Pod Insights MarTech Podcast ™ // Marketing + Technology = Business Growth The History Of Personalization About this episode Executive Advisor & Fellow at Harvard Business School, David Edelman, delves into the history of personalization. Exploring the evolution of personalized marketing strategies, David emphasizes the importance of understanding customer needs and tailoring experiences to drive business success. Drawing on his expertise, he sheds light on the significance of adapting to changing consumer preferences and leveraging data insights to create impactful personalized campaigns. Show NotesConnect With: David Edelman: Website // LinkedInThe MarTech Podcast: Email // Newsletter // TwitterBenjamin Shapiro: Website // LinkedIn // TwitterSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Transcript 0:00 Speaker 00 The Martech Podcast is a proud member of the I Hear Everything Podcast Network. Looking to launch or scale your podcast? I Hear Everything delivers podcast production, growth and monetization solutions that transform your words into profit. Ready to give your brand a voice? Then visit iHereEverything.com.
0:25 Speaker 01 From advertising to software as a service to data, across all of our programs and clients, we've seen a 55% to 65% open rate.
0:36 Speaker 02 Getting brands authentically integrated into content performs better than TV advertising.
0:42 Speaker 03 Typical life span of an article is about 24 to 36 hours.
0:46 Speaker 01 If we're reaching out to the right person with the right message and a clear call to action, then it's just a matter of timing.
0:53 Speaker 00 Welcome to the Martech Podcast, a member of the I Hear Everything Podcast Network. In this podcast, you'll hear the stories of world-class marketers that use technology to drive business results and achieve career success. Here's the host of the Martech Podcast, Benjamin Shapiro.
1:15 Speaker 04 Welcome to the Martech Podcast. I'm your host, Benjamin Shapiro, and today we're going to discuss customer strategy in the AI era. Joining me is David Edelman, who is a senior lecturer at Harvard Business School and the executive advisor to Edelman Advisory Services. He is also the author of The Personalized Customer Experience in the Age of AI. And today, David and I are going to talk about the history of personalization. All right, here's the first part of my conversation with David Edelman, the author of Personalized Customer Experience in the Age of AI. David, welcome to the Martech Podcast.
1:51 Speaker 05 Terrific to be here, Ben. Thank you.
1:54 Speaker 04 Excited to have you, an honor and a privilege to have somebody with your storied history of success in marketing. And hey, a Harvard Business School professor is no joke. You must know a thing or two.
2:04 Speaker 05 I think I do.
2:06 Speaker 04 I'm glad to hear it. You're the perfect person to talk to not only about what's happening today with artificial intelligence and personalization, obviously something that's on all marketers' mind, but we're going to kind of go from the wayback machine to the present. Let's talk a little bit about the history of personalization, starting off with the stages of personalization. Give me a breakdown here of what you consider the stages of personalization.
2:32 Speaker 05 Yeah, we've actually been talking about personalization for quite a while. Way back in 1989, and I'm dating myself, before the internet, I was a young consultant at the Boston Consulting Group, and three clients were asking us, what can we start doing with customer data that we are collecting? And out of that, I wrote a piece called Segment of One Marketing, and that really was one of the first waves. And it was even before that, when we had catalogs and things like that. The first wave was basically what we called direct marketing. It was direct mail, telemarketing, and most of it was fairly
3:16 Speaker 05 reductive. I have something I want to send. Who should I send it to? It was more about targeting and reductive, to be efficient in terms of spending your budget. Then, the internet happened.
3:29 Speaker 04 Let me interrupt you before we go on. Let's do this in a linear fashion. I want to ask you more questions about the segment of one. You wrote the book on it. We will get into the various segments. What I'm hearing from you is that the channels were direct mail. So I'm thinking you're using the post office. You mentioned telemarketing. My first job at a college to date myself was literally knocking on business doors, being like, hey, do you want to buy phone service and water coolers? I consider that to be direct mail. How is it personalization, though?
3:58 Speaker 05 So the basic start of that was somehow I knew that if you had bought from this catalog, you bought, LL Bean's a perfect example of this. It wasn't excessive personalization, but it was really more basic segmentation. And because Ben, you had bought some stuff from the general catalog that was about fishing, we're going to now send a focused fishing catalog for you.
4:21 Speaker 04 I'm trying to put myself in the mindset of 1989. Apologies for interrupting you, but I guess the reason why it's personalization is the strategies back then were radio, TV, billboard, newspaper. There was no sense of like actually figuring out who you're reaching out to. And that's why this notion of just basically what we would consider now targeting was personalization.
