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How AI is Changing Customer Connections
136 Plays18 days ago
In this episode, Doug Farren is joined by Roger Bailey, Associate Dean of Executive Education and Centers at The Ohio State University Fisher College of Business, to explore how AI is reshaping customer-centricity. We discuss why putting customer value at the center of business decisions drives profitability, how AI is transforming both qualitative and quantitative research, and what these changes mean for mid-sized companies.
From practical examples of AI in action to strategies for maintaining authenticity in a digital-first world, this conversation offers a roadmap for leveraging technology without losing sight of what matters most — the customer.
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Transcript
Introduction to Customer Centricity and AI in Marketing
00:00:00
Speaker
Focusing on the customer might seem like a basic principle for any good business, but what does being a customer-centric organization really mean, particularly in the middle market?
00:00:12
Speaker
And how is that impacted by the rise of new technology such as AI? In today's episode, we explore these topics with a faculty member here at Fisher College of Business.
00:00:24
Speaker
Welcome to The Market That Moves America, a podcast from the National Center for the Middle Market. The center is the leading source of knowledge, leadership and innovative research on the middle market economy. Throughout our podcast, we will feature middle market leaders and stakeholders to hear their real world perspectives on trends and emerging issues.
00:00:47
Speaker
Welcome to The Market That Moves America. My name is Doug Farron, Managing Director of the National Center for the Middle Market. located at The Ohio State University Fisher College of Business.
00:00:59
Speaker
Today's podcast episode explores what it means to be customer centric in today's evolving business landscape. And we're going to talk specifically about how AI is reshaping some of the way that we understand and engage with customers.
00:01:15
Speaker
So excited to have our guest on today. Joining me is Roger Bailey. Roger is a clinical associate professor of marketing and also the newly named associate dean of executive education and centers here at Fisher College or Business. Welcome, Roger.
00:01:32
Speaker
Thank you, Doug. I'm so glad to be here.
Roger Bailey's Career Journey
00:01:35
Speaker
So first, can you tell us a little bit about yourself, your background, and and maybe a little bit about your current roles here at Fisher? Sure.
00:01:43
Speaker
I've been on the marketing faculty here at Fisher since 2013. And to be more mis more specific about that, I'm on the quantitative side. So my training was not originally in marketing. It was in mathematics, statistics, economics.
00:02:00
Speaker
But when I was finishing my PhD down at Vanderbilt, I discovered there was this entire area of marketing where Marketers were applying theory from stats and computer science, mathematics and economics to improving managerial decisions. And I just fell in love with it. And ever since then, I've carved out a career you speaking, consulting and teaching pricing and product analytics, applied economics, forecasting, marketing research, innovation, all of these fields around this area of quantitative marketing.
00:02:38
Speaker
Interesting. That's great. ah So let's just dive right in.
Understanding Customer Centricity
00:02:42
Speaker
and and the theme, as I mentioned in the introduction, is customer centricity. Let's just start right there.
00:02:51
Speaker
What does it mean in your words and why does it matter? Yeah, thanks for saying in my words, because depending on who you ask, you're going to get different answers, of course.
00:03:03
Speaker
But at its core, the idea of customer centricity is a business velocity ah business philosophy where you are putting at the heart of all your decision-making,
00:03:14
Speaker
the customer and the customer experience. But I want to be really careful with this because this may bring up ideas in the heads of our listeners that you know we're sending folks out the door with free product and services because the customer is always right and their experience is primary. It's not quite that.
00:03:33
Speaker
And one of the caveats I add is that really customer centricity comes down to value centricity. putting the value at the heart of what we're doing. And and by that, I mean, when we're considering optimal product design or optimal pricing or an optimal positioning for our products, we need to be considering the customer value for our products and services.
00:03:56
Speaker
And we can do that by focusing on the customer experience. But value capture is still important as well. Yeah.
Profitability of Customer-Centric Firms
00:04:05
Speaker
ah What are you seeing in some of the data, either your own research or interactions that you're having with companies, are are there any statistics or trends you might share that show how these firms that really invest and focus on that value nature that you described, maybe they're doing better than their peers?
00:04:25
Speaker
Definitely. You know, we've seen research on this and and not just research. I mean, you can see it in what's happening, especially at larger firms. ah Gartner recently came out and said, you know, 90% of these large firms either have a chief experience officer or a chief customer officer. And that's this expansion into understanding the importance of customer in our decision making.
00:04:48
Speaker
And so why all the attention to this? Well, some recent research by Deloitte pointed out that these customer-centric firms actually are 60% more profitable. So they're improving their financial performance.
