Aarron Spinley on CX’s $10 trillion blind spot

[00:00:00] Welcome to In Other Words, the podcast from Phrase, where we speak with leaders shaping how global businesses grow, scale and stay relevant. Today’s guest is Aarron Spinley, co-founder of the Field Bell Institute, principal at spinley.co. And he’s also the author of The Customering Method, one of the most provocative and evidence-led critiques of modern customer experience thinking in perhaps decades. Aarron’s work sits across customer science, marketing strategy, risk and leadership, and he’s really known for challenging long-held assumptions about CX growth and how organizations actually create or even destroy customer value. Aarron, welcome to the pod. It’s an absolute pleasure to have you on the show. How are you doing?

I’m very well. Thank you, Jason. It’s awesome to see you again. I appreciate the very kind introduction. I’ll do my best to live up to it.

I’m sure you will. Well, let’s get into it then. So, over your career, you’ve seen, you know, customer strategy from a lot of different angles, [00:01:00] from, you know, enterprise roles to now founding the Field Bell Institute not so long ago. Which moments across that career have really shaped how you think about managing customer value today?

Well, I think in many ways, part of this is a little bit, you know, original source. I was always one of those annoying people that was just trying to figure out how humans tick far too early, probably, even as a child. I remember, you know, when I finished school, I went to drama school straight out of high school. And I had this teacher stop me. I would just have done a scene. He asked me to explain why I delivered this character in a particular way. And I remember going on this long speech to him about how I’d figured out the backstory and created this whole fictitious, multi-layer characterization of this particular character I was playing and figured out worldviews and identities and tried to build up this complex layer. And I [00:02:00] think the scene was something stupid, like buying a loaf of bread or something. So, it was, you know, I always was trying to understand that humanity. I remember years later, when I started working at risk, I read papers for Africa about the human causes of major catastrophes or the human behavioral causes, sorry, around those catastrophes. So, by the time I got in, towards the sort of marketing and customer space, which originally came through working in, before I started really studying it, it really came through, you know, digital asset design strategy type work. By the time I started to find my feet, I guess, in that field, there was a realization that so much of what we talked about, I knew inherently to be false because of this sort of parallels, you know, this work I’d done in parallel worlds, whether it was acting or in risk management, because human [00:03:00] behaviour is human behaviour. And I knew that a lot of what was stated had kind of these big, chunky problems with them. I think that’s probably where I started to become old and cynical and grumpy at some point, and then needed to convert that grumpy energy into something more useful. So, it was probably, I don’t know, about a decade or so ago now.

That kind of grumpy attitude or maybe a bit too much drama attitude, I guess, the logical conclusion of where you get to is that, you know, or perhaps even the basis of where you get to is you think customer experience became really easy to believe in, kind of as a thing. But as organizations expand across markets and regions and geographies, where do you start seeing that kind of belief in customer experience that everybody knows it’s great and we should be doing it, and it’s really good to be customer-oriented or whatever the words might be? Where do you see that belief start to break down?

My personal view is that we conflate a couple of things, right? The [00:04:00] first is that customer service has a strong economic foundation. And that is, you know, I spend time with our students, and I talk about this in the MBA. It goes back to the Bronze Era, right? So, this is not a new thing. When we meet a customer’s need, they tend to quite like that, right? It’s just very fundamental, kind of, it’s relational without being emotional, right, it’s just we meet needs. So, if you think about jobs to be done, framework, those sorts of concepts, service dominant logic, that sort of stuff. The principles of that go back a long time, and they’re absolutely valid. Where we tend to conflate is we start jumping into sort of exotic claims about emotion and things like that. And we make mistakes. We recognize that we need to understand our customer base. But rather than study and learn about what a customer base [00:05:00] actually is, what the laws, law-like patterns are that define a customer base, the brand effects that sustain a customer base, rather than actually learn the subject, someone decided that it made sense to build this idea that we could just ask customers. Now, the idea that you can just ask customers requires you a world in which human consciousness is not human consciousness; it requires a world in which 95% of our decisions and our processing and our emotion and, our bias and our behavior doesn’t stem from the unconscious mind, which is completely undetectable by our conscious mind. It requires that we are totally conscious, rational beings that understand ourselves and our behaviors, and we’re just not. We’ve known this for a long time. The great scientist, Damasio, calls it the covert knowledge of life. We know how to live. We [00:06:00] just don’t know how we know, right?

Fantastic.

