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On this episode, we discuss customer experience trends — and how these trends are impacting CX leaders' priorities in 2024.

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What trends are shaping customer experiences in 2024?

On this episode, we discuss how customer expectations change in difficult economic climates, and how brands can adapt.

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How do customer expectations change in difficult economic climates?

03:59 - What do customers expect from personalization?

06:51 - How can brands benefit from personalization?

15:43 - What are the key promises of personalization?

20:12 - How can AI enhance personalization?

25:13 - What challenges do brands face in implementing personalization?

29:01 - What does the future hold for personalization?

[00:00:00] Robert Zirk: Have you ever had a product suggested to you that makes no sense for your situation?

[00:00:06] Voice 1: Because you just bought this washing machine, you might also be interested in this 5.1 cubic foot front-loading washing machine.

[00:00:13] Robert Zirk: Or have you confidently used specific software at work for months, only to be shown a pop-up...

[00:00:19] Voice 2: Hello, first-time user! Would you like to watch our series of tutorial videos on how to get started?

[00:00:26] Robert Zirk: These examples illustrate a breakdown in efforts to personalize the customer experience. While they may have been earnest attempts to build connection, they're more likely to push you away.

[00:00:38] And statistics show that there's a disconnect between customer expectations and reality. 64% of customers expect interactions to be shaped by past experiences, yet 52% say brands typically deliver impersonal interactions, according to Salesforce's third State of the Connected Customer report.

[00:00:58] Brands who capitalize on the opportunity to effectively personalize the customer journey can significantly improve customer satisfaction, with the 2024 Forbes State of Customer Service and CX survey revealing that 81% of customers favor brands that offer personalized customer experiences.

[00:01:17] So today on Questions for now, we ask: The era of AI-driven personalization is here. What now?

[00:01:30] Robert Zirk: Welcome to Questions for now, a podcast from TELUS Digital, where we ask today's big questions in digital customer experience. I'm Robert Zirk.

[00:01:42] Robert Zirk: Before we get into strategy, we need to ask: what is personalization, really?

[00:01:49] We started by asking Mark Abraham. He's a managing director and senior partner at Boston Consulting Group, a TED speaker, and along with David Edelman, the co-author of Personalized: Customer Strategy in the Age of AI. According to Mark, personalization is a lot more than just addressing the customer by their name on an email or providing automated product recommendations.

[00:02:14] Mark Abraham: I think that brands today really need to think about personalization as learning, from each and every interaction they have with a customer, something new and tailoring the next interaction they have with a customer to be better, faster, cheaper or more convenient. When we apply it in this way, it's really about speed and scale, having millions or even billions of interactions with customers and learning very quickly, in a span of hours or real-time, what you can do to make the customer experience better.

[00:02:49] Robert Zirk: Mark began writing Personalized shortly after OpenAI's release of ChatGPT. The book is inspired by his work with brands on their personalization efforts as well as observations from his own life as a consumer where personalization was poorly executed.

[00:03:05] Mark Abraham: How many times do you get simply inaccurate email? Like when I bought yoga pants for my sister and then I got bombarded with ads and recommendations for women's clothes in my inbox, or even more hurtful: my friend, his dog died and still, six months later, recommendations for his dog's favorite treats were arriving in his inbox. Or that time when I bought the fridge that, by the way, arrived damaged and then I got mailers from the same company advertising more fridges to buy even before they delivered my fixed fridge.

[00:03:41] Robert Zirk: Mark's research found that these experiences weren't unusual: out of 5,000 customers surveyed, two-thirds said that, within the same month, they've had a personalized experience that was either inaccurate or inappropriate.

[00:03:56] But simply avoiding inaccuracies isn't enough either. For customers, a great personalized experience is increasingly being seen as a baseline expectation rather than a nice to have. A TELUS Digital survey highlights that when given the choice between a more personalized customer experience or a faster one, 62% of respondents would opt for the more personalized experience.

[00:04:20] And, in writing their book, Mark and David completed comprehensive studies that further demonstrate the demand for effective personalization.

