How A CMO Would Explain Artificial Intelligence To Another CMO?

Luca Signoretti
Sep 4, 2018 · 7 min read

An imaginary, informal conversation between two CMOs about A.I.

When reading about Artificial Intelligence applied to Marketing, I always got the feeling that the topic is handled with a lot of technical jargon. This circumstance certainly doesn’t help non-tech decision makers, and in particular CMOs, to fully grasp the essence of this tool. To try to overcome this issue (and being a marketer myself), I’ve imagined an informal conversation between two CMOs, one who has never worked with AI before and another one who has instead implemented already an AI-based marketing strategy and who is keen to provide his direct experience and tips about A.I., using plain marketing language and by focusing on what really matters for a CMO…

Steve B., CMO of a £1.2 billion consumer goods company, just came out from a planning meeting with his CEO with some priorities for the next months. His department has seen its importance inside the company grew in the last period as the company has set an ambitious top line growth objective for this year. While discussing with his boss about what new/improved strategies could be put in place to achieve increased revenues, the Artificial Intelligence topic has popped up several times. The company has basically no direct experience with A.I. and Steve’s perfectly aware of the reason for this situation: the top management shares with Steve a great confusion about what A.I. really is and a vast lack of clarity about its benefits for their business. Steve, who regularly keeps himself up to date by reading about AI, knows that A.I. has already proven to be very effective, and even disruptive, in many situations but he still has doubts about its utility for the industry he operates in and the specific situation of his company. To make things even more confusing, he constantly receives offers from A.I. vendors all swearing to be the only one to be able to help him to get the results he is looking for.

Today, anyway, Steve has decided that the time has come to go in depth in understanding A.I. as a possible tool to boost the performances of his marketing team. He resolved to talk with Alan, an all-time friend who is a CMO of a similarly sized consumer company that has already started experimenting with A.I. in marketing about 2 and half years ago. Alan’s company was one of the pioneers in A.I. adoption and has collected some valuable experience in deploying it within its marketing department.

When Steve called Alan, his objective was to speak with somebody who he knew was absolutely neutral in evaluating the A.I. topic and at the same time was able to provide straight, informal, unbiased, direct-experience-based answers to all the questions he had.

The following is the verbatim of their exchange:

Steve:

Thanks Alan for your time. Let me ask first about your overall experience with A.I. in your marketing department. How do you evaluate it?

Alan:

It’s not been a smooth ride Steve, but now I can frankly say that without A.I. we would be in a much weaker competitive position today. Also, I’m confident that we have acquired some very valuable experience with A.I. that we can use to progress faster than other competitors.

Steve:

Ok, let’s start with specific questions: what’s your understanding of what AI is?

Alan:

In simple words, A.I. is a further step in the digital evolution that builds on Big Data but that allows to go much further in building a closer and more engaging relationship with consumers.

A.I. is always about analytics as Big Data was, but it pushes further our ability to analyze the customers’ behaviors in a more granular way and to extrapolate patterns (common behaviors) we can leverage to make better decisions about what marketing activity to put in place for the targeted customers.

Let me give you an example: the A.I. progress vs Big Data starts with the definition of our customer segments. Previously we would have used and handful of classic segmentation criteria (demographic, behavioral, psychographic, etc.) to define our customer universe and come up with maybe eight-ten key target segments. With A.I. we can feed the algorithms with millions of single datapoints about our consumers and it will come up with potentially thousands of clusters based on commonality (patterns) that we could not even suspect they could exist and that represent a much more focused group of consumers to act on. These clusters are extremely precise as they’re not the result of our personal hypothesis: they are extracted out of real world data, which is a much more accurate picture of our real customers. Sometimes we call these granular clusters “microsegments”

Steve:

how can you manage thousands of segments at the same time? I have trouble optimizing my actives on the few ones we work on today…..

Alan:

Well, we don’t work with thousands of segments but certainly we work with a much higher number than before and this thanks to one of the major advantages of A.I. applied to marketing. Through A.I.-based tools we can automatize a selection process that automatically sends different triggers (messages, promo etc.) to these different microsegments and finally reports back to us what are the most valuable segments (which buy the most) and what activity (messages, promo, visual etc.) is the most effective with them.