And so, the idea that you can ask a customer base questions to understand the customer base is deeply flawed. It’s scientifically one of the most laughable propositions you’ll find in business anywhere. The motivation or the intent is really good. It comes back to that original thing we’ve conflated ourselves with, which is we’ve got to deliver great service. But from there, we start to run into just, we start to lay a mythology on top of mythology. It’s not just the idea of feedback and VOC and that kind of stuff. There’s some merit in some of that, by the way. It’s not to throw it all out. But we see it in Martech as well, where we know we have this constant activation that’s occurring around sales, which the literature shows will actually reduce the propensity towards purchase of a customer base over time. We know that’s also associated to, you know, pricing [00:07:00] mistakes, right? So, you start to diminish your brand, you start to introduce price sensitivity, you start to pull future buyers forward, creating gaps in your revenue model, and so on and so on. So, this comes about because a lot of marketing automation, product marketing says that you should be constantly activating in the same way that the insights feedback world comes about because, in that case, survey software category needs you to believe that. So, we have this, a little bit, probably if I step right back, a lot of it is a little bit about, sort of, this technological industrial complex we have. Where so many in our field, mistake product marketing and sales slogans for management theory, and because they’re not trained in what a customer base is to begin with, they become really easily victim to that. So, it’s well-intended, but it’s a conflation of things, and it’s also [00:08:00] the undue influence of technology, I’m afraid.

Yeah, and there’s an inherent bias in all of that, right, because technology providers want to sell technology. So, they’re naturally going to be talking about something from a point of view that matches their own to an extent.

There’s nothing wrong with that, right? I had, so I won’t obviously name the company, but I had a big vendor say to me, or a person from a big vendor, I should say, say to me a couple of months ago that, you know, we’re building technology with teams that aren’t trained in the field we’re building technology for. It was quite an admission, right? And obviously, I wouldn’t quote them, they’d lose their job in about five minutes, but I think it’s a really honest reflection of where the industry’s at.

Yeah, well, look, I mean, I’ve been a massive advocate for training in all fields, but especially in marketing. I think that, you know, before you, you know, lots of people come into marketing, especially in B2B marketing, coming from different angles. And I think the one thing that you can get right is to, okay, start training people in [00:09:00] the theory of marketing, you know. And there’s some good mini MBA stuff that we do, and I’ve both done that kind of stuff, so. And now, I think, you know, The Customering Method and the Field Bell Institute are really sort of pioneering, you know, the customer angle. If we think about it, let’s get into that sort of framing the customers differently. So, in the customering method, do you frame them as an asset base rather than this kind of idea of a sentiment problem, which is what you were talking about with this kind of service model? So, when you think about it, and you’ve got all this noise from other vendors and other, you know, the things that have been compounded over time on sentiment and all of that, how does that reframing of a customer as an asset base, perhaps explain what you mean by that? How does that reframing change how leaders should think about growth strategy, particularly compared to the traditional way of looking at stuff?

Yeah, and it’s very fundamental. And I like the way you framed it, as well as a way away from sort of a sentiment-based [00:10:00] concept. Sentiment’s important, but it’s an indicator on an asset. So, when we think about how we manage anything, we take customer out for a moment. The way that we manage any asset that any business has in any field has the same core foundations. So, we apply scientific management. This is sort of what Frederick Taylor wrote the book in 1911, and you know, a lot of it is associated to this idea of efficiency in time, which is connected to the industrial era. But actually, the thing that people miss about his work is that what he was really saying is we need to bring an evidence-based approach to what we’re doing as opposed to this intuitive kind of, sort of feel. And so a little bit like, you know, the enlightening moving into business. That was a lot of what his work was very much about. And so we started to focus on what the evidence showed delivered outcomes. We [00:11:00] moved into more formal asset management in many ways after World War II, when we started to see quality management systems emerge. That was in Japan in the 1940s. And what they began to look at was the construct of consistent, repeatable outcomes on every asset that you would manage. And so there was a very, almost engineering-esque type mindset to that, but then we started seeing those same principles applied in things like Sigma-6, right? So, it started to expand. We saw quality management systems start to get recognized globally, and they started to think about customer concepts in those areas. So, if you think about just purely scientific management and quality management systems of an asset, and you take those same principles, they apply just as beautifully and just as easily into a customer base. The science may not be engineering sciences, but they’re marketing science, [00:12:00] and they’re the humanities. It’s still science. It’s just the application of a different form of evidence into a different field. And when you understand that, you begin to understand how a customer base forms. You begin to understand loyalty properly because you’re looking at it in more strict terms. You know, loyalty is a great example, actually, Jason. I know you probably want to speak a little bit about it later. But there’s, you know, there’s sort of a really loose idea that we just make customers more satisfied and they become more loyal, which means that you better measure satisfaction right so you can see where some of that narrative comes from. But actually, the data shows the opposite. Pre-existing underlying loyalty is the number one underlying driver of satisfaction. We have the correlation right, but the order is wrong. So then, what drives pre-existing loyalty, and how do we unpack and understand that? So, you see, when you change [00:13:00] the sort of core underlying understanding, it pushes you into different places. And I think in very short, that’s what the reframing of a customer base into an asset where we can manage with all the same core principles, scientific management, quality management systems, allows us to approach that asset much more scientifically, much more repeatably, you know, I can brief a Board on the customer base on a moment’s notice. I don’t need a single survey.