[00:04:29] Mark Abraham: We looked at it across the globe, 12 different markets, and, consistently, 80 percent of consumers say they want personalization. And interestingly, three separate reasons emerge in the same way and in the same magnitude for consumers.

[00:04:45] Robert Zirk: The first reason, according to Mark, is that customers want more value out of their interactions.

[00:04:51] Mark Abraham: Some of the easiest ways that businesses can drive growth with personalization is by personalizing the way they offer value for consumers. For example, we consistently see in our own work that when we do personalized offers, we get about 2-3x the ROI as we do when we do mass promotions.

[00:05:13] Robert Zirk: If a customer is interested in your product or service, they recognize its potential value. Your goal should be to make that value easily accessible by clearly communicating the benefits and ensuring the product or service is easy to use or implement.

[00:05:28] And that leads us into the second reason why customers want personalized experiences: convenience.

[00:05:35] Mark Abraham: When I go to Amazon, I don't have to re-enter my information and I can one click buy and it saves me time. And that's the level of ease that consumers expect when they transact with their bank nowadays or they access health services. And those are categories where I think there's massive opportunity to apply that same methodology, you know, not ask the customer for the same data every single time.

[00:06:02] Just imagine how much easier it would be if you went to the doctor's office and you didn't have to fill out the same paper forms again and again.

[00:06:10] Robert Zirk: And finally, Mark explains that customers want to feel joy. They want to feel recognized and appreciated, and it doesn't take a big gesture to accomplish this.

[00:06:21] Mark Abraham: You know, it's not coincidental that Starbucks just started again writing names on cups with a Sharpie. People enjoy those moments of connection. And I think whether it be retailers with a physical presence, whether it be airlines where you're interacting with your flight attendant, those moments of human connection are a really important part of personalization and how companies can compete.

[00:06:43] Robert Zirk: We've covered that the majority of customers want personalization that offers them more value, convenience, and cause for joy. But what's in it for brands?

[00:06:53] Mark Abraham: We scored hundreds of companies on what we call the Personalization Index, which is our approach to rating the maturity of a company's personalization efforts, both in terms of their capabilities, the underlying data, tech, people, processes, as well as the experiences they're delivering across channels.

[00:07:12] And what we found was only 10 percent of companies are personalization leaders today. So they score highly on the personalization index. Now those 10 percent of brands are growing 10 points faster than the laggards. So there's a huge gap opening up in terms of competitive advantage between the personalization leaders and the laggards.

[00:07:35] Robert Zirk: And the potential return on investment for brands that prioritize personalization is quite significant.

[00:07:42] Mark Abraham: In fact, if you quantify this across industries, personalization leaders are expected to take share and grow their categories to the tune of two trillion dollars. This is what we call "the two trillion dollar personalization prize".

[00:07:58] Robert Zirk: A McKinsey & Company study shows that personalization can lower customer acquisition costs by up to 50%, increase revenues by between five and 15% and increase marketing ROI by between 10 and 30%.

[00:08:14] David Caudle, vice-president of strategic transformation at TELUS Digital, highlights that brands with effective personalization strategies can create a series of repeatable wins and avoid costly mistakes.

[00:08:27] David Caudle: When you get personalization right, it moves all the value levers in the right direction. If I'm out there just throwing out marketing campaigns and just having a generic proposition to a lot of customers, some of those aren't hitting their mark, so I'm increasing my cost of that campaign. I'm creating a bad experience because I'm now advertising a product or service that someone may not need or it may not resonate with them. And I'm not developing an overall positive experience for that. When you can get it right, you're increasing your likelihood of an offer being accepted. You're lowering your cost to serve and, at the same time, creating a great experience. So on all aspects of your customer life cycle, it's a win across the board.

[00:09:11] Robert Zirk: Think back to some of the cold, robotic examples of bad personalization we referenced toward the beginning of the episode and how those interactions would drive you away from doing business rather than deepening your connection. They're missing the value, convenience and cause for joy Mark cited earlier. But perhaps most importantly, they lack empathy.

