Customer Experience Unfiltered - Jay Baer

0:28Hey, welcome to the CMO Whisper Show. He's lived it, built it, and continues to help others do the same. Jay Baer is one of the most dynamic voices in business growth, customer experience, and marketing. He's a New York Times bestselling author of seven business books, the founder of five multimillion dollar companies, and a Hall of Fame keynote speaker whose humor and insight have captivated audiences around the world. Jay has advised more than 700 brands, including 40 of the Fortune 500. And his expertise has been featured everywhere from NPR and CNN to the Washington Post. And here's the twist.

1:03Jay isn't only a strategist and a storyteller. He's also a certified tequila sommelier. Did I say that right, Jay? Indeed. And one of the world's top tequila influencers, blending spirited tastings and unforgettable stories into his talks, from creating iconic marketing frameworks to hosting podcasts like The Spirit Guides and The Long-Running Social Pros. Jay has cemented his place as a true thought leader. I am honored to call him a friend, a mentor. Jay Baer, welcome to the show. So good to see you, Steve. Great to be here. Nice to catch up with you. Totally, dude. We go way back, probably more years than we want to admit.

1:40Exactly. I don't want to calculate it. No, no. Let's just say it's less than 100. So lots to talk about. going to be we're going to blow through this because you and i have really great conversations off air and we're just i've heard you speak and all those things so i want to just jump right into the dichotomy of the power of humanity in an ai world right and it's everywhere we know but i want to start with getting some of your myths you know the role of human connection in business in the ai world what are some myths what are some misunderstandings i think we're in this really weird place that hasn't happened in a long time, maybe since e-commerce first rolled out, where businesses were really excited about the ability to sell things on the internet.

2:27But consumers were very wary and leery of it. Like, wait, I'm going to put my credit card number into a computer? They're going to steal my money. That was a lot of angst and hand-wringing about that for a long time. Meanwhile, consumers would gladly give their credit card to a waiter who disappears with it in a back room for 15 minutes. That was never a problem. That's totally dope. Yeah, totally fine. But there was a lot of angstiness around e-commerce on the consumer side for a bit. And I think we're sort of at the same inflection point with AI, where businesses are bending over backwards to incorporate AI in as many customer-facing circumstances as possible because of the colossal efficiencies it potentially presents.

3:10But customers are like, yeah, I'm not super keen on that. In fact, some really interesting data came out from CCW earlier this year. And it was something like, don't exact quote me on this. I don't have it in front of me. But it's basically some 60-65 % of businesses are actively pushing AI to the front lines. And 15 % of consumers want that. So you have this huge disconnect between what business wants and what customers want. And so one of the things that I think about a lot now is, all right, is is that going to persist, right? Are consumers always going to push back on this tidal wave of automation and AI that's crashing down upon them?

3:52Or is it just a circumstance where a lot of consumers either haven't actually used AI, so they're against it on reputational grounds, or they have used it and they've used an immature version and had a bad chatbot experience or whatever. And they're like, this sucks. And it's going to get steadily better, which will solve that problem. I don't know what the answer is, but it's certainly something I've been thinking about a lot. It's always boggles my mind when I hear the dichotomy between what businesses slash marketers want versus consumers want. And I can't help but going because I work with brands too, like you do.

4:26And I'll go, guys, no offense, but this isn't about you. This is about the consumer. Like, why is it so obvious? Yes. It's so funny because every time one of these implementations gets plugged in, I think we're doing it because it's going to be easier. For who, though? Is it easier for the business? You can reduce labor costs, or is it actually easier for the customer? Now, I do believe, I'm bullish on AI in almost every way you can be bullish. I do believe, in short order, that it will be actually easier for consumers. They will yield better outcomes, et cetera. We may not be fully there yet.

5:03So I think this is going to reach an equilibrium. But that being said, even if we get to that point where AI is everywhere and people are like, yeah, it's not the worst. To me, the antidote to that is being as human as possible to keep it real in your business. What I've been advising people, both in person and on stage is go through your customer journeys and see if there are ways that you can actually add more humanity, more personal touch than you've had historically to offset the rising tide of automation on the other end. Because in a world where most interactions are digital and robotic and automated, the bespoke personal touch is going to stand out and differentiate your business like never before.