00:05:04
Speaker
And any of us in marketing know how difficult it can be to get customers to develop those relationships. ah These customer-centric firms have a 5% increase in customer retention, right? So that can be a pretty big deal on the back end. And then really for differentiation of our products, most of us are not competing directly with price or product. I i shouldn't say directly.
00:05:31
Speaker
Most of us, but many of us are not able to compete on those specific dimensions. Instead, we're really competing on customer experience. And even if we are in more of a price competition or a product development competition, we can still use customer experience to further differentiate our brand from others. And that's why we're seeing this explosion of focus on customer and customer experience.
Role of a CXO in Different Market Sizes
00:05:58
Speaker
With that said, i I want to be really clear about something before we move on, and that's you cannot just appoint a CXO and expect miracles, right? ah the The idea of customer centricity has to be a firm-wide approach, and that can be challenging for sure.
00:06:16
Speaker
Yeah, so as we think about how this might apply to the middle market, which as we know here at the center, oftentimes these businesses run very lean, particularly at the leadership levels, they might not even have you know a traditional C-suite.
00:06:33
Speaker
Their CFO may be running multiple disciplines within the company. But what you just described, is that something that mid-sized companies should be paying more attention to or even start adopting themselves?
00:06:45
Speaker
I would say definitely pay attention. Know that it's out there. But obviously, not all firms can go hire a CXO or a CCO, nor do they necessarily need to.
00:06:57
Speaker
i think we're seeing this trend more in larger firms. And the reason for that is is simply because it's easy to ignore customers when there's a lot of people at the table who have other incentives.
00:07:12
Speaker
When your firm is small or middle market, the people in the room tend to be maybe a little bit more diverse in what they're doing, the things that they're handling, the incentives that they're facing.
00:07:23
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ah But when you get to that very large scale, people tend to be more focused on a single item. And therefore, it's easy for customers to sort of fall through the cracks or the customer experience as a whole to fall through the cracks.
00:07:36
Speaker
So the idea of having a CXO or a CCO is really about making sure that there's somebody in the room who can evaluate a policy change or some action and say, look, how is this going to affect our customer experience? Is this a positive? Is this a negative?
00:07:54
Speaker
And does it make sense to move forward? And that person doesn't necessarily need to be a CXO or a CCO. If you have a CMO, they're likely to take this role right now.
00:08:07
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But even if you don't have an executive suite, just making sure that there are people in the room who are tasked with saying, okay, before we move on, how does this affect our customers?
Impact of AI on Marketing Research
00:08:19
Speaker
Yeah. So to your point, that could even be the founder or the owner, right? Someone who's just driving that and making sure that it's not only just in that room, but spreading across the entire company.
00:08:30
Speaker
100 percent. And when we teach innovation here at Fisher, we spend a lot of time talking about customer value and design thinking. And those sorts of things are naturally going to be a focus of any entrepreneur, of any founder. And so I think the CXO is really in the blood of anyone who's creating a company.
00:08:49
Speaker
Yeah, absolutely. Let's um shift gears a little bit and talk about this concept. you know, massively popular topic of AI. um Here at the center, we've been tracking AI utilization and adoption amongst middle market companies for the last two and a half years.
00:09:07
Speaker
But I want to link it specifically to this topic of customer centricity. How is AI kind of changing the landscape in terms of of how you think about research, whether it's qualitative or or quantitative? Are there new tools or lower costs of utilization? like Can you just walk us through how how that entire landscape has changed now that AI is becoming more prevalent?
00:09:33
Speaker
For sure. It's changing everything. I mean, it's really easy to understate. It's difficult to overstate the effects of AI and what we do in marketing. And and I mean that with a long view forward.
00:09:50
Speaker
But ah you know some of these things are still going to remain in place, at least for the foreseeable future. And so I'll start off with the idea of qualitative research.
00:10:01
Speaker
Yes, 100% AI has made this more accessible. You still can't understand customers without talking to customers.
00:10:13
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And We all know anybody out there who's founded their own company or is out there doing marketing research, we know the importance of talking to the people who are buying our products and services.
00:10:25
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And there's an entire skill set around this where folks train in how to moderate focus groups, run in-depth interviews, and use these open-ended questions to get to this rich data.
00:10:38
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And i want to point out that that skill set still going to be useful. mean, the reality is information you get from such qualitative research techniques can be very rich, but typically when you ask somebody a question, they're going to give you a superficial response.
