Brands should avoid making Gen AI or chatbots their sole frontline - Interview with Phil Regnault of PwC

0:00So welcome to the next edition of the Punk CX podcast. With me today I have Phil Renmue who is a marketing transformation partner at PwC, but he's also PwC's Adobe Alliance leader. How are you doing, Phil? And welcome to the podcast. Good. It's good to be with you, Adrian. Fantastic. Now, Phil, I know you're probably famous, famous in your own lunchtime or so, but for people that are not familiar with your infamy, can you give me a little bit of a thumbnail sketch on you and your background so people get to know you a little bit? I'm famous at our dinner table for sure. But let me explain to the rest of your audience who Phil is.

0:38Phil is a global citizen. Phil is originally from the Netherlands, but has lived and worked in Kyrgyzstan, Ukraine, the U.S. Traveled and worked across the world. I like to think that those experiences have amalgamated into giving me a certain perspective that I think is worth talking about. Professionally, that means that I initially in the early 90s was really on the forefront of the major geopolitical revolution that was happening at the time, the post-Soviet breakup, and I was helping their economies transition to a free market model. And then the turn of the century, I decided that that other revolution called the internet and digital business was fascinating, and I had to be a part of that.

1:28So like everyone else pursuing that gold rush, I moved out to Silicon Valley and spent time at the dawn of CRM with Siebel Systems, spent time with Oracle as well. And then after 20 years in high tech, I decided it's time to go back into consulting. I've got something to say there. I've really enjoyed the last eight years being back at PwC, my original home, working with my clients on tackling their toughest, their gnarly marketing job. Awesome. Now, the reason why we wanted to have you on the podcast is because I know that you've recently published the results of PwC's 2025 customer experience surveys.

2:08Now, it's a US focused survey, but I wanted just to explore some of the findings and things. But before I do that, there's a couple of things I wanted to dive in on. But I wanted to ask you, tell me a little bit more about the research, some of the main headlines coming of it? Sure. Yeah. It's a survey that we do periodically. In this case, we surveyed over 5 ,000 consumers and 400 or so executives. So we're getting both sides of the coin here, not just the enterprise perspective, but those that consume the brands as well. And what we found this year was something pretty staggering, not new per se, it's just more accentuated than in previous editions of the survey and that is that there is a pretty stunning disconnect between the sense that the c-suite have with respect to how their brand is performing and particularly the type of loyalty that it's engendering with their consumer base versus what the consumers themselves are saying right 50 gap it's really quite wow 50 gap i mean yeah it's a bit of a common theme sometimes when you see these research coming up.

3:18I remember kind of like one of your competitors, I think it's probably Bain back in the day that said, great firm. 80 % of leaders think they're doing a great job. And at the time it was like 8 % or something of customers went, okay, you're doing a great job and you're like, yeah. Yeah. So if you want to take a positive spin on it, you can say the gap is possibly getting smaller. Maybe not so positive. That's, that's very punk of you to say, Adrian, that interpretation. I don't know if I'm that charitable in my view. I think it's more like that, you know, that meme that goes around the web with that dog that's sitting in the middle of the fire and claiming that everything's fine.

3:54I think that's what we're in, basically. I think CX is on fire. Not in the good way. But it's, no, this, in all earnestness, this should be a warning sign to executives that they're just off. Yeah. And it's not an unsolvable problem. Like we said, it's not new, per se. Others are coming up with the same findings, which only supports this as not being an outlier, but something that we should probably accept as fact and something that really should be worked on with urgency and I think at least this level of prioritization. And so I wanted to dive into a little bit because there's a couple of things in the main report that stood out and sort of speak to that theme.

4:35And it said that 70 % of executives say customer expectations are evolving faster than their company can adapt. I mean, that in itself is a worrying stat. But I wanted to understand, I don't think there's a lack of desire sort of there, because I think the desire is there. But I want to understand is that, is there anything that you're seeing in particular that companies are doing that's hindering their ability to keep up? When you say there's no lack of desire, you mean desire to engage their customers? Yes, indeed. I mean, again, maybe you're being positive about that. No, no, I would agree with that.

5:14I mean, after all, if you're really the reason for being for any business is to engage customers and hopefully to retain some profit from that engagement, that's it in a nutshell. So I think it's worth calling out that they want to do that, that there is that desire, like you say, but they're just, I think, indexing on the wrong things right now. So especially if we look at things through the lens of loyalty programs, they're really looking more for, I just think they're measuring the wrong thing. They're looking at things like membership expansion or number of transactions that find their way into some kind of a loyalty pattern.