Yeah.

Right. And that’s something that’s quite foreign to the majority of our field as an idea. But it’s simply because I’ve studied the asset, I know the science that informs it, I know what the predictable laws of all like patterns are, and I can brief very clearly within reasonable tolerances of category variations and things like that. You’ve got reasonable directional certainty on the components of your customer base from day one.

If you’re talking about that, so this is the customering [00:14:00] method that you talk about quite a lot. And how do you sort of distinguish when you’re talking to, you know, senior leaders or board members indeed? How do you distinguish between this idea of the customering method as opposed to service or marketing, those kinds of methodologies? How do you sort of, because it kind of builds on those things, right? But it’s important, probably, to separate them.

Yeah, it’s a really interesting one, and I constantly have an argument with myself about this subject. Because it’s important that we understand them as distinct fields. You know, your classic foundational marketing of a market diagnostic into a market strategy, into market tactics, the things we’ve learned through the organizations like the Ehrenberg-Bass Institute and the amazing work of the, you know, Field and Binet’s of the world and this sort of stuff that’s gone on over the last, well, become more, we’ve all become more conscious of it, shall we say, over the last decade or so. If you’re a marketer, your [00:15:00] hands are full. You’ve got a lot going on. And you have plenty of challenges in terms of even just maintaining market penetration, let alone growth. And so on the other side of that divide, if you like, the work that you’re doing is building the asset. But the asset does require management. Now, there’s a lot of shared sciences, but nevertheless, there’s a distinct method. So, if you’re looking, again, if we think about marketing as diagnostic, strategy and tactics, we think about a customer base across the the “three I’s” primarily, which is ‘Identity’. And that’s a word that gets thrown around, but you need to understand identity theory to understand identity. And then that flows into ‘Intent’. They’re very tightly connected. So, the way that you behave is very much informed by how you see yourself. And you can have multiple competing identities at the same time. I often say, you know, I’m a dutiful son. I’m a passionate lover. I’m [00:16:00] a great dad. I’m a business partner. These are all identities I have that I bring to me and bring with me, I should say, into interactions. And so understanding how that works, rather than trying to dictate it, but being able to reflect the intent or the dynamic interactions with the customer in the moment, but longitudinally as well, requires you to have an understanding of ‘Interactions’. And we teach interactions in two parts, so anatomy and the architecture of interactions. But it’s the three I’s, right? ‘Identity’, ‘Intent’, ‘Interactions’, and then you can get into ‘Measurement’. So, it’s similar to marketing in the sense that it has a linear value construction, but it’s different to marketing. The discipline’s different. However, one of the, and I focus a whole module on this in the MBA for this reason. We look at the distinct intersections of those two things, because, and this is where I argue with myself, where I say, oh, it’s probably actually an extension of marketing. [00:17:00]

Yeah. Yeah.

The market is not really ready for it because it’s got its hands full.

Yeah. Yeah.

And only a quarter of market is a train to begin with, so you probably don’t want to, right, extend too much on them. But if you think about concepts like physical availability and for your audience, you know, that’s just a brand concept that says that it’s important to be able to engage or interact easily with the brand, and ideally, ultimately to buy from them is proven to be very, very important. If you think about your customer channels, they are the lion’s share of your physical availability, right, so you start to see the intersection of the two fields. Nike discovered this to their great detriment when they dropped, when they played around with their distribution and took themselves out of stores and dropped their share price by multi-gazillions of dollars in a single day, which is a fascinating case study of what happens when you muck around with physical availability. But you should notice that’s in a customer channel. [00:18:00] So, this intersection around physical availability is really important. The intersection around pricing is really important. We see a lot of, particularly in Martech, you’ll see a lot of automated interaction, price promotion going on, which comes back to this issue we talked about before about the destruction of value and the increase of price sensitivity, et cetera. And so, you know, customer people have to have a good understanding of pricing, even if they don’t have responsibility for it, so that they don’t break it, right? So they don’t break strategy, they don’t damage brand, and the last bit to that intersection is in the way that we regulate communications to a customer base is nuanced and it’s different to the way that we outbound message a mass market, right? They’re two different things. So, that’s where you get your intersections, it’s where you see the extension happen, but nevertheless, you have to understand them as distinct in order to bring them together.

