Think Human in the Age of AI with Doug Zarkin

0:00Hey, welcome to the CMO Whisper Show. I'm your host, Steve Olenski. Part marketing practitioner, part ad agency veteran, part journalist. I was a writer for Forbes for 10 years. I've had so many insightful conversations over the years with business leaders, to athletes, to celebrities, to, of course, CMOs. The only difference now is instead of sharing those insights through written form, I'm doing it this way. My guest this week is Doug Zarkin, a transformative leader in branding and marketing known for his, quote, thinking human approach. His career highlights are many, and they include the following.

0:37co-founding Gray Advertising Youth, Entertainment, and Lifestyle Marketing Fund, leading the successful launch of Avon's, quote, Mark brand, elevating notorious secret pink into a national brand, driving brand transformations at Kelwood and Provision. He's currently serving as chief brand officer at NPR Brands, overseeing multiple companies. Doug's achievements are all detailed in his incredibly insightful book called Moving Your Brand Out of the Friend Zone, which is available on Amazon and all other outlets. And you can find all you want and then some about Doug at Doug Zarkin, Z-A-R-K-I-N.com.

1:13And one final clear highlight, Doug, that I'm going to add to your bio. You're the very first guest on CMO Whisperer. Yeah. Well, Steve, you and I go back a long ways, probably to about 12 or 14 years ago when I started as the CMO of Pearl Vision, part of Eslo of Exotica. And you were at Forbes at the time. And I remember you asked me a series of questions that I had never been asked before. you were really curious more about the how than the what, which is actually part of what I talk about in the book. The notion of the importance of the how, not just the what. And it's a pleasure to be on. Great to see you again, my friend.

1:48And you got most of those brands correctly. It's Warnico, but don't worry about it. The company doesn't exist anymore. Okay, so no one's going to come here. No one's going to come after you. Well, listen, I can't wait. We're going to have a blast. You and I, we talk all the time. And so much has changed even since, my gosh, it's been about 18 months since I launched the show. which in the dog years of digital, it's like 100 years. Absolutely. Let's just get into, we got to start with that two letters, right? Everybody's mind is AI. So I know one of the things I want to get into is how can brands think human in the age of AI, which is such, it almost sounds like a contradiction in terms, right?

2:24Think human in the age of AI, but get into that, why data alone isn't enough, emotional intelligence, why you think that emotional intelligence is the new brand differentiator. So AI is absolutely in the epicenter of all the conversations that marketers, brand leaders, CEOs are having. And I think, unfortunately, most brands are kind of living in the world of FOMO. And that is not a marketing strategy. And fear of missing out is not a strategy for AI either. I think there is a lot of things that can be done, very few that need to be done. And I think one of the greatest opportunities for AI is how you work smarter and more efficiently within your own four walls before going out and talking to consumers using AI.

3:08Information sharing, breaking down silos, creating a shared information hub are some of the most efficient ways that you can use artificial intelligence to strengthen your efforts. The rush to use AI to do everything for you is great and wonderful if you're a startup and you don't have resources, but you have big aspirations and big ideas. And even then, I would say tread lightly. But I like to think about AI much like I think about data, which is AI and data is really only as good as the questions that you ask. AI is an algorithm. The algorithm feeds off information you put into it. Data is the output of asking great questions.

3:48And how do you know what questions to ask? How do you know what information to put into AI to get you something more efficiently? And that really comes with getting out of the boardroom, getting out from behind your computer, and really living your brand 365. If you're a retail brand working in stores, you and I joked, you're talking to one of the few guys that can proudly say he was an Avon lady because I spent my first six weeks at Avon in the field. I also know how to professionally fit a bra, which is creepy and something I don't talk to my daughter about. But I also know how to fit a pair of glasses and a set of R supports.

4:18So the notion of really understanding the texture of your brand from the front lines backwards, I think, is a very smart strategy. It's also a very smart way to balance out how you're going to use technology for good, not for evil. It is such a fascinating time. To put it in its most simplistic form, it's the right side, left side brain, right? Right. Of the emotional side versus the intelligent side and the data side. And AI, in a way, or I guess not in a way, is really exacerbating all the data and everything that's available through that prism, if you will. But I think your point is, and I completely agree with you, how that emotional slash human intelligence, that has to stay a part of any brand.