[00:09:33] David acknowledged that some of the empathy we previously found through face-to-face interactions started to get lost as digital channels emerged, but that today's technology is able to make up for it by using personalization to bring humanity and empathy back into customer experiences..

[00:09:51] David Caudle: The ability to use AI to understand the needs of a customer, what they've been doing, and analyze that very quickly to be able to guide the customer to use voice technologies, voice analytics, customer sentiment analysis to know the feelings of a customer and amplify that and bake that into the digital channels with those interactions, so there are a lot more digital technologies that we have that are rapidly evolving across voice and other analytic capabilities that are being able to offset what we've lost in that live interaction and create personalization and empathy in new ways.

[00:10:28] Robert Zirk: And to build human experiences, leaders need to consider every touchpoint throughout the customer journey.

[00:10:35] David Caudle: So once you sell the product, you have to think about "How are they using the product? Are they satisfied with it? Are they having difficulties with it?" Because, you know, you've now sold the product, but if you haven't delivered on that commitment, you're creating a bad experience for the customer. And then when you interact with the customer around customer service, the idea is to move the moment of need, shift left, and be able to be more proactive and preemptive so they're not always reacting to the customer. You understand what they want, you have their data and you're being able to anticipate any problems or positive experiences, up-sells, cross-sells based on the needs of the customer.

[00:11:14] Robert Zirk: By applying your knowledge of the customer and their goals for using your product or service, you can transform a potentially negative experience into a positive one.

[00:11:24] Mark noted the customer journey has become much more complex over time with more variables that play today than ever before. He cited a B2B example, showing how the use of AI can help leaders navigate multi-faceted customer journeys and deliver personalization at scale.

[00:11:41] Mark Abraham: Nowadays, even before B2B decision makers talk to a salesperson, 80 percent of them do significant research online, whether that be on a website or other forums or reaching out to users or looking at user-generated content. So there is a much more complex set of digital as well as physical inputs that companies need to consider when they're navigating that B2B sales journey.

[00:12:11] And in that, AI can play a huge role. There's a lot of talk about GenAI, but predictive AI has been around for a decade or more. And companies with large sales forces have been looking at mining those signals across different channels, be it people that have attended an event, had a Salesforce interaction, went to a website, opened an email. All of those are signals that can feed the AI prediction models for what to do next. And I think this piece of understanding what is the next best action is where AI has a huge role, assuming it's fed by the right data and fueling the right experience.

[00:12:53] Robert Zirk: So what does it take to get started using AI to deliver personalization? Mark mentioned one initial stumbling block for brands tends to be the misconception that you can't pursue personalization without having perfectly organized data and technology.

[00:13:08] Mark Abraham: The truth is no brand I've ever worked with has all of this sorted. Everyone's working with messy data and different parts of their tech stack needing to be upgraded or solved. So the key is to start with "Where is the next place for personalization in the customer journey to make a difference?" Whenever I get in a room with executives from brands thinking through this, they have no shortage of ideas for how to apply personalization.

[00:13:38] Maybe it's improving the recommendations we're making on the website. Maybe it's serving up better personalized offers in the app. Maybe it's helping our associates interact with customers in the store in a more personalized way. Maybe it's helping the sales force think through the next best conversations to have. Whatever it may be, thinking through that use case and then thinking through "What is the minimal data with the tech we already have and a rapid SWAT team that can help prove out the value of personalization and that use case, and how do we stand that up and make progress in the next few weeks?" Because the beauty of personalization is you can quickly make a difference.

[00:14:21] Robert Zirk: Given that successful personalization requires initiative and competencies from all departments of an organization, David notes that there are many big questions leaders need to understand: questions about the customer journey, measurement, data operationalization and more. If you're not sure where to begin, a partner like TELUS Digital can bring toolkits, systems, processes and governance models to help brands build a framework for successful AI-fueled personalization. David described how he works with leaders to design and implement personalized experiences for their brands.