No, I mean, it’s [00:19:00] interesting. And you kind of depict this in that kind of bow tie model, where it sort of indicates the tension between that marketing strategy, which is all well-intentioned and completely correct in lots of cases. If you’ve done all your diagnostics, your strategy and your tactics, you get all that right. But there is a tension between that and engaging individually with that customer on the customer’s terms, right? Because the brand has its own set of goals. The customer has its own, or his or her own set of goals as they’re interacting, you know, you talk about identity, different identities, different intent, different interactions. There is a distinct tension between those two things in many cases. And from your view, that tension, how does that manifest itself when, you know, organizations scale? You know, it’s hard to overcome that. But what happens when you see that tension go the wrong way?

Well, I think we’ve got this propensity for corporate shortcuts, right? And it’s understandable, [00:20:00] particularly as an organization gets bigger and bigger and bigger. We don’t have a ‘Customer Department’, right? We’ve got an Ecommerce Team, and an Insights Team, and a Contact Center Team, and a Retail Manager, and a Distribution Manager we grow this thing. We don’t grow it. It’s growing such that we have to then wrap our arms around it. We’ve got to break it up into bite-sized chunks. And we end up a little bit into a channel strategy as a result of that, as opposed to customer orientation. So, that’s where it starts to break a bit. It’s just a scale problem. That happens a fair bit. And so you begin to understand some of the corporate shortcuts. And probably the greatest example of a shortcut, maybe in business, maybe in business, is NPS, right? And it’s marketed beautifully, the one number you need to know. So, forget understanding the domain at all, right, forget understanding the economics, forget understanding the [00:21:00] risk. There’s one number you need to know. And if you’re an extremely busy executive in a complex organization or a Board, who’s used to dealing with things like ratios to shorthand indicators of risk on a balance sheet, one number you need to know is perfect positioning. It’s complete nonsense, total nonsense, but it’s beautifully positioned. And of course, all the literature ever since has looked at the big claims of the NPS. It’s not a predictor of growth, and it’s not an indicator of loyalty, and it doesn’t pre-indicate sales, right, which are the big Bain claims, and each one of them has been very reliably, very corroboratively debunked. But the promise of that is very sticky, very, very sticky. And I think it’s just, I think that’s an example of where most of our leadership now, and they’ve done their education, they’ve got MBAs or commerce degrees or, you know, they came through [00:22:00] accounting or legal or something. They’re smart, highly qualified people. But if you did an MBA even 10 years ago, but you know, 30 years ago. Some of them didn’t even really involve proper marketing in it. None of them have involved customer, and no MBAs today include proper customer training at all, which is hence part of the vision and the mission of Field Bell. But if you don’t have that technical understanding, you are easily led into little traps. And if you’re a big organization, to your point, Jason, then corporate shortcuts are very, very tempting.

Yeah. So, thinking about those shortcuts and the reason why things like NPS are very easy, as you say, is because it’s simple and you don’t have a lot of time as an executive to sort of look at that at C-level. But what do you think should replace those, then? Because they will stay as they’re easy, and it’s a shorthand that everybody sort of understands. Now, yes, [00:23:00] it’s completely flawed, and you and I are very, very, very clear on that. And I definitely think the same. But what do you think, or what should execs start thinking about to replace those, to keep it credible and keep it actually realistic?

You know, I was, in fact, I did a little post on this about a week ago. I was inspired by a little meeting I was in. I was asked by some folks, again, I won’t name the organization, but those are private Q&As you do every now and again. And the question was, what measures are valuable to us, and how do we apply these to business values? And I appreciated the questions of the intents, the right intent. But I said to them very respectfully that driving back was not a freeway. We don’t start with measurement. That’s at the end of the process, right? And one of the questions that was in the follow-up was, in your advice, if you were saying, dealing with a young person coming into the [00:24:00] field, and they wanted to be the best in the world at what they did, what would be your advice to them? And there’s this really simple sequence that I think if you can nail, you’re in the top 1%. And I don’t say that, you know, grandiosely, I honestly believe in 1%. In fact, I probably believe you’re in the 0.1%, but we’ll call it 1%. And that is this, again, we come back to the fact that it’s an asset. So, we start with an understanding of the asset. Then that informs how we manage the asset. So, we end up in a system world. So, the three I’s, this sort of thing, right? That leads us to measurement, which is the nub of your question. But measurement’s supposed to be formed by the asset and by the system. In fact, system theory 101, interdependence concept of system theory, is that systems inquiry, which is another way of saying measurement, is an extension of the system itself. So, you can’t separate it. It’s part of, yeah, [00:25:00] which means that you find yourself saying, well, okay, what’s the system we’re using to manage the asset? Which means, how do I measure the component parts of that system for the efficacy, because if something’s not working, I need to fix that. Because I know how that works end-to-end and what its cumulative effects are, so I need to make sure it’s working at each point end-to-end. So, the system informs a measurement. And then you end up in, okay, but I also understand the asset and what the system’s trying to do in a cumulative way, which means I know what I’m measuring at a business level. And ultimately, in a customer base, you’re mitigating risk to the asset because marketing is the one that’s really building it. We have a function in that crossover, particularly around physical availability, right? But we’re not doing a market diagnostic. We’re not running market strategy for the most part, unless you are a CMO that has responsibility for all of it, then yes, you are. [00:26:00] But generally, at a discipline level, you’re not.