5:57But that doesn't focus on what the experience is. And I think that the distraction away from focusing on the right experience is a problem. Now, that said, this notion that 7 out of 10 executives say that they can't keep up rings a bit defeatist to me. sounds like an excuse because surely they can if they truly have the wherewithal and the desire to do it doing executives allow for silos to persist organizationally and over the decade and a half that you've been doing this podcast and having cx conversations You've heard this over and over again, the relationship with a customer is made or broken at the experience level.

6:55It's not membership in a program or anything like that. And that means that we have to get over silos that exist from a functional perspective, but also get past the silos that ultimately manifest themselves in how data and content is organized. data and content really lie at the root ultimately of being able to create a great omni-channel experience for for their customers the other thing is that there's this there's this thing called ai adrian that's really taking the market by storm right now yeah look we we made it five minutes without talking about ai but good for us good for us but there is there's this sense that consumers are embracing AI faster than companies can.

7:43And so that's where maybe this sense of, I just can't keep up because should it be ChatGPT or should it be Gemini, should it be Llama, what model should I be working with, should I be working with any models? The answer doesn't lie in the models. The answer lies in what you do with that. And the answer also lies in retaining a human connection with your customers and not defaulting or deferring rather to the algorithm to govern that interaction. But I think that the pace at which AI is developing, the pace at which you and I and consumers are using it in our daily lives is intimidating to a lot of executives.

8:23But they'll catch up to that. I don't think that's a permanent lag. I think they will catch up. we're already seeing evidence of that. But I, I, I, my thesis anyway, is that that's why they feel like they just can't keep up. It's not really that the expectations are changing on the part of customers. We like to say that, but I don't know if they really are customers. Expectations are actually pretty fundamentally basic and consistent over time. They just want to be remembered and treated respectfully and have their problems, good or bad results quickly. Yeah. I mean, I think this is, so I have a thing that I trot out every now and again, where I say that the future of customer experience is always built in the present.

9:09And what I mean by that is that if we don't attend to the problems that customers have today, then we potentially forfeit our rights to expand on and or develop that relationship tomorrow. them. And it speaks to also this almost a competing tension that happens at an organization level around priorities. Too many people get caught up in the maelstrom that is evolving technology. And it's this kind of like almost typhoon right now. And they get consumed by that, but then they forget about the here and now in many ways. But actually the people that win are the ones that are actually trying to manage that competing kind of tension about i.e.

9:57focusing on making things better today, but then also building for the future as well. And I think that becomes a, this, it's a really difficult sort of tension to sort of, to navigate. But I think that for me, that feels like a thing that's central to this is almost a bit understanding the kind of landscape that you're, that you're, that you're playing on, but actually making sure that you're striking that delicate balance between improving today but also building for tomorrow. That's right. The key thing that consumers are looking for

10:33is loyalty from the brand to them. And then they'll return the favor, if you will, by expressing loyalty by repeat choice or by actually being willing to pay a higher price for a product or service because they feel like the brand is loyal to them or they have a viable alternative but they decide that that they're going to stick with the brand and that that That's something that isn't actually measured by the brands as much. And going back to your point about staying in the here and now, but building for the future, I think that that's really where a lot of experience modalities, let's say, portray themselves.

11:27They're really focused on today being the endpoint, which is a transaction as a point, as opposed to building up a relationship for the long run. I like to say that brands should embrace this notion of memory as a service. Okay. Where the idea being that if you show that you remember this customer through action or through an offer or something like that, then I think you'll engender loyalty that is of a more voluntary nature than one that feels like, okay, I'm just participating in this program because I'm being slotted into some predefined CRM journey. And that's the story. Then you feel like you're a cog in their machine as opposed to that they're serving you.

12:17And so I think that notion of the long-term really matters. And just on the here and now, I've been toying with this new concept, Adrian, that I'm curious what your take on it is. And that is that we've come out of this era over the last 10 years, let's say, where a lot of brands have been focusing on their data, their customer data, whether it's first-party data, you know, you hear this term zero-party data thrown around, or second - or third-party data, it doesn't matter. But data has been an intense focus. Data, though, if you put a stitch-together customer data graph, it gives you these abstract, dispassionate points.