[00:14:59] David Caudle: A lot of it is really trying to understand the business outcomes they want, right? So when you look at their customers, what really are they looking at in terms of the end-to-end customer lifecycle? And where to start? So, if you look at the whole customer lifetime value, you have acquisition, you have onboarding, you have the use of your service, up-sell, cross-sell, many different areas of that life cycle.

[00:15:22] And it's important to figure out what are the key moments that matter in each of those aspects and what data that you're going to use to map what's good or what's bad. And being able to guide the customer through that to understand where they are in their journey and to be able to create actions that, you know, improve their experience and value as a customer.

[00:15:43] Robert Zirk: Mark found that effective personalization delivers on five key promises to the customer. He calls the first one: "Empower me."

[00:15:52] Mark Abraham: You have to solve a problem. Take Spotify as an example. They're great at personalization because they want to find the best way to connect you with the music you love. And that's the piece they're trying to solve with personalization.

[00:16:07] Robert Zirk: After “Empower me”, the second promise is “Know me”.

[00:16:11] Mark Abraham: So you need to have the right data at your fingertips as a brand to tailor my experience. Spotify does that in spades, not just by knowing who you are, your profile in the app, but also tagging a lot of the data behind the scenes. the genre of the songs you listen to, what your friends like, what you've shared with others, when you're looking at that data in terms of time of day, location and all of that powers the recommendations that they make, so they know what songs you might enjoy playing to your friends when you're hosting them for a Friday night meal.

[00:16:47] Robert Zirk: The third promise of personalization, which is where AI begins to be involved, is "Reach me":

[00:16:52] Mark Abraham: So when and where do I serve up that personalized experience? Spotify obviously does that in the app, but it might also inform you via email or push notification when your favorite band comes to town and you might get concert tickets. Behind the scenes, there have to be algorithms that distill down all of that data into recommendations for when and where to reach you.

[00:17:17] Robert Zirk: The content you provide forms the basis of the fourth promise of personalization: "Show me."

[00:17:23] Mark Abraham: So this is about selecting the right content from Spotify's huge content library to serve up the right playlists or individual songs.

[00:17:32] Robert Zirk: Mark cited Spotify's DJ feature, which Spotify describes as "a personalized AI guide that knows you and your music tastes so well that it can choose what to play for you."

[00:17:44] Mark Abraham: Now, another piece to call out with "show me" is with GenAI, you can create enormous amounts of content, orders of magnitude more than what was possible before, so curating down to just the right and relevant content becomes critical.

[00:18:00] Robert Zirk: The promises we've covered thus far have been "empower me", "know me", "reach me" and "show me". Last, but not least — in fact, Mark notes it's the most important promise of personalization — is "Delight me":

[00:18:15] Mark Abraham: Every time I have an interaction, it should be better than the one before, which means you need to be running lots of experiments in the background to distill down my preferences and the preferences of customers like me. This requires not just AI and data and tech, it requires the right human processes because, ultimately, there's a role for marketers and humans and designers to put the right guardrails on that machine learning and AI behind the scenes..

[00:18:44] Robert Zirk: As Mark and co-author David Edelman wrote in an article for Harvard Business Review, both Spotify's user base and revenues have grown by a thousand percent within the past 10 years. And this growth is something that the company credits to its focus on personalization.

[00:19:01] For example, Spotify Wrapped, its end of the year AI-driven personalized recap, is such a fixture that it feels like an event compared to other year-in-review features from other apps. David Caudle notes that the level of personalization exhibited by the likes of Spotify and other major players like Netflix and Amazon is changing the game for everyone — even if your brand isn't a direct competitor of theirs. The reason for this is...

[00:19:30] David Caudle: Because they're part of our everyday life, we tend to judge other brands against this, right? And that's having a tremendous impact across all sorts of industry verticals.

[00:19:39] Robert Zirk: This observation of customer behavior is known as liquid expectations, referring to how a positive experience with one brand reshapes customer expectations everywhere else.

[00:19:50] David Caudle: Whether you're an airline, you're an automobile manufacturer, you're always being judged by the experiences that people have with all these brands we use every day. So it sets a high bar, you know, when you have these great experiences, then everyone has to measure themselves against it.

