get people aligned on a vision for the kinds of experiences that we wanted to make personalized. And so, what we did was basically carve out from our overall leadership team's meetings. So, we would meet as a leadership team essentially every 2 months for a strategy meeting. And I would have an hour and a half in those meetings to lead the discussion on where are we going with customer experience. And most of that was about personalization. And so, I had people on my team who were project managing initiatives that cut across different areas, but it touched the Chief Information Officer's team because we had to make sure systems were getting plugged in and they were sharing information. We had to have the chief financial officer because there were investments that had to be blessed and tracked. Had to have service operations, as I mentioned. So we would bring this to the table and together— and that's an important word— track our progress and work together to deal with the compromises that came up. Because always there's going to be trade-offs constantly. And instead of it all just simply being on my shoulders, as a team— and I really appreciated having the air cover from our CEO, we had to work it through because if we're going to do this, it may cost us more in other areas in the short term. So, how are we going to make that trade-off and operate that? So, there's just a constant stream of decisions that you have to align upon. And that's why it takes a village. But it does take leadership to keep the momentum going.

Yeah, I mean, you touched on a few really important points there about, you know, making sure that everyone's kind of happy, being able to compromise, grow, things like that. And I feel like one of the other most important aspects to working in a team on this journey is accountability, right? When you have the whole C-suite executive team, whoever it is on board for this set of goals, it really helps to keep everyone in check and accountable for their actions and what our goals are as a team. Additionally, it also makes it easier to measure the impact of our actions, which is what this next chapter, Chapter 9, is all about. Here in this chapter, you break this term down into a pretty simple sentence. You say, "Personalization is about giving the customer quality, value for money, and convenience with the utmost speed." One way to measure this is creating a personalization P&L. Here you introduce a lot of quantitative metrics. Including an engagement ladder, operating costs, capital expenditures, and more, right? But in the last step you add in— in the last step that you add in this chapter is drawing a roadmap to value. So I kind of want to ask you to expand on that a little bit, right? For companies to just— for companies that are just getting started or just building this roadmap now, what are some clear priorities that they need to keep in mind? And what are some pitfalls that maybe you've seen organizations fall into?

Yeah, so getting the value from personalization depends a lot, as we talked about in the first part of the book, on how you plan to empower customers and what are the desired impacts of those use cases. Is it for sales? Is it for using your product in a way that makes more sense? Is it the way you deliver customer service and being more efficient in it while also giving people better answers. So, the places to start are not going to be right across the entire customer journey right out of the gate. So, you got to pick your leverage areas. So, for example, we picked onboarding. So, somebody comes on to a health plan as a new member. Most people don't understand their health insurance in the United States. That's a problem. For many reasons. They also call in a lot to the customer call center with all kinds of issues because they don't understand it. And that costs us money, and it makes them unhappy, and it costs them money because they do things that are in the end not going to be in network, and it's going to cost them more. So, we said, let's make onboarding as personalized as possible. So, we used— we found a company called Sunday Sky. We created personalized videos. And what we did was measure, in this case, the impact on our members of several key variables, one of which was, did the calls to the call center go down? Were there actions that we recommended people take, like downloading our app and registering for the app and setting certain things up on the app? Were they also engaging more with text messages and emails that we sent, all of which would set them up for a more successful membership and from from an economic perspective made a lot more sense for us. So, you really have to think about the goals and start very deliberately. And then eventually, we got to broader things like in the customer call centers themselves, for example. We went upstream into marketing. But you focus on it. And then as you're doing that, the really big thing that we talk about in the book is you need to have a control. So you need to be able to test the lift versus not doing it. And that's where a lot of companies fumble. They just simply try to do things across the board, but it's hard to prove that that's what added value. So we help people out. We did not send videos to everybody right out of the gate. We held back about 10% and we looked at the difference between them versus others in terms of behavior. And lo and behold, calls to the call center went down by over 20%. Over almost 80% of unnecessary emergency room visits were shuttled to urgent care centers because we told people about urgent care centers near them, near their geography. We showed them on a map that they could go to instead of the emergency room for certain things. So, things like that, you can create metrics, but you gotta focus it on the goals of the use cases.