12:56I think that they don't bring in all the data that you need, though, in order to create an experience. And I think we've been over-reliant on the pure customer data and not looking at context. Context being where are we on our product development roadmap? What is happening in society and the culture around us? What is the cultural affinity of this customer segment that I'm looking to treat as opposed to what are they like as individuals? We all belong to some kind of a tribe. And I think trying to find that where we're placed there will allow you to pinpoint your customer-targeted activities in a more precise manner and in a manner that feels less transactional too.

13:41I think that's right. A couple of things occur to me on that is that the contextual data, contextual intelligence, I think, is almost the next step forward for particularly a personalized experience. I don't mean that in a marketing sense. I mean across the board. And adding that context, and it's not just the individual context, but also the kind of group dynamics and affinities that lie in that. And I think that's absolutely emerging. And I think it's been accelerated by some of the capabilities that we're seeing develop in that sort of AI space. There's one thing that's always concerned me about the data side of the things.

14:23And it goes back to an idea that I remember speaking to, it was a guy who was called Yasha Kikas-Wolf, who was the CMO at Mozilla kind of years and years ago. And he talked about this idea about lean data. And it's the idea that people are going, they've got more data than they know what to do with. And rather than actually going, oh, let's start from the data kind of perspective. I sometimes think they miss a step where we're going, well, what is it that we actually want to do? That's right. And I always think that it's like, because people go, let's figure out all this data and then we can figure out what we can do with it.

15:02Rather than going, why don't we figure out what we want to do and the service and the experience we want to deliver and then think about the data that we need to deliver that and then the tools and things that are going to help facilitate that. And so it feels like, so I always think that we get this data technology and then experience continuum, but it should be almost the other way around. Absolutely should be the other way around. Like start with the experience and then think about what is the, you know, the tools that you need to deliver on that, what data needs to go into those kind of tools in order to deliver the experience.

15:35And that's where I think with many people, it feels to me that many people are going wrong. They're trying to tackle all of the data and all the data silos and everything else. And once they've done that, they're going, okay, now what? Okay, let's just turn the handle and then see what happens. rather than being almost like completely vision and then strategy led and then thinking about from a lean data perspective, what are the things, what do I need? Because then at least that way you start thinking about where are the gaps that I need to fill in order to fulfill this kind of desire about the experience I want to try and deliver.

16:10Hot on, experience has to come first. And I think that the corollary observation would be that that means by definition, the human stays in the loop. You know, that's the proverbial concept that a lot of people are espousing right now for good reason, because I think it matters. If we aggregate all that data and then defer to the algorithm to decide what the optimal experience is, it's going to feel like it was generated by AI. You know, we just, we can discern that right now. So I think the combination of human ingenuity, human creativity, plus the data, I do like that lean data concept because it means that you're not necessarily just putting everything into the soup, but you're actually making a soup that has just the right ingredients.

17:05It's not just unloading the entire spice store in there. I think that's what needs to be done. it can be a more cost-effective approach because you're only using the data that you need. And so it's going to save on storage and compute and all of these different things. It might even reduce latency because actually you're working with a more refined data set. And so I think that's an interesting kind of thing. The whole data side of things, I think it's fascinating. But it's a drama I've been banging on about people getting the wrong way around for some time. But I wanted to circle back on something you said about loyalty and about solving the wrong kind of problem, because there's other kind of stats in the reports.

17:49They said like nine out of 10 execs say that customer loyalty has grown in recent years, but only four in 10 consumers say the same. But then you also kind of said that earlier, you said the loyalty programs are in danger solving the wrong kind of problem. I mean, and so is it that they, I mean, help me understand kind of what's going on here. And is it that the, that the windows kind of shift shifted in terms of what loyalty is and brands haven't actually kept up as it were, they're still almost like earning loyalty points or that type of, that type of approach. And actually it's, it's moved to more relational sort of thing and they haven't quite gotten it.

18:30And they're sort of like stuck in the past. I mean, is that what's going on or is something else going on there? I think it's just a focus on maybe the wrong loyalty. There's loyalty with a capital L and lowercase. Right. The capital L would be the loyalty program, the points, the status that I can earn. Loyalty with the lowercase L is really where you want to be. you want to achieve that loyalty because that feels more voluntary. You're creating a coalition of the willing basically among your customers. But, you know, nearly a third of consumers say that they will stop using or buying a brand if they have a poor experience.