[00:20:06] Robert Zirk: And according to David, the best brands are using AI to deliver what customers are looking for.

[00:20:12] David Caudle: Where we see the market leaders today is that they're able to understand really what is the intent, the stage that a customer is at and able to model the various types of interactions, whether they're empathy type actions, nurturing actions, service actions, or sales actions, and then being able to guide them either through a human interaction through a contact center or a store, or through the digital channels, but really delivering that experience to them on the channel that they prefer.

[00:20:42] Robert Zirk: One example Mark referenced is Delta Concierge, the GenAI-powered virtual assistant from Delta Airlines.

[00:20:48] Mark Abraham: It'll be a virtual assistant that helps you seamlessly navigate your trip. They've announced partnerships with Uber and Joby, which is a flying ride share service, and YouTube for content and many others. And what Delta Concierge will do is help you take all of that work out of the day of trip and the trip itself that you used to have to think through and go to multiple places to solve.

[00:21:16] For example, it'll, in the app, call your Uber and it'll show up right there when you get to your destination — you don't have to go to different apps. Or you'll be able to play exclusive YouTube content while on the flight on your device. Those are the kinds of seamless services where serving up exactly the right thing for you, given your context, given your location, takes personalization to the next level.

[00:21:42] Robert Zirk: To scale personalization to such a degree, you need to ensure you're collecting the right data. Mark finds that many companies are not making the most of the data they already have, like transaction information. But he sees opportunity for brands to leverage zero-party data, which is directly provided by customers in response to a question or input.

[00:22:02] Mark Abraham: Customers will only provide you data when there's a clear exchange of value. In fact, we see the rates go up from 30 to 90 percent when you clearly explain why is it that you're asking for this data and if it's really seamlessly integrated into the user experience, like the thumbs up/thumbs down on the Netflix feed or in the Spotify app. Or even if you sign up for a Stitch Fix account, you'll fill out the style shuffle survey and rate different images based on how much you like them. Based on that, they can infer your style preferences. Those kinds of experiences are really valuable to collect a few key things about the customer that are sometimes difficult infer and being clear about "What are the three to five questions I wish I knew about the customer's intent?" is a really powerful way to start that journey, especially in places where you're building a long-term relationship with the customer.

[00:22:59] Robert Zirk: Mark emphasized that engagement data can also inform the way you personalize your customer experience.

[00:23:06] Mark Abraham: By this I mean, how are customers interacting in different channels with your content? Are they opening an email?

[00:23:13] Are they clicking on different parts of the website? How long are they spending in different parts of your app? Tagging that data and categorizing it in the right way and building intelligence off of it is the underleveraged goldmine that most companies have, and it's actually easier than to solve some of the transactional and third-party data challenges, because you can run experiments.

[00:23:37] Robert Zirk: And AI can help perform these tests, learn, adapt and provide suggestions on how you might proceed with future interactions.

[00:23:46] But personalization isn't about collecting as much data as possible. Brands need to be considerate of what they actually need to know to deliver personalization. Given data privacy concerns, it's important to get this right. When Gartner surveyed more than 2,500 customers, more than 50% said they'd unsubscribe from communications and 38% said they'd stop doing business altogether if they considered a brand's personalization initiatives "creepy." Mark cited data privacy and risk management as concerns leaders need to be aware of while ensuring these considerations factor into decision-making across departments.

[00:24:26] Mark Abraham: I think the key here is to embed a set of questions and a set of guidelines that marketers, analytics folks, tech folks need to think through throughout the organization instead of just relying on the legal department or the chief risk officer to think through that. A great example is when you're building algorithms, what are some of the things that are not inputs to it, but you really want to make sure you don't get biased interactions around? So knowing to ask that question, the quality checks and look at the outputs of the algorithms with that mindset is critical and it relies on humans — in this case, the marketers — to think through what are some of those guardrails to put in place.

[00:25:13] Robert Zirk: David notes that delivering personalization at scale can be an organizational challenge. He advises leaders to ensure data, systems, processes and team members are all in alignment.