4:57The EQ and the IQ, the balance of the two is important. It's sort of along the same lines of there are facts and there are feelings. And as long as you understand the difference between a fact and a feeling, you can make good business judgments. They're both important. They're not equally important. Sometimes a feeling may be worth more than a fact. But if you confuse facts with feelings, you're going to run in circles. And that is probably one of the most challenging parts of leaning in a moderate organization is you want insight, you want gut. You have to know when the data is the data versus the feeling or the insight from that data.

5:32Yeah. I think you've been enough of those decision-making conversations to go, the numbers don't lie, that old expression. And no matter what your gut is telling you, the numbers don't lie. You have to get past those emotions. Fair, right? Is that a good statement? Yeah. I mean, you can make numbers say anything you want them to say by structuring the question a certain way. It could be a 70-degree day and you can ask a question where you're going to get a result that people think it's cold. You can do the same thing on a 20-degree day. I think the skill comes in and understanding how to ask good questions.

6:04And that is something much like with AI, how to put good input. Because AI isn't going to magically do your work for you. It helps you work smarter and faster and perhaps even more efficient. But it is really only as good as the inputs you put in. You got to feed the algorithm in order for the algorithm to work. Yeah. It's the prompting. Well, it's more so than prompting. It's the data that goes into so that when you prompt, it knows what it's pulling. If you want AI to write an email for you or to take an email that you've written and curate it in your voice, but maybe more professional or more succinct or more aggressive, whatever it is, it's going to learn your voice.

6:40And you have to feed that. You have to grow that plant with your insights, with your data, or else it's just going to give you a standard generic that someone's going to look at and go, oh yeah, that's fake. The key with AI is so that you don't know that you didn't write it. It's got to feel like it's from you because in reality, it's got to be an expression of you or else it's not going to move the needle. Exactly. Exactly. I completely agree. I think you have some real stories, right? Of some brand wins and fails where data said one thing, but gut saved the day. Yeah. I mean, I'll give you one from my 11 years of CMO of Pearl, which is when I joined the company, the brand was really creating its profitability growth through top line sales, mainly driven by heavy discounting.

7:24And it was made very clear to me that the brand needed to lose its 30-year-old buy one, get one free promotion. And so if you looked at margin, and you looked at discounting, and you looked at profitability, it was a no-brainer to pull it out. And so we did very quickly. And it didn't work. We had to bring it back. The reason why we had to bring it back was because we had not looked at the other side of the value equation, something I talk about in the book, which is the experience. The experience has to be 3 to 4x the price in order for there to be positive brand value. I mean, real positive brand value.

8:01In that case, we were taking the value equation and we were affecting price by making things more expensive because we were not going to do discounting the way we had done it. We hadn't taken the time to build the experience up so that if you're 2xing the price, you've got a 4 or 6x the experience. Consumers revolted. They were like, it's not worth it yet. And so we needed to spend the next two years really refining the experience before we could then eventually revisit pulling BOGO out of the system, which we did. And we saw eight consecutive years of double-digit growth. As they say, the numbers don't lie.

8:35The numbers don't lie, but the numbers can help tell a story. Correct. And transparency is important, especially in reporting. But it is also equally important in that you can make data say what you want it to say by the way you structure the questions. You have to have that intellectual honesty and that integrity as a leader to be able to look at the data objectively and say, okay, it's not telling me the story that I thought, but that doesn't mean that the story that I'm seeing is wrong. Yeah, exactly. Big difference. Big difference. Big difference. Okay. I want to move to, I love this. You call it the great retail recalibration.