4:44 Speaker 05 That was the closest we can get.
4:46 Speaker 04 Okay.
4:46 Speaker 05 And there was a dream that we could go further. People were starting to talk about, I was starting to talk about it. But the channel was limited in terms of its ability to both gather enough information back and deliver something that really could be just for Ben. So then we got into the digital era, the start of online, start of the internet. And that era in personalization started to go after those two blockers. So one blocker was getting enough information about Ben and actually getting it faster and understanding about Ben in the moment. So the interaction on digital channels had a whole exhaust of data, some of which you
5:31 Speaker 05 could actually act on in the moment. Ben just went into search, landed on your site. You can now start showing Ben things because of where he came from. You could get the right landing page to match Ben's interest. And if Ben looked at something and then didn't buy, you'd follow up and try to retarget Ben again. So most of this was about following people and trying to match where you thought they were.
6:00 Speaker 04 So there's a different channel mix here with the internet era and a lot of it's driven by data. When the internet era first started and we moved from this notion of the targeting or the personalization is only around targeting, essentially the creative is basically the same. We're delivering this mail piece, we're just only delivering it to people that we think are likely to buy. And that's what we're calling personalization. The internet comes out and you not only get a real time data signal, but you mentioned we're changing the landing page to be specific to somebody when we realize that they're in market. What are some of the early outbound marketing channels that we're using? Go away from direct mail, we're on the internet. How are you actually targeting and keeping in touch with the prospects?
6:44 Speaker 05 So the main thing is email. In the early days, a lot of it was similar to direct mail, sending email, but doing that in a way where the distribution per person is dramatically cheaper. And you can also get much more, again, of a data exhaust trail. Did somebody actually click on it? And then you also know after they click on it, what they actually saw. So Ben versus David got different offers for different products. You would know what you had actually sent them and then you can have a landing page that matches.
7:18 Speaker 04 It's like the early days of A B testing and you're understanding if your subject lines or your copy are converting and we're looking at the subject is good, then we're going to get a higher open rate. And if the copy is good, we'll get a higher click through rate, get somebody to our website and go from there. What happens after the sort of early internet era?
7:39 Speaker 05 So then we get into three different things that happen in the web 2.0 era. Mobile, you're interacting on a device that also has location. So you're in a place in time, which would make that very relevant for certain kinds of things that could happen in real time, such as being in a retailer, for example, that you're actually in a retail store and you could get potentially offers. So one is that. The second is. Content capabilities dramatically improve. Content management, the ability to manage content in a componentized way
8:19 Speaker 05 so that you don't have to create five completely different, wholly constructed PDF emails. You can mix and match and you can take a general template and slot in different things depending on the data that you have about then. And then the third is digital advertising and social media expanding and way more capabilities based on interests, connections, content that you interact with. All of that creates another outbound channel that has gotten dramatically more sophisticated in terms of its data in order to much better to target you, possibly even individually.
9:03 Speaker 04 So we've got this notion here in this tailoring and targeting era, the web 2.0, where we're now having more content, not only real time signals, but an understanding of location because of the mobile rise. Talk to me about the marketing strategy. Before we were telemarketing, then we were using email marketing. We've all lived through this relatively recently, but what do you see as the shift in terms of not only how we're targeting in terms of understanding context, but where we are targeting?
9:34 Speaker 05 Yeah, so we're targeting through text messages. We're starting with permission, being able to actually send you a text notification. We can also send you an app notification because in mobile, if you've downloaded my app as a retailer, then I then can send you notifications of things relating to offers and stuff that you can access through the app. So you've got a couple more very important channels that have opened up through mobile itself, as well as the fact that you're just simply online more because of your mobile device. You're looking at social media, you're checking your phone, your accessibility as an individual to be able to.
10:19 Speaker 05 Receive digital messages has skyrocketed. It's not only when you're sitting with a laptop or desktop in front of you. It's all the time. So that changes marketing strategies as well. Because you can catch people in many, many, many more contexts in real time. And from the marketer's perspective, it actually goes even more towards pull versus push. Because instead of just saying, I've got a campaign. Who am I going to send it to? Which was not only happening in the direct mail era, but was happening in the email era too. You're now saying, okay, Ben's in this situation at this moment.