Yeah.

So, what do you deliver economically? You’re fundamentally about mitigating risk to the asset and enhancing profit. The way that we enhance profit is the longitudinal cycle of the customer base. The only thing we can really affect is lifespan. Most of the other loyalty claims are a little bit mythological, to be honest with you. We can affect lifespan. And if we have good control, particularly in pricing and the way that we, again, mitigate risks to affecting pricing negatively, which is what a lot of customer teams do, through a range of those mechanisms, we can start to measure profit, right? So, that’s the contribution we can make. If you’re trying to, you know, do things like growth attribution, you get into a tricky world, you know, because, okay, do I get credit for my part of the physical availability and how much of the physical availability is attributed to our overall growth? Like, you end up [00:27:00] in nut job and soup sandwich stuff, right? So, you’ve got to be a little bit more real in business tests about where we deliver core outcome. So, when we’re dealing with Boards, we’re dealing in, you know, if they’re a good Board, they’re dealing with compliance duties and performance duties. And the customer base is very much about your compliance duties first and foremost. So, when there’s all these arguments about the ROI of CX and things. Most of it misses the boat by a country mile. But it all comes back, as I always keep saying, if you don’t understand the asset, the errors compound from that put.

I mean, fascinating, fascinating. So, from that juncture, let’s move slightly out. And we have this mid-show moment that we call, you know, your inbox confession. And really, we ask every guest that comes on, what’s the one task, personal or professional, that you wish you could automate?

This is the one you gave a little heads up [00:28:00] to just before the show. And I’ve been, as I’m talking to you on one level, my brain’s been cycling on the other. I think I’m going to go with my initial take. And I think that would be parenting. Think that would be parenting for the sake of my children, not me.

Well, that’s a very customer-centric view, I guess, an inside-out way of thinking. Although automating childcare, I’m not entirely certain that’s brilliantly healthy. Anyway, it’s good for you. Right, let’s get back into it. So, let’s go on that automation theme a little bit, I guess. As organizations automate, particularly things like, you know, marketing content, but it can be anywhere now, content, and they automate engagement across, you know, different channels, different countries, different languages. What have you seen? Where does it break, and where does those kind of inconsistencies start between this kind of idea of the customers, the three I’s, and [00:29:00] what they’re trying to do and what the business is trying to do? Where does it usually surface initially or start in your experience?

Look like it’s a little bit similar to concepts like market orientation, you think about the enemies of market orientations, price and product and sales and, not price, sorry, products, sales, advertising. I think you get into trouble when you, again, if you don’t understand the asset, you end up chasing your tail or being influenced by either the technology or the mindset of those that are selling you the technology to some degree. So, you end up in a world where you’re in a constant, it’s almost performance marketing mindset, right? We now use concepts or language like engagement. That means, you know, clicks or eyeballs, right? It’s like Facebook trained the customer world or something. And that’s [00:30:00] pretty negative stuff because you end up in a world of tracking, people love talking about personalization, which is really just a sales hack in many ways. It’s never been about the person, right? It was always about, you know, open rates on emails or whatever it might have been. And so I think there’s a conflation between actual customer engagement. And Paul Greenberg, who you and I both know, has a wonderful definition of engagement around, you know, what customers are choosing to accept, which is a very fundamental part of actual engagement as opposed to dictated outbound messaging mindsets. So, you see, a lot of organizations will say, well, these are the five messages we want to send to our customers this month. And your job in personalization or the Digital Team or whatever is to go and slice and dice the customer base or to watch their behaviors [00:31:00] and trigger one of those five messages to them. So, you see that a lot. The inverse is where actual engagement occurs, which is when you understand what the customer is trying to do, because they might be trying to pay the bill. They don’t really want another iPhone because they bought one last week, or they’re in financial distress. Are you not picking up those triggers, so there’s no suppression occurring? Some of those sorts of very obvious use cases that a Martech and Digital Team will go, oh, yeah, yeah, yeah, because they’ve heard that before. They just don’t do it. And the reason they don’t do it is because they’re not oriented to the customer, they’re oriented to the channel, and they’re oriented to the messaging KPIs. So, it’s one of those things. I was speaking to a student from last year just today on the phone, and she was saying to me that the way that she now thinks about it as an asset means that when you have those sorts of conversations, [00:32:00] she’s framing it around, am I neutral? Am I enhancing? Or am I degrading the asset? So, if I have started with five messages for the month, I don’t need to even analyze that anymore. I know I’m degrading the asset. I’m not oriented to customer need, which all the literature shows when you meet, increases sales propensity, right, increases the performance of your physical availability, leverages a lot more of that mental availability. So, a lot of this talk around friction is 100% right, but it’s turned into how do I get a limited number of sales messaging to the customer as opposed to how do I meet the customer’s need? So, that’s where we still see all of that. It’s a mindset issue. It’s not a technology issue per se. It’s the misuse of the technology.