19:14And it does not matter whether they're a member of a loyalty program. If they have a bad experience, it's over. That means that the loyalty program doesn't really serve your ultimate goal, which is to retain. You're just rewarding them based on a transaction that happens in the past. Your earlier point, it's not actually building anything for the future per se, because you live and die by a good or bad experience. Over half of consumers say they'll walk away from a product if they've had, or from a brand if they've had one bad experience with that product too. So it just, maybe not focused on the wrong thing.

19:52and I don't, I'm not suggesting that you toss out all your loyalty programs, but I wouldn't consider it the panacea, the thing that that's going to solve all your customer experience problems. It's one component of a more holistic approach, which has to include more of that, that human connection and also deferring some of the control over the buying cycle to the consumer, not feeling like they're being sold to, but feeling like they're being helped, being aided in making their own voice. Yeah. What it also feels like is that people are earning points and status and things. But it also, going back to that kind of point that we talked about before, it ignores some of the contextual stuff where many consumers are under budgetary pressures.

20:48And that's one of the kind of things that drives them first and foremost. They might go, oh, I need to do this. And then they think, oh, who have I got a scheme with? But then if somebody's come in at a quicker, easier, cheaper sort of like in a way, then it almost, because of where they are and their buying cycle, as it were, then that can trump all of that. And I don't know if brands are being responsive enough in order to deal with some of that, the contextual kind of changes that are going on, particularly at an economic level. Right. And that's why I was to finish my thought on that evolution from the original focus on creating your customer data graph.

21:29I think now it's time to put the content and culture knowledge graph together that provides that context, marries it with the core customer data, but also your company's values and decision criteria. criteria and which relates to how you're empowering your employees to actually act on those values. That's what I think is needed. That's the next evolution, I think, in great marketing is to provide that context to create an experience that is tailored to the moment with immediacy. So there's a new KPI I've been toying around, which is time to understanding. okay so instead of looking at or maybe in addition to looking at things like mps and cset and other measures of customer experience from an operational point of view can you reduce the amount of time it takes for you to be responsive that was the word that that you use and can you validate with that customer that they feel like they were heard and had their need solved in a timely fashion.

22:43If you can solve that time to understanding, then I think you're on the right path. Now, I know the survey was published, was it a wee while ago, a couple of months ago or so? Yeah. But actually, more recently, you've released a fresh cut of the survey and featuring exclusive insights from Adobe users. Now, I know a little bit about Adobe And I wanted to understand why did you do that? And when you say Adobe users, what do you mean? Just so we're clear. Is this people that are on the Adobe AEM sort of platform? Or what are we talking about here? We're talking about users of Adobe Digital Experience products in the Experience Cloud, which would include AEM like you talked about.

23:30It might also include the use of the Adobe Experience platform, real-time CDP, Target, analytic work front all of that we're not talking about users of photoshop or right so it's like enterprise kind of users of their kind of marketing exactly sort of like and experience kind of like tools and technology and and the reason is not not that adobe per se is the end all be all for that but i think it's a very useful proxy for so users of adobe products i think are are useful proxy for any company that is, let's say, towards the leading edge of applying technologies to enhance their marketing operations and ultimately to enhance the customer experience.

24:19That was our thesis going into it. And then when we did the cut, it's basically the same data set that we talked about before with our customer experience survey. We looked at just the subset of those users who self-declared that they, or the respondents rather, who self-declared that they used these Adobe products. Our thesis was borne out. Across the board, users of those products showed that they were ahead in using journey mapping tools, for example. It may feel like a true of them, or if they're an Adobe customer, they're using that. But we also know from other research and certainly all the conversations that you've had over the years that journey mapping is one of those foundational things.

25:05It's not, again, it's not the end all be all. Not doing it is not going to be terribly helpful to developing a great customer experience. So the fact that Adobe users are using that and then narrow the gap in their own loyalty and their consumers' loyalty, I think there's something to be taken away from that. They also use more social media listening and analytics tools, 53 % versus 43%. And they also have 10 points more use of customer service management systems. So there's something there. maybe some of that is attributed to the fact that they're using specifically adobe products and again we could also i think uh infer that this is a good proxy for those that are just on the leading edge of using digital marketing and digital experience solutions so it feels like it's yeah as you say it's like a proxy for almost a maturity given that the adobe platform and it's the tool set is one of the leading players in that sort of like type of, in that sort of like space.