11:02 Speaker 05 I have a sense of what Ben is interested in. I have an opportunity to sell Ben. Let me put together the right thing through a channel Ben tends to react to and send that to him right now. So it's turned around to responsive to your situation versus just simply pushing what we want to promote.
11:24 Speaker 04 What comes to my mind when you're talking about the difference between push and pull and this sort of web 2.0 era was also the rise of the notion of the influencer. Where I know not only are you interested in a specific subject. I know that you have a relationship with a specific person. So we see not necessarily only actors and actresses being the ones who are promoting brands and services because they have access to distribute the message over media. Every person becomes this influential figure in your life. We go from these sort of macro influencers, the Kim Kardashians of the world. And now all of a sudden, it's like, oh, you know what?
12:05 Speaker 04 Mom makes a little money off of being a YouTube celebrity, talking about knitting or whatever he or she is into. That to me is kind of the biggest thing that happened in the pre-AI era. Not only are we personalizing with location and delivery methods, but also who is delivering the messages changed dramatically. Now we're in a new era, what you're calling the age of AI. So what do we take from the history of personalization going through the pre-internet era to where we are today that can tell us about how we should think about personalization today?
12:41 Speaker 05 So one of the most important things overall is that we're moving from thinking about this in just a marketing frame of mind to one that's about more broadly customer experience. So it's not just to get someone to buy. It changes the way you might experience a brand, how you use the product, how you get customer service, how you learn about new things you can do to expand your engagement with the product. Think about brands like Netflix, Spotify, Uber. All of those are brands that we are increasingly drawn to, not just because they're good marketers,
13:20 Speaker 05 but because the actual experience is using data about ourselves to deliver unique value. That's changing things now. So it's becoming a way of competing of corporate strategy based on personalized experiences.
13:39 Speaker 04 So personalization isn't just a marketing tactic is what I'm hearing from you. It's not just the message to try to drive someone into your ecosystem. It has to be carried beyond the marketing through the interaction with your products or services.
13:54 Speaker 05 Yes. And let me just give you a very simple example of this. When I was Chief Marketing Officer at Aetna, we realized people did not understand their health plans, and that leads to a whole lot of problems.
14:06 Speaker 04 Probably still don't.
14:07 Speaker 05 So one of the things we did was we wanted people to understand their health plans. So we figured video would be a good way of doing it. But everyone's health plan is different. And how do we create 20 million different videos? Well, we found a capability from a company called Sunday Sky that can do personalized videos. And these are crude. These are simple animation type stuff, but they're engaging and they're personalized. So Ben can see who in his family is covered. Oh, your wife doesn't have a primary care physician relationship. Here are three in your area that are accepting new patients that are in network. Click here to schedule. By the way, also, here's three.
14:51 Speaker 05 Urgent care centers near you. Here's where they are on a map. So you don't have to go to an emergency room. Here's how the economics of your plan works. So all of those things, that's completely personalized. That's not marketing, but it is part of the customer experience. And that led to fewer calls into the call center, net promoter scores going up. People actually opening our emails more often.
15:19 Speaker 04 You know, it's funny, when we think about personalization in the AI era, my head goes to we've got all this vast amount of data and the challenge for marketers has been able to interpret it and find the right signals. The right place and time and message to be able to deliver to drive a marketing activity. And I hear what you're saying is it's not just the marketing activity that's going to be disrupted through this new technology, but it has to be carried all the way through. What you say in marketing then has to be delivered in the product. And so essentially your product becomes shapable like clay because we have an understanding of the person's interests before they actually become a customer.
16:01 Speaker 04 Are there any specific uses of data or the way that we understand customers that you think is changing?
16:08 Speaker 05 I think we are using more and more the interactions we have that aren't just kept, the interaction that aren't just in a separate e-commerce or product silo, but they're being used to manage more broadly the experience or not. And I think one of the challenges is thinking about how you can use customer information that you could actually easily collect that you're not. Let me give you another example. I recently moved and when we moved, we upgraded our coffee at home to a Nespresso to get nice espresso. So the Nespresso machine came with 100 pods. Within two days after I got this, the Nespresso and the pods,
16:49 Speaker 05 I am getting bombarded by Nespresso every day with offers to buy more pods. I have 100 pods, they should know that. How much coffee do they think we drink?
16:59 Speaker 04 I mean, if you're in your twenties, that might Last year, a week or two.