Another advantage of the use of A.I is that we can have a significantly better understanding of the Customer Journey of the person belonging to the segment. We can understand where in the journey the customer ceases to be engaged or at what point of the process our product is eliminated from the ‘short list’, and once this information received, act on it to reverse the situation by sending, for example, a message or a promotional offer.

“Digital personalization at scale” is what we are after. It’s a known fact that personalization drives growth. Thanks to A.I. we can push the segmentation almost to the point that we can tailor the marketing activity to the single specific customer and, thanks to automation, we can manage all these microsegments (ideally segment of 1 person) at the same time.

Personalization, fostering more effective ways to reach potentially interested customers than previous wide-reaching marketing campaign, reduces the customer acquisition costs and boosts the efficiency of marketing spend.

Finally, a key ability of AI based systems is to provide (suggest) the “best next move” in converting new customers based on the data collected about their reaction to previous marketing activities (‘prescriptive analytics’). This represents a massive advantage for the companies that can leverage it.

Steve:

Really interesting. Supposing that I’m finally convinced about using A.I. in my company, what would you suggest me as a first move?

Alan:

Before talking about that, after you heard about the opportunities, you should also be aware of the challenges.

The most common error in adopting A.I. is to think that technology is the most important element in the picture. Indeed, technology is not the main element. There are two much more important elements you need to clarify before you even think about introducing A.I. in you marketing department.

First, you should be crystal-clear about what strategic objective are you going after. A.I. can help you only if you put it to work toward a clear, specific goal in mind (“increase revenue” is not specific enough. Increase the “conversion rate on your ecommerce website” is). Your strategic objectives should be reflected in the outcomes you expect from adopting A.I. Don’t go for tens of different goals, focus (especially at the beginning) on few strategically relevant ones.

Second key element is data. If you don’t have the right amount and quality of data any A.I. tool will be completely useless. You could summarize it this way: no data, no accuracy, no value. So before thinking about introducing an A.I. tool you must evaluate your data set and if not good enough (data are old, about uninteresting facts, badly labeled etc.), you need to introduce the necessary changes to get the data you need for the A.I. tool to be effective.

You have also to be aware of the organizational and cultural challenges that go with the AI adoption (and this frankly, is something that goes beyond your marketing department but that you need to drive anyway as the ‘A.I. project’ sponsor inside the company). A.I., to work fully, needs smooth collaboration across the company, and the removal of departments’ ‘silos’ that block data from being centralized and used to create a fully detailed picture of consumers.

That’s why, one of the best practices I warmly suggest you as a first move into the A.I. introduction process, is the creation of the so called “war rooms”. “War rooms” are teams of selected people from relevant functions (marketing, digital, legal, merchandising, and IT/DevOps) who focus, full-time, on specific customer segments or journeys. Decision making responsibilities and resources (clearly defined by the top management) are assigned to these groups that have inside all the skills and knowledge needed to deliver results. The people assigned to the ‘war room’ become later the first nucleuses of a “silos-free”, collaborative organization that will implement further, bigger A.I. projects.

A final point before we go: A.I. can bring positive effect, like higher efficiency, from the very initial phases of its introduction (for example by freeing content managers from manually trying different versions of a message by automatically managing the testing and by analyzing the results of different versions till the best one is found ) but you can expect more significant performance increases as the company has gained enough experience with the new tool and its deployment.

Well, I hope all this helps…

Strategic Circle

We are a consulting company focused on Strategic Artificial Intelligence & Marketing Advisory in the consumer goods sector. We write about how AI will shape the Marketing of tomorrow.

Luca Signoretti

Written by

Growth Strategist and Marketing Consultant/ Driving Marketing innovation through technology/University Lecturer/ MBA.

Strategic Circle

We are a consulting company focused on Strategic Artificial Intelligence & Marketing Advisory in the consumer goods sector. We write about how AI will shape the Marketing of tomorrow.

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