5:48So you mentioned the, I don't know if you used, I forget if you used the word balance, but you're intimating that balance, right? Between AI and pupil driven authenticity, as I'll call it. I'm asking you, you know, come up with the ultimate$64 ,000 question. How do you, how do you get that balance? And my guess is part of your answer will be on never put words in your mouth is it really depends on one, your business goals and what your business is about. Like there's no one size fits all. Oh, for sure. And I don't know that, that balance meaning actual equilibrium is either the goal or possible.

6:23But I think it's clear that word of mouth is more important today than it was yesterday. And it will be more important tomorrow and the next day. And every day you draw breath, word of mouth will be steadily more important. Because actual human recommendations, like we're doing right now, where a real person is talking to a real person, is going to take on greater importance because it will be increasingly rare. It's the only thing that AI can't fake. Literally the only thing is actual human to human recommendations. And so that kind of human touch, like I actually got to talk to a real person on a phone, high five.

6:58We've got to find ways to offer that inside our customer journey somewhere. I'm not suggesting if you've got 25 nodes on your customer journey, 12 are human and 13 are robotic. I don't know that that's the goal here. But at key inflection points, if we can find a way to keep it real, to maintain humanity, it will benefit businesses, even though it's probably more cost effective on a unit basis to automate some of those things. I'll give you an example. So there's a bank, a large bank, well-known bank, that until recently did this thing where if you finished your mortgage, you had a mortgage with them and you paid off your mortgage 30 years, whatever.

7:36Like, yeah, that's pretty good. So what they would do is they would automatically fire out an email. Steve, your last mortgage payment has just been processed. We have, per the details of your mortgage agreement, deducted$250 additional from your account as part of your mortgage dispensation fee. Thank you. Signed the bank. So it's like an automated message. They're taking an extra$250 from me, which is kind of a kick in the nuts to begin with. So in this whole idea of how do we keep it real and how do we stand out in a rising tide of automation, the bank's like, you know what, that's probably not the best way to handle this.

8:12So now the way it works is you get an actual phone call from the branch manager who invites you for a one-on-one meeting in their office. You come sit down in the office and they've got like a cookie cake for you, whatever, and as a little celebration, congratulations, you paid off your mortgage. And instead of charging you$250 automatically with direct withdrawal, they actually present you a physical by hand $250 prepaid Visa gift card. Now that has a much different emotional resonance to it. And does that cost them$500 per transaction? Yes. But the word of mouth value, the relationship capital that gets the bank transcends that transaction.

8:51So when we talk about finding ways to purposely keep it real, to purposely add humanity back, that's the kind of thing we're talking about. So you were the perfect person to ask about word of mouth. You've written about it. I know you spoke on it, all sorts of things. Right. And it's probably the oldest form, right? I think you maybe even alluded to it. Oldest form of marketing, advertising, whatever, right? One person tells the first caveman, like said, this is a sharp arrowhead to another caveman. Like that was, that's a great, right. And they'll tell two friends and that whole dating myself with that commercial, but you know, scale one to 10.

9:22How do you think most brands I'm asking the generalities do when it comes to word of mouth? How well do they do it? Yes. Uh, one. Yeah. One. You don't No, I spent a lot of time thinking about this. It's there are two reasons for that. One, almost all brands misunderstand how word of mouth works psychologically. The big mistake that fundamentally every company makes is they assume that competency creates conversation. That if you run a good business, people will notice that and talk about it, which makes sense on paper until you think about when's the last time you told a story about something good.

9:59Steve, let me tell you the story about this experience I had last night. It was perfectly adequate. Says nobody ever, right? Because it's not a story. Word of mouth is simply a story. A review, an online review is just word of mouth with shelf life, right? So if there's not a story, there is no word. It doesn't matter how good you are. If you're a restaurant and you have good food, no one's going to talk about that because that's what the money was for. Like you assume it's good food. It's a restaurant. So what creates word of mouth, we call it talk triggers in the book that I wrote about it, are things that you don't expect.