Yeah, I feel like I'm hearing a lot of this go back a lot to your, you know, one of your promises, know me, right? And it all kind of goes back to really knowing the customer, knowing their needs for personalization. What would they appreciate? What do they not need, right? Like, for example, if I'm going to go to a coffee shop and they have the option to be able to personalize, I don't know, the type of milks or different ingredients in the coffee, maybe I'd appreciate that, right? But that being said, maybe I wouldn't appreciate taking out another minute to choose the color of the cup or something like that, you know? I guess it all just depends on what the customer needs. And I feel like through this process, you just learn so much about your ICP that it becomes almost inevitable to think about privacy and risk, right? And this is something that you address in this upcoming chapter, right? This is a thought I've had while reading this book. I'm sure others did too. And I know for a fact you did because you wrote this chapter, right? And that's the question of privacy and risk. How do companies ensure they are acting responsibly? So today, right, you mentioned some data here that half of customers not only believe that customers have their data but are also selling it. And these are the risks, you know, these are some risks associated with your second promise that we also discussed in the last episode, right? Know me. Now, misuse of data can cause a company to lose trust It can also get it into legal or financial trouble. Now you kind of go deeper into each promise, right? And they have how they have both risks and mitigations associated with each. But for now, I kind of want to generalize the question and ask you for a word of advice to, you know, an early founder or a company C-suite officer or something like that, right? What are some of the big mistakes you've seen companies make when it comes to data privacy or risk, either intentionally or unintentionally? And what are some important steps for early or late organizations to take to mitigate those?

Yeah, sure. The first and foremost thing is to ask yourself, what if we actually always told the customer what we were doing with the data? Would they feel comfortable? So ask yourself that. You got to look at it from the customer's point of view. If a customer knew you were doing this, would they be comfortable? We did a survey actually of thousands of individuals in actually all over the world. And we asked them, how comfortable are you with companies using your personal information? 70% said they would be comfortable with companies using their information in order to deliver value. But two-thirds of them said they had stopped doing business with companies who they felt were using their information inappropriately. So there is a line and, you know, that line may not be very well defined. It's gray because different people are on, you know, different continuums of that line. But the reality is people are concerned about this. And so you've got to start thinking about it from the customer's point of view. So that's first of all, from an internal guardrail perspective, if, you know, every newspaper and social media site in the company talked about how you were using customer information, would you be comfortable? The second thing is to actually then start asking yourself, if people aren't comfortable, they probably would do things that would indicate that, such as not open our emails, unsubscribe, do, do various actions. And so that's what testing is about, because you don't know always what the line is and whether people will be comfortable. And that's why you should test certain kinds of personalizations in smaller batches. And see what happens. How do people react? And maybe it's not just that you're personalizing. It could be the way you're doing it, the tone of the language, how you show it to them. There's a lot of different dimensions to manage there. But testing, testing, testing is really important. So the two things I would emphasize is if customers knew, how would they react? And the second is Explore in a very deliberate way through testing what that line is.

Gotcha. Yeah, I think that's really interesting. I think it really touches a lot to also the integrity of an organization, right? You know, if the customers did find out, if they knew what we had, right, would they be okay with that? And I think that's an important question to ask. Obviously, you know, you're in the business of profit, but that being said, right, there's a certain level of morality that comes with that as well. You know, so far we've talked a lot about the quantitative link between personalization and customer satisfaction, that growth, the value creation. We've covered how time and time again, right, the organization succeeding at personalization win trust, loyalty, and retention. So in this next chapter, you talk about 4 steps to accelerate personalization. So I'm just going to run off these 4 real quick and just do a quick intro on each. Feel free to expand on them as I go. And then I just had a question about one of the points because I think it really applies to my life and a lot of probably early-stage founders as well.

Okay.

So your first point here is clarify your objective, right? Being able to narrow down a list of priorities and empower the customer. The second is to secure your personalization foundation, to evaluate an existing foundation, and ability to also deliver on the 5 promises that we discussed in the last episode. The third is cultivate agility to compete with speed, right? Implement processes that enable you to constantly ideate, get feedback, grow, and try new things. And then the last one is to completely embed personalization in your corporate agenda. Choose the right leaders, challenge them throughout the organization, set shared goals, and stay on target. Now, before I ask my question, right, I just want to take a minute to really appreciate what you said in that final point. And that's the challenging the leaders within the organization part. I think that's something a lot of companies overlook, you know, and I think that's something that's so essential to being able to learn, grow, and hold each other accountable because, you know, everyone is an equal in the organization, right? Everyone's contributing to its growth. And I think without someone holding, you know, the big guys up there in charge, you know, accountable, I think that's that's something that adds a lot of value within a company.