I think it’s also a senior leadership problem in the way that they’re tasking those teams, right? Because they [00:33:00] need to think about, okay, those teams are just pointing in a direction, and they’re doing that. So, maybe you need to zoom out and go, okay, team, are you thinking in those terms? Are you degrading a customer asset or thinking in terms of customer assets? So, that’s perhaps the challenge to the senior leadership is to make that shift in how they KPI or how they run those teams, because they are a blunt instrument to an extent is that, you know, if you point them in a direction, they will go. It’s just you need to be sort of sort of ratcheting that back when it’s appropriate. I love that idea that you had of why would you if someone’s having a problem paying the bills, why would you try to be sending them, you know, offers and all of those kind of things across different channels or when they come into the store trying to, you wouldn’t do it in a physical location necessarily where you had a customer, you know, service person talking to somebody who knew the history of that person, knew that they were coming in. When you’re talking, it’s a little bit easier to understand that, isn’t it? When you understand someone’s context, I guess, is the point, or their intent or their situation, right? Their [00:34:00] situation. It’s all bringing those things to bear in the more digital world is trickier, but you probably need to think about that quite carefully.

Well, I think the parallel is to brand management. You know, marketers are often saying, you know, we can’t get enough support to invest longitudinally. You know, brands can take 30 years to build, but we’ve got to manage it quarterly, right? This kind of thing. And the parallel skills and customer base as well, it’s a longitudinal asset. So, when you talk about the sort of incentive structures that come out of management teams, it’s one of the reasons I try and talk to Boards a lot because they often impose the incentive structures down to the Management Team, right? And so understanding that the asset is the asset and that the primary job is mitigating the risk to it starts to change the way that those incentive structures look, and it starts to change the way that we apply technology, right, because you’re thinking more fundamentally about, [00:35:00] well, if the literature tells me that if I spam my customers, they will buy less, then you end up back in a commercial world as well, where you’re still worried about the risk of a lower sales volume or something of that nature, or if the literature tells me that if I keep allowing the teams to run sales, you know, pricing promotions constantly at 30%, I’m probably not even profitable, right, you start to have the right economic drivers. So, I don’t think it’s an issue that the economic drivers are in use. It’s the wrong economic drivers that are in use. And if you change that frame, we should see that move. But again, in big companies, there’s that temptation for corporate shortcuts and, you know, NPS and all of that sort of stuff. There’s not as much the same kind of care and diligence around the customer base because there’s no time, you know, Directors are part-time. They’re not an extension of the executive. They carry significant risk as company executives. [00:36:00] So, they’re not going to read these massive, long reports about churn statistics, right? I’m always amused when people say, you know, send their Board paper up on this stuff. They’re not going to read that. You’ve got to get beyond that. And I think that’s a big problem that hasn’t been addressed, because folks haven’t understood the asset in the first place. They’ve never translated that to the proper language at the executive and the Board level to begin with.

So, come to a topic that, you know, it would be remiss not to mention this topic on any podcast that I do, but AI, you know, it’s being adopted, and it’s being very aggressively adopted in marketing and CX and analytics. From your perspective, thinking about that kind of idea that we need to change decision making, there simply isn’t time to do stuff, which is an interesting, you know, concept. Where could or where is it simply scaling, or has the propensity to scale bad [00:37:00] decisions? But more importantly, I guess, is what we’ve just talked about, is where can it actually help make good decisions or work on that customer asset?

Yeah, well, I’m always, I mean, I find there’s a couple of, again, a couple of levels to this. I’m always amused when folks are talking about, you know, the arrival of AI decisioning. You will laugh at that, too, Jason, because I know some of your background. AI decisioning has been around since the 90s. So, welcome to the party, guys. Nice for you to join us.

Finally caught up.