10:34It's things that sort of break your pattern, your frame of reference. Usually the word of mouth driver for most businesses is not their core product or service. It's this other thing that they do special on the side. Going back to my restaurant analogy, there's a restaurant in Los Angeles called La Boucherie. And they're at the top floor of the tallest building in downtown LA. Like, really fancy steakhouse, beautiful views, good food, obviously. But nobody really talks about that because you knew it was a good view. You saw the picture on the website. You knew it's good steaks. You got 4.2 or whatever it is on Google reviews.

11:09What people talk about is their steak knife menu. So when you sit down, the waiter presents you, opens up, brings over like a walnut box and opens it up for you and says, you know, Mr. Lensky, please, you know, choose your fighter. And they've got, you know, a Japanese knife and a French knife and a big Australian, you know, Paul Hogan, Crocodile Dundee knife and several different American knives. And there's like 11 or 12 to choose from, right? And you get to like pick your knife from the you think is cool or fit your hand or whatever. And people take pictures of that. And that's the story they tell, right?

11:44So word of mouth is not an accident. It's a strategy. And most people get that wrong. Hmm. Where do brands, we could spend an hour talking about this, this next question, but when they quote unquote try to engineer, which is artificially manufactured word of mouth. Yep. Other than the obvious, which to me is, you know, playing online reviews, is that the biggest or what other, you know, ways that you see? I think now, even, even since we wrote that book, I mean, now a lot of that is detonated with influencers, right? With third party content creators. And so they try to light the match. And this is a big part of my tequila business.

12:21We do a lot of tequila influencer work. We work with a lot of brands who compensate my business partner and I to talk about different tequilas. Now, like all content creators, all we have to sell really is our trust, right? So you've got to be circumspect and wise about who you're taking money from. You don't want to lead the audience astray because then all of a sudden you turn around and don't have an audience anymore. That being said, there's this pyramid of persuasion that I talk about sometimes where the most persuasive messenger for any business is an actual customer. Second most persuasive is sort of a quasi-customer, kind of third-party influencer.

12:59Third most persuasive is an employee. Fourth most persuasive is some sort of business leader, CMO, etc. And the least persuasive messenger is the company itself, right? It comes from the logo, essentially. So that's kind of the pyramid. But most brands, when they're communicating in any form or fashion, as a matter of the channel, they usually do it on the inverse. Most of the messaging is from the logo. It's from the brand, right? And then a little tiny, tiny, tiny bit is from actual customers, right? So, I mean, you and I come from B2B marketing. The whole role of customer marketing, I think is still way, way, way underdeveloped and underappreciated in most organizations.

13:40So you mentioned persuasion. I know you've coined the term persuasion ladder, right? Yep. For those who are not familiar, what is it? Why does it matter? Let me start there. Well, the reality is that there are all these different nodes on the way to actually changing behavior. Right. And most organizations believe that if you just kind of throw out an offer, an idea that then people's switch is going to get flicked in their head. And then they're like, OK, now I'm going to do it. Here's my money. Right. And in reality, it takes a lot longer than that. I mean, you know, as well as anybody, right, we've been talking about this for decades, that it takes seven impressions or nine impressions or whatever for somebody to actually make a decision.

14:22I think it's nine, whatever. But that is really true, generally speaking, right? That you have to be enveloped by an idea in order to make a discernible behavioral change. And so this idea of the persuasion ladder sort of marries to that concept, right? That you have to say, what's the first thing we want to tell somebody? And then that leads to the next rung, which is the next kind of question or conclusion they have, which leads to the next one, the next question or conclusion they have. And so essentially, it's a series of questions that the consumer asks themselves or asks of themselves on the way to parting with their money.

14:57So it's almost like a sequential FAQ, I think is the best way to think about it. We used to execute these projects for clients a lot. We do it that way. It's like, okay, the first question somebody is going to have is, what do you sell? Second question is, why is it good for me? Third question is, what does it cost? Fourth question is, what if I don't like it? How do I return it, etc.? You walk up that ladder until you get to the part where there aren't any objections anymore. And this is how good salespeople operate innately. Like this persuasion ladder is how good salespeople sell. They just don't have a name for it because they're not in marketing.