00:10:58
Speaker
You ask, how do you like our product? They'll say something like, it's great. I use it all the time. That's not really what we're going after when we're trying to understand customers. We want to get to their underlying motivations and feelings, why they buy, who they talk to about it.
00:11:15
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And that really requires that human touch, somebody coming in and saying, all right, you said this, tell me why, and getting deeper. And so you can imagine that skill set having some staying power even in the face of AI.
00:11:30
Speaker
But AI has changed how we analyze such data. Years ago, i mean many years ago, when you'd come out of a group of interviews, you would literally take the transcript, whatever it was, and cut it into pieces, these individual answers in quotes, and paste them, do tabulation to try to create what are the overall themes we're seeing across the interviews, what are some of the takeaways, the insights we're getting from the interviews or the focus groups.
00:12:00
Speaker
And that was very time-consuming. Now, I can have students who are learning in ah in a consulting or market research class, I can have them take a transcript from a bunch of interviews put it directly into an AI platform, ask it for a thematic analysis. Simply say, you know, chat GPT, help me take this output, ah create a thematic analysis for me, develop with bullet points what those themes are, provide quotes for each of those themes that support what those themes are, and generate a simple report on what the insights could be to a decision maker.
00:12:42
Speaker
And in seconds, it's done. And it does really, really well. I mean, i would encourage any listener here to take something, if they have a transcript that's you know not something you need to worry about in terms of privacy, go into the free version of ChatGPT, put it in there and say, do a thematic analysis of this and just watch what it can do.
00:13:05
Speaker
So it's really cut down the amount of time on the qualitative research extensively. Yeah. do um just Just as a um curious personal curiosity, do customer reviews that get posted online, do those serve kind of a similar purpose? And can they be effectively use through AI tools to kind
Customer Reviews as Data Points
00:13:28
Speaker
of pull. I just know personally, like when I'm on sites and, you let's use Amazon, for example, oftentimes i will read the ratings and the reviews, which could become a final decision-making point, particularly if it's a product that I don't have any experience with.
00:13:43
Speaker
What are you seeing? Like, is that is that a viable qualitative piece of research?
00:13:53
Speaker
And for years, and it's it's difficult to call some of this stuff qualitative, I mean, because in a way, it's also quantitative. Right. Because you're getting maybe thousands of these reviews. And we've had the ability for a very long time to scrape data off of the web and analyze it.
00:14:09
Speaker
And before AI, we had text analytics. And going and doing a sentiment analysis on what your reviews look like is... a critical tool in understanding where customers' heads are at, as well as what your other customers or potential customers are seeing. Because just like you, one of those final decision points that I'll i'll come to is, well, how do I feel about the quality of this product?
00:14:34
Speaker
And when I'm on Amazon or another site and looking at those individual reviews, you can bet I'm going to the negative ones and saying, what do I need to watch out for? Right. How about the the quantitative side? What are you seeing there in terms of some of the AI, maybe enabled techniques, whether it be surveys, data viz, all those areas?
00:14:57
Speaker
Yeah, like I mentioned, for years we've been able to automate surveys and scrape web data and do a sentiment analysis, especially with text analytics.
00:15:08
Speaker
And it's been around for a while. But AI has really allowed us to summarize a lot of that open-ended data quickly. right So we're able to take simple questions and build a report relatively quickly. relatively I mean, I want to be careful.
00:15:27
Speaker
There's a lot of folks out there, if you're doing market analytics, you might have a proprietary system, or you may be accustomed to working in or Python, and And you are already, before AI, generating reports on data that you're scraping regularly.
00:15:41
Speaker
But I think what it's really done is open this up to people who are maybe less technically sophisticated.
00:15:49
Speaker
And beyond that, the I don't want to say automation, but the ease in which we can take qualitative or quantitative data forward and say, now, can you use this to create a persona for us or to develop a ah segmentation?
00:16:08
Speaker
you know, who's out there? What do they look like? What do they like about the product? What they not like about the product? Our large language models do a great job with those things. And it's really quite amazing as somebody who's been doing this for years to see the power in that.
00:16:26
Speaker
when it used to take somebody a very long time to parse through the data, sort through it, and then move from analysis to drawing conclusions about what customers look like and what they're feeling about the product, and even farther into how can we use this for insights for decision makers.
00:16:45
Speaker
yeah But I want to say one more thing about it. you know There's some skepticism about AI platforms and their ability to do math, and it's warranted. Yeah.
00:16:56
Speaker
So when we say AI, typically we're talking about LLMs, right? Large language models. And they are trained essentially using something we call a corpus, a very large set of documents of words, human language.