9:09Consumer expectations, not that we want to delve into politics, but it is what it is. and how those expectations from consumers have evolved in the new post-Biden? Yeah, I think it's an interesting question. I think there is, regardless of your political affiliation, there is going to be a refocus on things that are made in America. Some may see it as a selling point. Others may look for it. It's not a bad thing. National pride is great and wonderful. I don't care what side of the aisle you're on. You should be damn proud to be in this country. But I think consumers are going to be actively looking for that bit of insight, maybe not at the point of retail sales, but in their due diligence, number one.

9:54Number two, brands really need from a retail perspective to be doubling down on the experience. As dollars maybe become tighter because of the ups and downs in the economy, again, put the political conversation aside for a minute, people are going to want more value for their dollar. That doesn't mean going from six oranges to eight oranges. That maybe is in the experience. If you are going out with your family for dinner and you've saved your money and you go out once a week, you have a family dinner and you go to a great restaurant, when it's underwhelming from a service perspective, it leaves a bitter taste in your mouth.

10:26I think that taste is only going to get a little bit sharper and more pronounced as things with the economy tighten up. I do think, however, that brands have started to recognize that. I'm not breaking news here. I think if you look at retail economics, there is a bit of a double down on experience. Part of what makes going to a Costco or a Walmart a great experience is that you don't think it's going to be a great experience. You don't expect when you walk into a Walmart for somebody to say, hey, welcome to Walmart. Hope you're having a great day. That little bit of greeter customer service goes a long way.

11:03Being able to find somebody in a Walmart to help you, that's a surprise and delight. You don't expect it. You're thinking, I'm not going to spend a lot of money. And so it's not going to be a great experience. And I think why you have retailers like Walmart that continue to win, like Target that continue to win on the low to mid-end, and then on the high end, like a Ritz-Carlton of Four Seasons or Mercedes-Benz is because they have figured out how to calibrate the experience to deliver that really strong positive brand value equation that I talk in the book. Great segue. No, I didn't tee that up about your book.

11:36And by the way, it's called moving your brand out of the friend zone. You can find an old Amazon and all places you buy your books. But there's one thing I want to touch on specifically in the book, and it's about why you think familiarity doesn't equate to loyalty, right? And I love that you play off the whole dating kind of friend zone-y thing, how you say, well, can some consumers ghost brands, right? Yeah. How do we spark that relationship? We have access to consumers in a way that we never had before, whether that's through programmatic, whether that's through zip code appends, email appends, cookies, online video, locally curated offline buys.

12:15We have the ability to break through the clutter and put a brand on the brain of a consumer like you've never had before. That does not mean that you are creating a relationship. There's a difference between noise and commitment. There's a difference between a screaming baby at the back of the airplane who gets attention versus somebody who is getting attention because they're in the front of the airplane. Brands can't be confused by where they believe consumers put them in their relationship ecosystem. Because you open an email doesn't mean you're going to do anything with it. And because you can send an email doesn't mean that you should.

12:48So it is incredibly important for brands to look at their lifetime value, look at their active versus passive versus latent customers, look at their reviews and ratings, and really have a bit of that gut check. because you are not the only brand that is trying to get attention. Yes, it is easier to get their attention, ironically, even though there are more choices and options than ever, because you can really personalize to a way that you've never been able to do before. But that doesn't necessarily equate to somebody who's going to want to go out with you on a Saturday night. Right. Exactly.

13:19In a virtual or a business person, from a business perspective. Interesting. Yeah, that whole, you know, I think, do you think marketers are still kind of falling in that, you know, familiarity? equates to loyalty and it's really not the case anymore? I think familiarity only equates to loyalty if you look at your existing first party data and you are seeing a pretty active life cycle. I think familiarity almost creates more of an issue for you if consumers are starting to unsubscribe from your communications and you're seeing your existing consumer base maybe shop you every 16 months versus every 14 months.

13:56That's where you've got to get into the data and look at it. That's where you have to be intellectually honest with yourself and understand, are you a product that deserves an audience with your customer every month, every two months, every three months, every six months, every year? Some brands don't require that constant high touch. Yeah. And yet they can still create brand love. Frequency, to answer your point, much shorter than I should have, doesn't equate to intensity of relationship. Interesting. Yeah. I still think a lot of marketers believe that. But be that as it may, the TikTok trap, I think you called it that, right?