15:28And we know we have to have names for everything. Exactly. Actually, it reminds me of the Jim Leshinsky zero moment of truth. Totally. Yeah, exactly. Love at first sight or the opportunity. Whatever that first engagement is, that's that first rung of the ladder, right? Absolutely. And man, I tell you that book so transformative for so many people. I mean, it got, it got a lot of love and rightfully so. But I think when you look back into the pantheon of, of digital marketing work, Jim's stuff in that regard is, is really, really groundbreaking. It's seminal. Totally. And I was honored to have him on as a guest as well on my show.

16:05He's amazing. Yeah. He's a great dude. He's a great dude. So again, I'm going to ask you a similar question when I asked before about word of mouth, but how do you, how do brands, you're consulting a brand like Jay, how do I, how do I keep persuasion from feeling forced instead of natural? Well, I mean, again, part of it is, is who's doing the persuading, right? I always say, you know, how do we, how do we make the persuaders non-professional because it just works so much better. You know, how do we, how do we activate real customers? How do we activate real fans? How do we activate third-party influencers that feel credible?

16:34And then if, and only if we have to do it, do we, you know, come from the business itself? you may have seen the red lobster turnaround story recently where you know they were in a bad way bright young awesome new ceo comes in overhauls the menu does a lot of like direct to camera appeals on instagram and tiktok to their to their audience like here's what we're changing it's going to be all different and it's been wildly successful but but the messaging wasn't from red lobster it was from this dude like the actual ceo like on camera right like you know like like Dave Thomas at Wendy's kind of stuff.

17:07And again, that also is going to work better, right? Because it's the human touch in a world where the human touch is increasingly rare. How can you put a face on it? To me is one of the first questions that brand should be asking. Yeah. And from word of mouth, persuasion, everything we're talking about falls under the umbrella of one of my favorite topics. And I know it's yours and that's customer experience. Yeah. And it's always been if there's one topic I probably wrote the most in my time at Forbes was customer experience. Yeah. And probably 90 percent of those was what are you doing? Why are it right?

17:44And I haven't written for Forbes for five years and it's still and you work with so many brands. I don't get it. You're you're a smart guy. Help us. Why do so many brands still not get, quote unquote, customer experience? I think it's for a similar reason why they don't get word of mouth is that it is not easy to measure the impact. Right. Like, you know, it works in your soul. Like you, you, nobody ever says to me, word of mouth doesn't work. Nobody ever says to me, word of mouth is unimportant. Nobody ever says customer experience is unimportant. Right. I mean, you know, I've been doing this a long time.

18:18Nobody ever says, you know what, we don't care about customers or if they're happy. Like nobody ever says that. So you say, hey, you should be better at customer experience. And everybody in the room nods and smiles like, yeah, we should be better at it. You're right. But in the bright light of day, it is not by any stretch of the imagination impossible. But it can be a little bit more difficult to run your ROI and your correlation analysis on word of mouth or customer experience initiatives. CX is a little easier for nuanced organizations because they can look at conversion rate. They can look at churn rate.

18:51They can look at LTV. You say, all right, this particular segment of customers had this experience. This segment had this other experience. And let's compare those two. And what's the delta? And that's how you calculate ROI on customer experience. But I'll tell you what the biggest issue is, though. It's not the measurement. The biggest issue with customer experience is that people think too big. Let me tell you a little secret. Customer experience doesn't exist. It's fake. People like you and I made it up. It doesn't actually exist. Customer experience is not a thing. It's not a knob that you can twist.

19:23It's not a switch that you can flick. It's not holistic in any way, shape, or form. Customer experience is, in reality, all the things. It's literally dozens or hundreds of micro decisions that you make in your business about how you answer the phone, about what the receipt looks like, about the header on the email newsletter, the color of the buttons on the website, and on and on and on and on. It is all the things. The only reason we came up with customer experience is that it's too hard to describe all the things. But the problem with that is then people say, oh, well, let's get better at experience.

19:57What does that even mean? And the reality is, and you probably have seen this data, it's pretty harrowing. 75 % of corporate CX initiatives fail to produce ROI. And it's for that reason, because people think too big. If I say you should improve the customer experience, 100 % of the time people will say, yes, we should. And 0 % of the time anything actually happens. So what I always advise is you've got to think small to say, all right, let's come up with very specific, very measurable, very tactical things that we are going to stop, start or change in our organization to get demonstrably better at specific elements of customer experience.

