Traditional Customer Relationship Moments vs. AI Moments

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Excerpted from The AI Marketing Canvas: A Five-Step Road Map to Implementing Artificial Intelligence in Marketing, by Rajkumar Venkatesan and Jim Lecinski, published by Stanford University Press, ©2021 by the Board of Trustees of the Leland Stanford Junior University. All Rights Reserved.

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Moments In A Traditional Customer Relationship

Let’s say your New Year’s resolution is to lose weight (stimulus). You’re super-serious this time, so you’re especially interested in personal training. You see an ad on TV for a local gym: Peach Athletic Club (PAC). You go online to search for reviews about PAC, and discover that it has several membership levels: blue, silver, and gold. Intrigued, you drive to the local Peach gym, about ten minutes away. You wait fifteen minutes until a salesperson becomes available. The salesperson gives you a tour, telling you about all the features and benefits and the membership special that’s ending shortly. To sweeten the deal, the salesperson offers you a few free sessions with one of the club’s personal trainers. Those are the magic words and so you sign up (Acquisition). After a few visits (Retention), you decide you love this gym (or not), and, hoping to save others some time, you go online and write a review (Advocacy). You decide to continue with personal training, even though it’s expensive, and you expand the gym membership to a family plan to include your spouse and kids (Growth). You get a new job in a new city, and so you look on the website for a way to cancel your membership. Not finding anything there, you call the gym—only to be told that not only do you need to give thirty days notice, but you also must come to the gym to sign paperwork in order to effect the cancellation.

These are moments in a traditional customer relationship that live solidly in the second wave of marketing. Now let’s see what those moments might look like as AI Moments.

AI Moments

It’s January 1 and you’re determined to lose weight this year (stimulus). You’ve seen a few ads on TV about your local gym and have seen the Peloton outdoor ads, so you’re aware that both options exist, but neither brand comes immediately to mind as a solution. You go online and search for “fitness routines for 43-year old men.” The search engine, using an algorithm, serves up a Peloton ad. This ad is personalized to your preferences (running or cycling) through predictions made by a machine, which recognizes pictures you have posted in and browsed on in your Facebook profile and in other online social media profiles such as Pinterest.

You click on the ad, which takes you to a landing page that has been dynamically generated to align with what the machine knows about you. It contains, among other things, all the routines that can be customized to your lifestyle, along with detailed feedback and customized calendars. The content the machine has generated for you hits its mark, because now you’re intrigued and excited about the possibilities. Depending on where you live, you could walk to the local Peloton studio, purchase a Peloton bike, or download the Peloton app to try the routines and personalized data about your workout regiments and health—complete with music that is customized for you based on your initial choices (Acquisition).

Upon exploring the app, you discover that it not only allows you to connect with others, but also connects you with a specific trainer (live or avatar), who advises you about your personalized routines based on your strengths and interests. This data is cycled back into the machine to help not just you but also other customers like you (Retention). If you are happy (or maybe not), you write an online review about Peloton and its studio, connect with others who train with you (Advocacy), get feedback for improvements from an algorithm based on data collected during Acquisition, decide to purchase a Peloton bike, or subscribe to another routine that works for you and is recommended by the AI algorithms (Growth).

How Peloton Is Using AI To Grow Its Business

This is a made-up story, based on experience and research about Peloton, to show the potential for AI to impact the entire customer journey. Now, here’s a real-life example of how Peloton is using AI to grow its business.

Peloton has been running Facebook ads for years, and was using both broad targeting and lookalikes to achieve its goals; but it wanted to grow faster, so it tapped the ad technology firm Lightning AI to help accelerate the process. Lightning AI’s algorithms identified user groups that were highly likely to purchase Peloton bikes (Acquisition). Within two weeks, more than five hundred different interests and behavioral targeting groups were tested on Facebook. Within two months, more than a thousand combinations were tested. In addition, Lightning AI led Facebook prospecting campaigns for new Peloton bike sales, which drove 26 percent of total purchases from prospecting (Growth). Lightning AI’s algorithms created scale, and the new audiences it found performed better than the broad audiences and lookalikes Facebook had offered.

The company also has added AI to its sound design with Super Hi-Fi. Peloton says, “With this partnership, Peloton becomes the first and only fitness service to leverage AI for intelligent audio experiences. Peloton Members will experience powerful enhancements architected from the ground up for their service powered by technology that understands the nuances of music with a depth similar to a human DJ.” Side note: Peloton is one of many fitness brands that collect data. Consider wearable Fitbit (a node), which was recently acquired by Google (a network). All such brands collect a lot of data, and a logical next step would be to focus on Wave 3: one-to-one personalized marketing.

So where do all these Peloton AI Moments lead? For one thing, as a customer you’re happy to get a service that would otherwise cost a ton to get from a fitness trainer. Second, the feedback, the personalized music, and the connection with other riders make you use the product more (Retention, Growth, Advocacy). These two things, especially in the fitness world, are signals to Peloton that you are getting better and feeling better, and are more likely to go back and use the product again. This increases the value of the product to you over time (Retention), and makes you more likely to tell others about it (Advocacy). In the meantime, Peloton is also learning about you and others like you, and is using that information to develop and pitch the right products to you at the right time.

These new AI Moments are the new personalized way in which customers will experience all the moments in their customer relationship (Acquisition, Retention, Growth, Advocacy) as a result of advances in artificial intelligence and machine learning. The long-term implications of the three forces and the current (third) wave cannot be overstated. If you’re a “Peach Athletic Club” still using second-wave strategies to market to consumers, with no road map for moving to a third-wave personalized approach—think chatbot technology to automatically schedule tours, and AI-powered email marketing—you will not be able to compete in the long term with the richness of the AI-and data-powered experience of a Peloton, or with anyone else.

About the Author:

Rajkumar Venkatesan is the co-author of The AI Marketing Canvas: A Five-Stage Road Map to Implementing Artificial Intelligence in Marketing. He is the Ronald Trzcinski Professor of Business Administration in the Darden Graduate School of Business Administration at the University of Virginia. His writing has appeared in the Journal of Marketing and Harvard Business Review, among others, and he is the co-author of Marketing Analytics (2021). For more information, please visit