00:17:10
Speaker
And what it does is it trains itself to more or less be a sophisticated parrot to take what it sees there and regenerate and output that. So it does a fantastic job of mimicking language, but it's not really trained on mathematics or at least not complicated mathematics.
00:17:27
Speaker
So in terms of doing strict math, You know, people, you can go find examples of, oh, you know, here's ChatGPT or some other AI platform failing at basic mathematics.
00:17:38
Speaker
But that's not really what it's designed to do. That doesn't mean we can't use it. And so some of the things I find um AI very useful for, one, writing code. I use R and Python when I'm doing statistical analysis or machine learning.
00:17:54
Speaker
And when I'm going to employ those things, if I don't have a piece of code written and I want to quickly write it, I can turn to AI and it can do a very good job. Because code is just language, and in its corpus, it has a lot of code.
00:18:08
Speaker
And some other tools, I ah use it a lot for data cleansing, right? So removing variables, joining data sets, it can do okay with those things, but you just need to be very specific. And while this isn't a discussion of prompt engineering, the Detail here is just that.
00:18:26
Speaker
Be extremely clear about what you want the AI platform to do if you want it to do well. ah For example, if I want to interpolate missing values in a data set, I can't just say inter interpolate the missing values.
00:18:41
Speaker
might do what I want, but it's just a language model. So use the right language. Tell it which variable you want it to interpolate the missing values. Tell it you want to use the previously observed week and the next observed week to interpolate those values.
00:18:58
Speaker
And the more clear you are, the better it does. And of course, it can generate simple graphics and things like that as well. So even the quantitative side benefits greatly from having access to AI.
00:19:09
Speaker
Right. how um How do you see customer expectations evolving as they start to see more AI tools becoming embedded in their experiences?
AI's Influence on Customer Information Access
00:19:22
Speaker
Is that something that's kind of shifting consumer behavior in any certain ways? It sure is. there's First, it's just access to information. right So how they learn about your product, including how other customers think of your product, is changing.
00:19:40
Speaker
For example, we're seeing a downturn in click-through rates in search, which is a huge change. used to be if you want to know something, have access to the web, you go to Google.
00:19:51
Speaker
But It's actually declining. And for the first time, it dropped below 90% of share and it's continuing that direction. And the reason is, is because people are really, think search traffic is turning into ai traffic, either through AI summaries on Google's platform itself, where I ask a question and the summary gives me what I need. I don't need to click through anything in the search list.
00:20:15
Speaker
Or I'm actually turning to chat or clawed or these other AI platforms, and I'm asking those platforms what I need to know. And therefore, how customers are interacting with our products, that's being affected.
00:20:32
Speaker
So if you think about ah SEO, search engine and engine optimization, we want to be the ah first at the top of the list. It's sort of irrelevant if nobody on the list is going to be clicked on.
00:20:44
Speaker
And you can't really do SEO in the same way. mean, I mean, the corpus, as I mentioned earlier, this large set of documents, that's how AI is trained.
00:20:55
Speaker
And when you ask it a question, it's going to give you an answer but based on what it sees brands connected to around what you're asking. And so you can't pay to play here unless you're generating content.
00:21:09
Speaker
I mean, you think about Reddit, for example. How is your brand perceived and what is it connected to on Reddit might have a big impact on the propensity of your brand to appear under different queries or prompts in AI. And that's very different than standard SEO. right In this changing landscape, you have to be thinking about, well, I mean, back to the the point of customer centricity, how do my customers interact with my brand?
00:21:40
Speaker
I mean, what are they doing? What do they want? What what do they want from us? Yeah. I saw a great example of this. A travel expert posted their top seven prompts to find the cheapest route ticketing for airfare.
00:21:59
Speaker
And it was a great, exit because it said, you know, chat GBT, please show me the lowest price fare in this 21 day window from Columbus, Ohio to, you know, name your city. Like it had all the,
00:22:12
Speaker
It was brilliant. And it's just, that's a great example to me, but no one's going directly to the airline sites or even Travelocity. You just prompt and it'll just pull it all in for you. So that was really interesting.
AI vs. Human Touch in Marketing
00:22:24
Speaker
So, amazing Roger, the kind of hearing all this, the kind of the elephant in the room, particularly for like marketing folks who may be listening to this, is AI replacing marketers?
00:22:38
Speaker
I mean yes and no. i I want to be careful.