14:31What do I want to get into next? And this is going to be a little controversial. You know, when you wrote about, can going viral kill your brand? It can if you misinterpret one of the relationship zones I talk about in the book is this notion of brand fling. And it's sort of like, think about it, like a summer romance or a vacation romance. You have plenty of brands that have that one hit wonder, that fling, that product that skyrockets to the top for whatever reason. It could be what Taylor wore on stage. It could be what Oprah is talking about. Yes, she still exists. And yes, she still has power.

15:06Or it could be something that just went viral in a funny way. Mistaking that for brand love or even the friend zone is a recipe for an epic sales forecast failure. because I think a good example of that is Peloton. You know, Peloton during the pandemic, high double digit, I think low triple digit growth and built their entire business model on the foundation that that had laid. When in reality, it was a short-term win somewhat by circumstance, somewhat by being in the right place in the right time. But to think that you're going to triple digit growth over triple digit growth every quarter, look, they got ahead of their skis and they made some decisions that maybe weren't the best for them.

15:46So it's really about, I think, having, ironically, a degree of humility that marketers need to balance with that bravado of believing that you can get into the mind of the consumer and motivate them to do what you want them to do or do what you're asking them to do when you're asking them to do it. That's a tough pill. You know that for some marketers to swallow, to know that you're not in control. We are in control of what we can control. And that is the way in which we treat the customer. And again, it's a concept I talk about in the book, this notion of thinking human, which is really about the notion of thinking about every customer as if they were your only customer in the day.

16:25What would you do? How would you build your customer service model? How would you build your sales model? How would you build your loyalty model? If you do that, you are going to find that your customer is going to be more than just a customer. They're going to be an advocate. Today, more than ever, reputation commerce, which is what people say about you, and that ability to turn that into an action. Because yesterday, today, tomorrow, and forevermore, the most powerful marketing tool in a marketer's toolbox is word of mouth. Being able to understand that gives you a really good sense of where your brand is.

16:59Yeah, exactly. Legacy brands. I've worked on a lot of them. I know you have. And I want to talk about what they have to do to stay not just relevant, but culturally relevant. Right. Talk a little bit about that, because there's so many new brands that pop up every single day when you're a legacy brand. To me, I always look at legacy brand agnostic of industry as good and bad, meaning good. You got a lot of equity or maybe not bad, but challenging. You have to continually stay relevant. How does the legacy brand continue to stay culturally relevant? It's a great question. Legacy brands have that miles traveled as an advantage.

17:36They have been there, they have done that. That doesn't mean they're going to continue to do that. And I think we've seen so many legacy brands fall away because they kind of put their head in the sand a bit, either virtually or otherwise, and believe that they don't need to evolve. Legacy brands need to be even more of a steward of their consumer than anybody else. They need to be understanding what the consumer is not saying, but thinking, because you've got to try to get into that consumer's mind to anticipate. Let's take a great example of a legacy brand that has continued to be culturally relevant, McDonald's.

18:11The value meal is a great example of understanding what your customer is thinking. Customer isn't saying with real meaning, I want cheaper, at least when they created the value meal. Or I want you to combine a burger and fries and a shake and a soda and throw in something for a snack and package it up. Maybe they did some focus groups, but they really understood where their consumer was going, what was situationally going on in their life. That is the power of a legacy brand in action, maintaining its legacy. Unfortunately, look at a brand like Bed Bath & Beyond, who was living and breathing the 20 % off coupon that everybody has.

18:49Everybody has a stack and they never expire. You can coupon stack and that's fine. But somehow they lost their way. And I don't think the loyalists saw it coming. I think those that were occasional shoppers saw it coming. I don't want to go and buy this. I don't want to carry pillows home in my car. I'm just going to order it on Amazon. And I'm an Amazon Prime member. It's going to show up in a nice box and moving into my dining room and put it together. So I think, again, I think the challenge becomes for legacy brands. How focused are you on listening and understanding your consumer versus just trying to make a top number?