26:11And so using that and then leveraging the capabilities and then sort of almost like matching that against customer expectations and deliverable outcomes and things, it feels like it's a proxy for people that are doing this and doing that are having better kind of results as that sort of, as a, but it's almost like a, as you say, a proxy for kind of like for maturity. um but the um which is interesting so it's a bit like almost if you have it feels like if you've got the if you're adopting some of the most if you like comprehensive tools and using the most of their kind of ability in a joined up kind of like way then you're likely to be driving kind of better outcomes and reducing that gap between expectations and and what you're being able to deliver and and i think this is this is ultimately outside of delighting customers the most important thing for an enterprise ultimately is to make profit sure and i'll introduce just different survey that we did as well we we recently published an analysis that we did in partnership with the an a based on years of data from con lions winners as you know winners or those that that placed in the competitions there would be generally considered as leading marketers what we found is that in that data set where by the way you're going to find a very heavy use of adobe products as well they had a 79 percent higher return on their marketing activity sorry higher shareholder value return overall than those that did it and we believe that this is actually a watershed moment in analysis of marketing's contribution to the enterprise because as you know and many of your guests lament about you know marketing doesn't have let's say a consistent seat in the C-suite.

28:15And if they do, their asks for investments and their claims of success are often viewed with some skepticism, which is fair in some ways because of some of the, let's say, stretching that's done in arriving at the right metrics. But what we proved with this data is that if you, as a marketing leader, and that in and of itself is all discussion of what does it mean to be a marketing leader. But if you do that, you're going to generate almost twice as much return to your shareholders than if you're a marketing laggard. I think that that's really, really important for the CMO to be able to puff out their chest a bit more and claim the importance and value and also retain the gains that they're generating in order to reinvest in marketing and create this reinforcing loop that allows you to then obviously, ultimately, hopefully, if you're focused on the right things, deliver a better customer experience.

29:24Absolutely right. I mean, the ROI is a perennial sort of challenge in the service and experience sort of space. It doesn't matter whether you sit in service ops or you sit in kind of marketing, it's always a challenge. And the closer we can get to, if you like,

29:43causal links between activity and returns, and the more robust they are, the better. And that's the perennial kind of challenge. But I sometimes think that many people don't build good enough business cases. It's almost assumed if we do this, then this is going to happen. But sometimes it doesn't bear decent scrutiny. That's right. And then as you said, then there's this age-old problem of marketing attribution, which is very, very difficult. it's difficult enough in the b2b space where you have i think theoretically a more robust way of measuring things but in the consumer space it's it's very hard and which is why in this study we we we decided we were going to look at attribution as a as a means of justifying marketing shareholder return is what ultimately what the ceo what the board what the shareholders care about and if we can prove that if you're a great marketing company you deliver more shareholder return then it's end the story forget about you know attribution around a specific campaign or an event or a piece of content um we focus on on the bigger picture and trust that the marketers are getting the marketing mix right delivering the right content at the right time through the right channel to the right recipient but here i think it's incontrovertible truth and again i think it's a it's a watershed moment for marketing to actually have this proof point that they can glom onto and say see i told you so marketing matters.

31:15I'll make sure we can get the link, include that in the highlights. I'll send it to you. And so one final thing on that I can report, because I also noticed that there was a statement in there, which I thought I really liked. And I want you to explain a little bit to me. And it says, chatbots have their place. But if that's the extent of your AI use for CX, you're probably in trouble. And I was a bit like, okay, come on, Phil. Tell me what you're talking about. Is that too much? No. No, it was just, I mean, it's not enough. I mean, I was going to turn up. Yeah, yeah, yeah. Like if you're forcing an interaction to happen through an AI chatbot, first of all, it's impersonal.

31:54But it's, and Ruth B said, you know, in their current setup, the experience for a consumer is generally going to lag expectations. Just not great, you know? I mean, my personal experience with chatbot just isn't that good, especially if they're forced on me. But they're getting better. It's just that there's this sense now because billions of people around the world now are familiarizing themselves with LLMs and they're directly interacting with it. There's a feeling among brands then that that means that we want to interact with some kind of AI algorithm as we interact with a brand. And I think that that is a leap that they're making that just isn't true.