Yeah, I just think because personalization, when done right and done wrong, is a major factor in your brand. And your brand is one of the most important corporate assets that you have. Every leader in the company is held hostage to the value of your brand. And is on the hook to contribute to building the equity of that brand. And so, as we talked about earlier, doing personalization right does require a village. It requires people who run all different parts of the company to work together. And so it really is a corporate agenda that from the top, everyone has to be aligned to go after. So That's why it is important to hold leaders to the fire because the brand is at risk. And that's frankly why we wrote the book, because we didn't think personalization was just a tactic used in marketing to manipulate people, find a vulnerable moment, get them to do something they're going to regret. Yeah, that's unfortunate. And it's something that is going to happen, especially in today's AI era. We did it because we saw there was a high road, a high road that can enable you to compete and deliver value based on how you use customer information. And that's where real opportunity lies.

Yeah, no, I think that's really cool. I think my question was really, I wanted to ask about this third point that you bring up, right? Cultivating agility to compete with speed. And here, Obviously, you talk about implementing these processes that enable you to constantly grow and get feedback, but also try new things and do that with speed, right? Do that fast. I think this question, like I said, I feel like it applies to me and a lot of other people who may be startup founders, small business owners, or honestly even in big corporate America, right? Because when you get to that stage, it's hard to constantly ideate. It's hard to be growing and getting feedback. Get feedback all the time. But I want to ask you, how have you seen the companies you've been a part of, whether that's at early stage startups or you've seen these big companies that you've tried to implement these processes in, how do you really cultivate that agility with speed? Because you see so many, such a high percentage of companies fail because they're not able to grow well enough. They stagnate. And they also just fail to get feedback. They fail to ideate. They fail to grow and try try new things?

Well, it starts from the premise first and foremost that you need to have that feedback from a personalization perspective. You need to have a constant stream of information to know your customers better and know the variances better and feed in this day and age the AI algorithms. They need data. They need a constant stream of variance in that data. The only way to get that is more testing and more things that you're doing that are going to pull back data. So, it's just a basic flywheel. But then, the question is how do you actually make that possible? And one of the major things that I do, especially with larger companies, is help them figure out how to get faster to make that a prerogative that, again, senior leadership recognizes has value. And instead of, for instance, having 13 people take 13 weeks to get a marketing program out the door. Let's completely rethink the logic of that. And let's have small groups of 4 to 5 people who can do more things, each of them to be multi-armed bandits, to borrow a phrase from AI, um, so that they can get more done. And with the tools that are available, they can. Um, and so instead of people very narrowly focusing on just social media, search, programmatic, have somebody focus more broadly on media strategy overall and executing it and using the tools to track and manage it. And so it's a reconfiguration. So instead of 13 people taking 13 weeks, have 3 teams, each of 4 to 5 people, cranking stuff out in 1 or 2 week cycles. And that's a very different vision for how the organization operates, how it's even set up. Um, it's based on agile principles from software development, being brought into marketing, customer experience delivery, service operations. And that's a big part of what I do actually is working with companies to work how to set that up, get the muscles going. I mean, there's a whole discussion we can have on agile in and of itself, but it's having that spirit and the goal. A lot of startups are actually quite good. You know, they're scrambling to get their, you know, minimum viable product out the door. And to see how it does. And that's there, but you've got to sustain it. And I think that's why a lot of smaller companies don't get much sleep because they're trying to do what I'm talking about with even fewer people. Now, with a lot of the AI and automation tools, it should be a lot easier.