19:21Yeah. And I think a legacy brand, I know this is going to sound kind of obvious, but to me, the most successful legacy brands always keep that challenger brand mentality. Yeah. I mean, I love the challenger brand mindset, which is you've got to be smarter than your competitor because you're not going to outspend them. You got to outthink them. An analogy I talk about in the book is that if you are a legacy brand or you are a brand that is on top, you need to be thinking as if you are in third place or else you're going to find yourself in fourth place. And by that, I mean, if you are a leading brand in the one spot, you're always looking over your shoulder to see what the person behind you is doing.

19:59How far in the race are you ahead? If you're the number two in a category, you're always looking at the person in front of you and saying, what do I need to do to catch up? If you're number three in the race, you're thinking, shit, what do I need to do to win this thing? And that is the challenger brand mindset. Challenger brand doesn't think about who's in first or who's in second in trying to be in first or second. They're trying to think about how I can just get in front of everybody and win. And that's really frees you up to have that challenger brand mindset. That's the key. You just said, Doug, frees you up, right?

20:31Because we get in our own ways all the time. Well, we get in our own way because we have access to so much data. And because something can be measured doesn't necessarily make it meaningful. And so we're inundated with all of these dashboards and KPIs when in reality, can we strip our business down to the most top five things? Top five things are there because if you spend less than 20 % of your time on anything, you're not going to move. So I always try to find what are the four or five key KPIs that are really moving the business and try to spend my time on it. That doesn't mean you don't click in.

21:04And if it's existing customer sales, then you click in. And then you look at segmentation and then you go further. But if you start with these micro looks and you're looking at a dashboard of 20 KPIs, where do you go? I want to go back to something for a second about retail. And I think you're a really good person to ask this question about. And that's the future of brick and mortar. Yep. Even if I just say those words, what comes to mind? Where are we going to be in five years? It's not going away. It's not going away. The death of brick and mortar is, I think, one of the silliest things I've ever heard.

21:38Broadly, there are certain categories where you can completely sub out. And yeah, I think brick and mortar has a right to go away. I mean, I think the video rental business is a great example. You don't need to touch and feel a movie. You just want to be able to play it. And once the technology caught up to that neat state not being tactile, it was the death of brick and mortar video stores. Okay. But people still want to pick out their own produce. People still want to take a car for a test drive. People still want to be able to feel how heavy a pair of glasses is on their face. People still want to be able to know what size they are of sneaker and feel how it feels on their foot.

22:20It doesn't mean that omni-channel isn't a solution. It just doesn't mean that brick and mortar is going to go away, that every major shopping mall is going to be a bank, a health club, and a bunch of restaurants. You just got to think harder about what you're doing at brick and mortar to justify why you have brick and mortar. To take it a step further, and you mentioned this before about you really got to... That's when you really got to think about if you're a brick and mortar, what that in-store experience looks like. Again, go back to the value equation, right? Brand value, whether you're making$50, $500, or$5 million a year is experience divided by price.

22:54You've got to deliver an amazing experience at brick and mortar or online in order to justify your price point. If you stay at a hotel that is$199 a night and you check in and your room isn't ready, when it's finally ready, they gave you one towel and the hairdryer doesn't work. And the Wi-Fi is terrible. You're going to be really upset that you spent$199. Now, imagine spending$495 at an upscale hotel like the Ritz-Carlton. If you check in and your room is ready and they've provided you an upgrade and you get there and there's a little welcome drink from the general manager. And then you go and you put on one of the fluffy robes and you run down to the pool and someone's there to help you and they know your name by day two.

23:34You're not thinking about how much you're paying for the room. You're thinking about, wow, this is an amazing experience. I think that's honestly the core. Brands can charge what they want, provided the experience is pretty robust. And again, what they want in context, of course. Right. But there is a reason why luxury brands can charge a luxury price because they deliver a luxury experience. When they don't, the consumer runs away. Okay. Looking at the time, I don't think I was doing this, Doug, when our first session, which I called now the random five. Okay. And I asked every guest five random questions, personal, to get to know you as an individual.