17:02 Speaker 05 All right. But by the second week, they're also pitching us to buy another machine. So they know we're not a small business. This is a residential address. They should be able to figure that out. Why are they just bombarding me with offers? What the actual information they could have done is two days after, ask me, how do I like it? Did I know that I can make iced drinks with it? What flavors do I like best? How much coffee do we tend to drink in a week? Would we like to go on auto replenish? Would you like to try some new flavors? That could completely change the relationship, make it totally personalized. And that's actually just zero party data, we call it.
17:45 Speaker 05 Ask me, I'm very happy for you to have that data and then use it to serve me better. But that's not mentally where they're going. Their strategy hasn't thought about it as a personalized experience. They're just trying to milk me. And just because I bought an espresso, they think it's personalization to just bombard me with offers. So it requires a change in perspective about how you're using data and what data you can actually collect. Because in a lot of cases, you could also just ask me.
18:17 Speaker 04 I always think about the amount of data that we're able to collect basically being like a river. Right? You can get lost in it, or you could use it to get to where you want to go. And when I think about sort of this arc that we've described of going from focusing on targeting with sort of blunt objects, direct mail and telemarketing into the digital era where we're basically using personalization to send messaging. And maybe there's some customization on the landing page experience. We have this explosion of mobile and content, which just gave us so much more that we can do so much data, so many places, so many different vehicles. And now all of a sudden marketers are sitting there drowning in that river of data.
19:00 Speaker 04 And hopefully this new AI era of personalization means that personalization, A, isn't just a marketing tactic. It's something that is carried on through into the product experience. But it also allows us to digest more and understand of the data, what is relevant? What messages are going to have an impact? And honestly, on the other hand, what is too much? So we avoid the, would you like to buy your second hundred of Nespresso pods? Experience this week? That's my dream for artificial intelligence and personalization is that it allows marketer to digest the vast amount of data that we have. So we can make better decisions in terms of the experience. What's your hope?
19:43 Speaker 05 I think that is true, but I want to add one more thing, which is you don't automatically know per se which messages work if you haven't tried a whole bunch of things. So AI lives off the data that you feed it. And whatever you fed is the limits of what it knows. So good marketers are constantly testing and learning, testing and learning, testing and learning and using that to create data. Because what motivates Ben to take action is likely going to be different than what motivates Dave. So you need to understand what the possibilities are, but you don't even know until you try. And AI can enable that.
20:27 Speaker 05 It can actually create five different versions to test. That's gen AI. But then there's other AI such as machine learning AI. Like there's a company called Offerfit that we've used that can do multi variant testing that can actually manage you using basically five different variables at once across a whole bunch of cells to test whether it's the message, the offer, the timing, the channel, all of those variables. For example, if you sign up with Shopify, you get a free trial. They want to convert you from free to paid. They use Offerfit to manage across 500 different possible combinations of offers they could
21:10 Speaker 05 give you to sign up to paid. They use that to create all the test cells and constantly run experiments. That feeds their AI. That then tells them the best thing for Ben versus Dave, but then they keep trying new things in order. They throw more into the hopper because there may be new things they haven't tried yet. That could work. So there's another piece of this. It's not just the river. It's how you manage what flows into the river, so to speak, in order to start creating more signal instead of just all the noise that's in the river.
21:46 Speaker 04 It's not just understanding what the outcomes are. It's understanding what variables actually have an impact as well. All right. And that wraps up this episode of the MarTech Podcast. Thanks for listening to my conversation with David Edelman, the Executive Advisor and Senior Lecturer at Harvard Business School. If you'd like to get in touch with David, you can find a link to his LinkedIn profile in our show notes, or you can visit his company's website, which is edelmanadvisorieservices.com. You can also find his book at personalizedthebook.com. If you'd like a summary of this podcast, or if you'd like to be our next guest speaker on the MarTech Podcast, head over to martechpod.com. You can also find us on YouTube, Twitter, Instagram, or even on TikTok now. And if you'd like to contact me, let's connect over
22:31 Speaker 04 on LinkedIn. My handle is Ben J. Shap, B E N J S H A P. And if you haven't subscribed yet, and you want a daily stream of marketing and technology knowledge in your podcast feed, hit the subscribe button in your podcast app, and we'll be back in your feed tomorrow morning. All right, that's it for today. But until next time, my advice is to just focus on keeping your customers happy.
23:16 Speaker 00 Thanks for listening to the MarTech Podcast, an I Hear Everything production. Looking to launch or scale a podcast like this one for your brand? Then visit iheareverything.com.
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