00:22:46
Speaker
i would say the human touch is going to be important, and not just for the reasons I mentioned earlier in terms of that human-to-human skill set. I think authenticity is important.
00:22:58
Speaker
And so to the the previous question of you know how are um how is engagement changing or an engagement strategy changing you think about generating short form content people really don't want to read copy much these days and even long form videos that might be really interactive might not be your customer's cup of tea and so the idea of generating content that you can interact with uh and and sort of have this you know bi-directional interaction with your uh
00:23:34
Speaker
with your customers, that's really valuable in getting your name out there and finding a new way to connect and learn about the customer experience. But in terms of using Gen AI for that or for what marketers do, which is to understand our market and develop products and services that meet the needs of that market, Gen AI's not super great at that.
00:23:58
Speaker
You know, there are some things you can do with it. Yes, I can generate Kapiti, but... is Is copy the future of how we're going to interact with customers? Probably not.
00:24:10
Speaker
Can I use Gen AI to create videos? Sure. If you were to go online right now and and dont think, I want to create a video, I can create an avatar and then have the avatar read a script. And maybe even that script is developed with an LLM.
00:24:29
Speaker
But that's not authentic. And people will recognize that it's just AI reading off of a script. So AI voice generation and avatars and things like that, they're not really authentic. And you can go online and see, I mean, it doesn't take a ton of effort to see what I mean.
00:24:46
Speaker
If you were to you know, want to sacrifice some of your time, you can go on any site that has reels, right? These short video clips and those that are AI generated, you can look through the comments and see what I'm talking about.
00:24:59
Speaker
It's like, this is AI brain rot. People don't like it. And so that human touch of being able to understand and be authentic is actually quite important. The same thing you're doing here, Doug, when we're working through these interviews, this is real. It's not AI generated and people can, uh, recognize that and there's value in that.
00:25:20
Speaker
So yeah, that's, that's a big part of it. There's also the idea of, you know, other parts of my job as a marketer, am I in danger? Is my skillset in danger?
00:25:33
Speaker
And the answer is yes and no. Again, i not exactly. I mean, if your skillset is all I do is write copy, then the answer is yes. Your skillset is in danger. Are you in danger?
00:25:45
Speaker
No, not if you're able to evolve, right? The AI-enabled marketer is going to be a much more productive marketer going forward. So some tasks in marketing are going to become obsolete.
00:25:58
Speaker
And while AI can create language and and videos and stuff like this, you can expect it to continue to improve, but it's still not a human. And humans still react to other humans. So there's elements of what we do That can be expanded.
00:26:13
Speaker
The amount we can create, the amount we can learn, ah and our ability to react to what customers are feeling is only going to
Evolving Marketing Strategies with AI
00:26:21
Speaker
improve. And those that are moving with that target and really enabling their own, empowering their own um marketing skill set with AI are going to be ah readily available to to handle this change.
00:26:33
Speaker
Yeah, interesting. And I can't validate this is a real conversation. This has not been generated by AI. Well, now, Rogers, this has been really fascinating. Appreciate all your insights. And I think some really good food for thought for our audience to as to how to think about how this is evolving very rapidly and clearly something that, you know, if ah businesses out there haven't started to dip their toe into this, they they certainly need to at least understand the area and then ah you know start testing and and learning how they can apply it to their own businesses. So thanks again for your time and and being on the show today. today
00:27:14
Speaker
Yeah, you know, this is great. I love what you're doing here. I'll say, you know, in terms of people who are taking a look at this and saying, well, what can I do going forward? I mean, really just start working with AI.
00:27:26
Speaker
I mean, what I should say is come to Fisher. We're changing a lot of what we're doing specifically around AI. and And of course, have lots of programs, both through executive education and our other degree granting programs around AI.
00:27:40
Speaker
But even beyond that, taking a look, jumping in. If you're a marketer and you're concerned about this, just go start playing with it. It's an easy thing to do. And I love that you're bringing attention to this.
00:27:51
Speaker
So yeah, this is fantastic. Thank you very much for your time. I appreciate it. Yeah, thanks, Roger. And as you mentioned, we are doing a lot of things around AI, particularly as it relates to mid-market
Conclusion and Call to Action
00:28:02
Speaker
companies. So for more information, please visit our website, which is middlemarketcenter.org.
00:28:08
Speaker
Thank you. And we'll talk to you again soon. Take care. Thank you for listening to The Market That Moves America. Never miss a new episode by subscribing anywhere podcasts can be found.
00:28:19
Speaker
You can also subscribe to our email newsletter at middlemarketcenter.org.