Yeah. And a lot of the really critical stuff around things like central orchestration, without running off down that rabbit hole, operates on AI and email concepts that don’t require GenAI at all. So, the kind of plumbing, if you know what I mean, is still missing a lot. And a lot of that plumbing, those fundamentals of that plumbing, it’s been around for a long time, quarter of a century. And it’s important plumbing because, you know, when you look at the way that service collapses across [00:38:00] channels and touch points, orchestration is really fundamental plumbing to help mitigate risk on that service collapse. So, that’s the first thing, you know, something old, something new. Sometimes, the new thing isn’t new at all. But then there is some new stuff, you know, the rise of Agentic, and that poses new risks as well. If you have intelligence at every touch point, you have inherent risk in the sense that, you know, how would you feel if you had a brain in the tip of every one of your fingers? How effective do you think you would be trying to pick something up?

Yeah.

Right. And that is, so we’re seeing this issue we talked about before with channel orientation over customer orientation. AI is exploding the errors of channel orientation rapidly, to answer the first part of your question, and there’s lots and lots of examples of that. I think there’s also, maybe, I think the other part to it is like anything, it’s a tech bubble at the [00:39:00] moment. There’s a lot of hyperbole. And, you know, so you see folks talking about the rise of the, you know, the AI shopper assistant. I wrote a piece about this a little while ago. Because I’m going, okay, does that mean that we’re all going to wear the same clothes and drive the same car and eat the same peanut butter? And then someone will say, well, no, don’t be stupid, you know, you control your bot. Oh, okay. So, in that case, mental availability doesn’t go anywhere. Physical availability goes through an evolution to some more machine-to-machine type learning, but the principles of physical availability, that doesn’t change. So, what’s changing again? Where’s this revolution? Right? So, there’s that bit that’s going on. There’s too much hyperbole among folks that don’t understand the thing that they are claiming to be disrupted. But yeah, there’s a lot of good, you know, I’m always cautious about being one of those folks that says, well, this is where it’ll go, and this is where it won’t, because I feel like, you know, [00:40:00] when it comes to AI, we are still in our nappies. You know, if lucky, we’re crawling on the floor. We’re doing the bum shuffle on the floor. We’re not even crawling, you know. We don’t know. We don’t know where it’s going. But I know that the fundamentals of service will remain because we’ve got 5,000 years of economic precedent on that. And I know that customer choice has further evolution to go, but it’s really the management of choice that remains the key thing, that too much choice we know is, you know, it slows you down, it constrains thought, it stops you making decisions, you end up with abandonment. So, you know, those that are advocating AI delivering all this new choice, choice is actually a problem unless you know how to manage it. So again, it comes back to having a good, solid understanding of those fundamentals. But I’m a little bit hesitant to say where it’s going to be remarkable. I do think there’s service use [00:41:00] cases where it can be really effective, you know, probably not the classical website bot experience that we’ve all had for the last half decade, which makes you want to kill every robot on the planet. But we’re getting better. We’re seeing a bit more intuition. The problem we’ve got is that those bots are still sitting in an isolated manner, and they lack the context of what happened three months ago, or a month ago, or two days ago. And another channel at the same time, you know, so there’s those sorts of problems that they’re missing. So, they’re context enriched, but I don’t think they’re context rich yet.

Yeah. No, I think, I mean, I’d agree with you. As you said, we’ve done a lot of thinking about this many years ago. I think context is massively important when you’re thinking about the individual customer. What is that context as they interact with you? That shapes the way you build the content, that shapes the way you service them, it shapes the way, everything, the way the organization kind of is built around that. But thinking about that [00:42:00] technology side of things, moving sort of, I mean, AI and also technology. When you’re talking to CMOs and COOs and CIOs, what conversations do you think those leaders need to have together when they’re thinking about this next wave of customer AI technology or whatever else? What do they need to think about?