20:43And what I do when I'm either on stage or consulting is I time box it. I say, here's what we have to do. I want you to get 15 % faster, but you have to do it in 90 days. Because if you time box it, it's got to be so specific and so tactical that they can actually execute it. If you say, hey, let's just get faster with no time box, no constraints at all, it falls apart. The weight of it collapses the initiative. So you've got to be really tactical, really targeted. And when you start to stack up incremental improvements, we're 5 % better here, we're 7 % better there. That's where you actually have a CX turnaround.

21:21It's like stacking up wood in a pile. It's not like a giant tree trunk all at once. Inheriting what you're saying, and I keep going back to one word. discipline, meaning you have to have a discipline to get granular in a way, right? Exactly. Yep. And you have to have the thing about all that also is challenging for CX is that ipso facto, like literally by definition, it requires a lot of cross-functional cooperation. And that's not always the easiest thing to execute. So it is word of mouth. And most word of mouth comes from ops, right? Word of mouth is not a marketing discipline. It yields marketing benefits, but word of mouth is always operationally launched, right?

21:57It's something that you do different, not that you say different. And so consequently, if you're going to have an effective word of mouth program, it has to be led by people who are in ops in the field. Just like this bank example. That takes a lot of coordination. Okay, we got to have the branch manager call you, set up meetings, get to the gift cards. That's not just a campaign that we're going to run on meta. We got to figure that out at every branch in a large bank. So CX, same thing. It's not... especially bigger organizations like you've worked with for so long, anything that crosses departmental lines or it has more than one vice president involved gets hard.

22:36Yeah. Because when I hear cross-functional one word, it's the four letter word literally and figuratively of silo. Yep. And we all know. It actually becomes, and I've been in all these meetings. Okay. Yeah. Jay, great idea. We love it. Whose budgets are going to come out of? Exactly. So, well, what if it's both of our budgets? We don't really work that way. You know, I'm like, all right, well, I don't know what to tell you. You know? Right. All right. I'm going to pivot to your passion of tequila. Yes. You're now the number two tequila influencer in the world. True. That's a big time pivot, right?

23:10Yeah. So how does tequila go from passion to platform for you? I didn't really mean it to work like that. I've been into tequila for a long time, decades, but just as a hobby, right? And I've consistently studied more about it. And then 10, 12 years ago, I started to go to Mexico and visit producers and read a lot learned a lot, etc. But then when I stopped recording my podcast, Social Pros, a few years ago, I had a little time in my week every week that I used to do the podcast. And I'm like, well, maybe it would be fun to just make some videos about what I've learned about tequila. And that was kind of right late pandemic when all spirits were having a huge boom.

23:49So that was interesting. And then I'd done a lot of long form content in my career, books and podcasts and webinars and things like that and blog posts. But I'd never done any short form content of any consequence at all. I'm like, well, that would be also fun to learn how this whole Instagram reels and TikTok game is played. So let's just make content about tequila in those places. So I made a handful of videos. They were terrible, really bad, really, really bad, and did not succeed at all. But then you learn how the game is played and you get better and you study and you figure it out. And then I convinced my now business partner, Maddie, I asked her to be on one video.

24:21I said, would you like to be in a video? And she said, okay. And now 750 videos later, she's truly the star of the channel. And so we started making videos and then they started getting more popular and more popular and more popular. And now it's a whole business. So we've got sponsorships. We've got a merchandise line. We built a private community of craft tequila brands to help them grow their own businesses. So it's almost like an EO or YPO chapter. So yeah, it's actually an actual company now, which is remarkable. I never thought that was going to happen. My biggest challenge is shelving. I'm on like my fourth my fourth series of shelves I just spent a ridiculous amount of money on shelves upstairs I have 700 bottles of tequila in the house wow and uh and more on the way always so draw some parallels or what are some lessons from what you did to what you when you consult with a brand or tips for marketers and things like that some of it is is as I said you know putting a face on it right like people trust Maddie and myself to make recommendations about a tequila more than they trust the tequila brand that makes the tequila, right?