Yeah. No, I love it. I think it's really cool to me how your book really caters to the future, right? How you talk about Because a lot of books, a lot of companies, a lot of consultants, right? We talk about now, what can give us the maximum revenue now? But I think the way that you're able to look at the future is something that adds a lot of value to someone reading this now, someone reading this in 5 years, in 10 years, however long. And in this 12th and the final chapter of the book, you dive even deeper into personalization of the future, right? So in this chapter 12, You start this chapter off by painting a picture, you know, a really nice picture, if I do say so, of a family vacation 10 to 20 years from now, or, you know, in the future basically, right? Now this is involving a rideshare app that syncs with your calendar, gives you recommendations, drops you off at the tunnel, takes care of your luggage, your food, your bookings, and a lot of other things, right? Sounds like a very, very pleasant vacation for anyone to be taking, right? This was a great paragraph to read right before my you know, class in 30 minutes. Uh-huh. But anyway, the purpose of this almost idealistic vacation experience is to show that personalization in this example has taken away all the fuss, all the difficulty of planning and traveling, right? And as far away as this sounds to us right now, the reality is that, you know, you say we're not so far away, right? Um, but in order to reach this ideal stage, we have to ensure a few things, including, you know, working faster than the competition, empowering the customer, capitalizing on AI, And, you know, for my last question, I want to kind of ask a very almost generalized, a very broad question about leadership, about making the right decisions. Who's your leader? Things like that. You know, you see a lot of companies today both falling apart and getting back up. You see companies that you never assumed would have the big break that they did. And I think this has a lot to do with the leadership, with the team. Every organization that, you know, makes it talks about that. And I want to ask, you know, for this final question, almost as a more broad question to your overall expertise and experience you've had throughout everything from these early-stage startups to big corporations that have been established. When it comes to that corporate leadership team, when it comes to your CEOs and entire C-suite holding each other accountable, being invested in increasing the equity of that company, how do you make the right decisions, right? When you're on the board, when you're the one who's you know, who's behind the wheel. How do you make the right decision? What do you look for in a partner, in someone who's going to help you drive this company to success? And I know that's a really broad question.

It is a broad question, but here I can— the thing I look at, given where I sit, and I do also work with a lot of startups, I work with them on go-to-market strategies, how to think about segmentation, how to set up customer success organizations. The thing I always find that the better companies have is that they are not just obsessed with their product. They are thinking about what will it take for the customer to get the value. Just because we have a cool tool doesn't mean that somebody who just starts subscribing or buys that cool tool all of a sudden sees value. There's changes in behavior. That people are going to have. They're going to have to disrupt. If it's a B2B thing, they're going to have to disrupt the way they operate. People are going to need to be changed, processes changed, possibly incentives changed, maybe jobs changed. And too many startups don't think about that. They just— their leaders are obsessed with a cool product. They're not obsessed with how is the customer going to get the value. And making that the foremost thing to discuss. And that's why they have to bring in folks like me to put that in, shove that in people's faces and play the role of the customer and start challenging them because everybody just gets so caught up on their idea. So, that's where, you know, from my perspective, just coming up with something that's a bit, I don't know, maybe different on this angle. It's being obsessed I always say this, with the customer and with how they are going to get the value, not just you as a business. How's the customer going to get the value? I just don't see enough of that.

Yeah. No, I love it. That's a fantastic ending note. And I think that's something that you see so little of. You see a lot of founders out there spending hours on making the flashiest looking product, fixing up the tweaks and making it look a little prettier. But that's absolutely right. You don't see enough of someone caring more about someone who's so far away from them, you know, but impacts you in such a close way. And with that, we bring the second and final part of this book and this podcast episode to a close. What an incredible read. You know, this is not usually the genre of books we usually dive into, but I really appreciate your ability to take take this quantitative data-focused book into such a, and explain it in such a qualitative manner. You know, over this course of this book, we've covered a lot of content, right? Everything from the 5 Promises of Personalization, utilizing AI and other technologies, putting personalization into action through leadership, measuring our impact, and also the future of personalization, right? If you're a founder, a small business owner, or just a person interested in the incredible change happening in organizations nowadays, I highly, highly recommend this book to you. David, where can listeners find it, see your work, and more about you?

Yeah, sure. Well, first of all, the book's available on Amazon in print, digital, and audio. So, that's probably the easiest place to get it. You can learn more about me. Just go to LinkedIn. From LinkedIn, you can get a link to my own website for my business, Edelman Advisory Services. Because I'm just an independent consultant now. But I've got a major presence on LinkedIn. You can follow me there. I've got over a million followers. I publish actively. I have webinars on LinkedIn. So, it's pretty easy to find me.

Yeah, I love it. I love it. Once again, David, thank you so much for taking the time to hop on the podcast and do these recordings. I had a blast.

Thank you. I've been impressed with the way you've structured all of the questions and your segues and all of that. You've done a terrific job as well. Thank you.

I appreciate that. And to our listeners, until next time, keep on learning, keep on changing, and keep on growing. We'll see you next time.