Well, I’m always a bit self-serving to start with. And so I’ll say, you know, the obvious thing, which I genuinely believe is true. I know I’ve got a dial up a fight, but you’ve got to get people trained on your fundamentals because they will never interpret technology use until they understand that. They just won’t. I mean, if you look at LinkedIn, it’s becoming, it’s like an episode in a fairy tale half the time. Some of the stuff that just flows off the tongues of people who are very, very confident in what they’re saying. And they were super well-intentioned, but they just don’t understand remotely the field that they believe [00:43:00] themselves to be an expert in. And my fear is that that kind of thing just permeates more and more and more into internal teams. And there’s almost a pressure, right? It’s almost a peer review thing. Sorry, a peer pressure thing. It’s like you don’t want to be dropped off by your mum at school, and you don’t want to be the last one to figure out AI in the Marketing Department or the Customer Department or something like that. So, it’s kind of like, I think, a little bit of a false arms race. I think there’s good studies that show that service failure costs businesses literally 10+ trillion US dollars. We have bigger fish to fry on the fundamentals. But I still think it’s a super interesting new superpower that will have a role, and the role will only increase. So, my advice to execs has always been a little bit, put the tools down for a moment. Even the AI ones, put the toys down, get [00:44:00] back. And I get, you know, being self-serving, come spend three months with me. Come spend three months with my partner, Henry Hernandez, who teaches, of course, mini MBA and customer tech. And he teaches about the customer system, right? So, most of what we see now is folks that have got an application focus. I use a particular breed of software, or I’m a best-of-breed guy, right? It’s an application mindset. It’s not a system mindset. And so it’s the same principle, but technologically and managerially, you’ve got to put that stuff down and come back to the fundamentals. I think there’s some really good examples of things, you know, Phrase is a brilliant example, really. Especially for obviously international organizations, when you’re thinking about that physical availability and making consumption of interaction easy. The whole, you know, grappling with the language thing. I mean, you and I both worked in global businesses. And you know, I worked [00:45:00] with one where I was working across Asia Pacific, and people outside of, you know, in other parts of the world don’t quite realize that that’s multiple currencies, multiple languages, multiple cultures, multiple world views. It’s not, sort of, just a region. It’s a very, very diverse space. And even just within that space, the nuance of language makes all the difference. But when you extrapolate that globally, you know, the applications of AI into that and the management of language. I talk a lot about clinical language and teaching the class. Again, language is such a fundamental thing to the way that we communicate on a human level in any setting, customer mode included. So, I think AI has got a lot to, I think there’s a lot more to come there as well.

Well, I think, I mean, fundamentally, though, I think your idea of that ecosystem, customer ecosystem, is something that we kind of think about. Is that from a technology point of view, the ecosystem that you deal with, essentially [00:46:00] all of the ways you manage those customer interactions, there’s an ecosystem of technology that’s around it. A system, you call it, but I’d call it sort of an ecosystem as well. And I think one of the things that really resonated with me then was that, you know, you’ve got to get the fundamentals right. You talk about the strategic thinking, but also the plumbing. It’s like, you know, you’ve got to do the thinking. It’s like if you build a house, you’ve got to think about what the house is going to look like before you start putting in all the pipework and everything like that. But you do need the pipework. You need to get all that right. And then everything else flows on top. So, it’s quite interesting. Well, Aarron. We’re close to the end of our time. It’s always fantastic to speak to you and learn so much and many things to go away and do a bit more research. You know, it’s brilliant. Just a couple of quick one-word, quick-fire questions to you then. So, if you think about global growth, you talked about language just then. But if you could describe global growth in one word, what would it be?

From a brand perspective?

Yeah, whichever perspective you want.

Well, it’s always [00:47:00] market penetration, isn’t it? I’ll come back to the marketing. It’s ultimately penetration. There’s all these ideas around growth generically. I know we’re close on time, but out of the industrial era, we got market-based economies. In market-based economies, growth is the increase of your market penetration. That’s all. I know it’s a very capitalist answer, isn’t it? It’s a very capitalist answer. But that’s what growth is.

Exactly. It’s a good answer. It’s two words, which I won’t give you a yellow card for, but it’s good. Penetration is the thing. And then lastly, yeah, so a book, aside from The Customering Method, your book, which I have to hand, what is another book you think every executive or business leader should read?

I’d probably go with How Brands Grow.

I love it. Yeah, Byron Sharp.

Yeah. Byron Sharp. If you understand a lot about that, you begin to understand a customer base. I think if more [00:48:00] people in CX, for instance, and Insights, that sort of area, read that book, they would send a lot less surveys, as an example.

Love it. Well, Aarron, all that remains is for me to say thank you very much for a fantastic, fascinating conversation. And I look forward to speaking to you again soon.

Absolutely. Thank you, Jason. Thank you, team, the production team behind the scenes. There’s about 400 or something.

No, not quite. Not quite. It’s not all me, though. You’re right. You’re right. Thank you to the team.

So, thank you team.

So, Aarron, thank you again for that brilliant conversation. You challenged a lot of comfortable thinking, especially around how leaders talk about customers versus how they actually manage customer value as organizations scale. It’s been a genuinely thoughtful discussion, and I think it will really resonate with leaders that are trying to grow without losing control of consistency, trust, and ultimately that long-term customer asset and the value of the customer. And with that, that’s it for another episode of In Other [00:49:00] Words, a podcast from Phrase. I’ve been your host, Jason Hemingway, and a huge thank you again to Aarron Spinley for joining us today. If this episode made you rethink how your organization approaches customer strategy at scale, be sure to subscribe on Spotify, Apple Podcasts or your favourite podcast platform. You can find more conversations on leadership growth and what it really takes to scale globally at phrase.com. Thanks again and see you again soon.