[00:25:25] David Caudle: Being able to align around the central strategy and then have groups work together across the organization around delivering that outcome to the customer. Do I have the right data? Are my systems capable of supporting this? There's all sorts of different elements in each of those different towers that need to come together, but if you don't have the right alignment, it will never come together.

[00:25:49] Robert Zirk: And given the collaborative nature of personalization, requiring participation from all departments, Mark urges organizations to ensure there's accountability for personalization initiatives.

[00:26:02] Mark Abraham: One of the best things that brands can do is to name a leader who has, not ownership over all the resources because it will be a cross-functional effort, but ownership over the accountability for the enterprise, the roadmap to deliver it, and, frankly, acts as the voice of the company on how well we're doing on that path. I think that accountability is really key to making rapid progress and companies that have that clear leader in place have seen much faster progress.

[00:26:34] Robert Zirk: We know through the examples we've heard that personalization done right can play a huge role in a brand's success, both in terms of growth and customer retention.

[00:26:43] David noted that personalization isn't a box-checking exercise — it must be a continuous priority for brands. And there are metrics that can indicate whether or not brands are experiencing success early in the implementation phase..

[00:26:59] David Caudle: You tend to look for things that will drive revenue or reduce costs that are well quantifiable, that you can easily build your business case around. But things are sometimes more subtle, things such as Net Promoter Score or customer satisfaction. Sometimes it's very hard to tell how much one initiative versus another contributes to these and sometimes those get overlooked. But I think as we look at a program of personalization, you have to look at it from all these different angles and have a mix across the customer life cycle in the end to end personalization journey.

[00:27:36] Robert Zirk: And Mark highlighted that the personalization index, a metric created as part of his research for his book Personalized, can serve as a benchmark of how effectively your brand is delivering personalization by analyzing capabilities and experiences and scoring them from zero to 100.

[00:27:54] Mark Abraham: Number one: what are your capabilities as a company to deliver personalization? So your data, tech, people, processes and there's a set of things that you're scored on and then the actual experiences you're delivering to customers across channels. We look at this through mystery shopping, through talking to and serving consumers, as well as participating in those experiences ourselves and rating them.

[00:28:20] And based on all of this, we've developed the personalization index score for hundreds of brands around the world. Now, what was surprising is that The average company only scored a 49 and a lot of companies have launched personalization initiatives and they've made progress on it, but they're nowhere near being a leader.

[00:28:42] The top 10 percent of companies we see scoring in the 70s or 80s, those are the ones we classify as personalization leaders. When we look at their performance, as I mentioned before, they're significantly faster growth than the laggards, and there's huge opportunity from moving up on this personalization index.

On this episode, we discuss the evolution of personalization in the customer experience — and how brands can leverage AI to create personalized experiences at scale.

Episode cover image for Questions for now, a TELUS Digital podcast, featuring an illustrated character holding a phone and interacting with an AI bot.

Questions for now AI-driven personalization image

According to TELUS Digital research, 62% of consumers would choose a more personalized experience over a faster experience. But despite the demand, the BCG Personalization Index indicates that only one in 10 companies are delivering personalization effectively.

Our expert guests break down what makes a personalization strategy successful and speak to how top brands are driving these initiatives with AI to increase their lead over competitors.

Listen for the compelling insights of Mark Abraham, managing director and senior partner at Boston Consulting Group and co-author of Personalized: Customer Strategy in the Age of AI, and David Caudle, vice president, strategic transformation at TELUS Digital.

Mark Abraham

David Caudle

The era of AI-driven personalization is here. What now?

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From neglect to nurture: A five-step guide to transforming your long-tail customer strategy

On this episode, we explore strategies that transform customer experience into a revenue engine — and how to communicate CX wins with language that resonates with C-suite executives.

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Are you leaving revenue on the table in customer experience?

Who, what, when, where, why and how. Introducing Questions for now, a podcast from TELUS Digital sharing compelling perspectives on the digital customer experience.

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