Loyalty360 Loyalty Live | Andy O’Dell, Clutch

Artificial Intelligence (AI) has become a topic of conversation for marketers this year. With its ability to enhance personalization, tailor rewards, and make product recommendations, the technology has wide implications for customer loyalty. Even so, many marketers are struggling to wrap their heads around AI — how to define it, what it means for their brand, and the best way to implement platforms that leverage AI.

Loyalty360 CEO Mark Johnson recently spoke with Andy O’Dell, Co-Founder and Chief Strategy Officer at Clutch, about the current role of AI in customer loyalty, potential uses of AI going forward, and how brands can implement the technology to reimagine the customer experience.

Chapters

• 0:04 Intro
• 1:05 AI
• 2:10 What are you seeing in regards to industries using AI
• 4:06 Personalization and testing AI
• 7:51 How should brands be looking at AI
• 10:42 How to get people to be optimistic towards AI
• 13:06 How brands should use AI to craft better experiences
• 15:19 Quick Response Questions
• 16:32 Outro

Transcript

Mark Johnson: 0:04

Good afternoon, good morning. It's Mark Johnson from Loyalty 360. Hope everyone's happy, safe and well. Want to welcome you back to another episode of Loyalty Live. In this series, we speak with leading agencies, technology partners and consultants in customer channel and brand loyalty, about the technology trends and best practices that impact the brand's ability to drive unique experiences, enhance engagement but, most importantly, impact customer loyalty. And today we have the pleasure of speaking with Andy O'Dell. He is the co-founder and chief strategy officer for Clutch. How are you today, Andy?

Andy O'Dell: 1:05

You see, you know, ai is obviously on an emerging trend. I think there's a lot of curiosity. I think a lot of that curiosity is tempered by concern or lack of understanding of what AI can and can't do and what it could and should do. And, you know, I think that's brought forward a pretty interesting discussion around what could the business use to, you know, change the experience that the consumer is having, optimize the experience or optimize the margin profile of any interaction that a customer might have with a brand. I think there's plenty of opportunities to leverage AI on the front end and the back end to advantage the business. And I think there's kind of an even split between AI on the operational side of the business, trying to find logistical efficiencies and other things like that, and then on the experiential side, you know, what is the downstream effect for a consumer when AI is involved? And I think that's kind of the crux of what the conversation is right now.

Mark Johnson: 2:10

Interesting. Do you see any relevance to using AI in kind of the markets? I know it's kind of an interesting topic. We had some discussions with some professional writers and you know they're kind of either or with. Obviously it has the potential to replace them at some point, but it can be a tool that can be very advantageous to help, you know, enhance writing efficacy in the short term. But we see, in the marketing side right as well, that some brands are, you know, a little bit reticent to use it and then maybe using it in a very rudimentary way. What are you seeing in that regard?

Andy O'Dell: 2:47

Yeah, we're definitely in sort of the gawky toddler phase of rolling out AI in business and there are some areas of the business that might be facing kind of an existential risk as far as like what it means for a career path, because AI is very effective at doing some pretty straightforward tasks and that's not to say that they're not valuable but, for example, copywriting. Ai is very good at kind of culminating and driving content very, very rapidly. It still requires, in my mind, some tweaking from human intervention. So you can prompt AI, it'll generate a response to your prompt, but then a lot of times I think it maybe misses the mark. It's not 100% of what you want it to be. So there's still cutting human intervention required.

Andy O'Dell: 3:39

So I don't look at AI and we try and talk about AI is not so much a replacement for jobs. It's not necessarily an opportunity to reduce headcount. What I do think the conversation should be around is how can we leverage AI to enable the humans that are working in the company to cover more ground, to be more effective, to be more efficient and ultimately create more personalization for their consumers along the path.

Mark Johnson: 4:06

Yeah, I think personalization is definitely the opportunity and what we've seen Brands are using it to copy me makes me copy. We actually had a call on AI About a week and a half ago and we had only about three brands early doing it. We had a telecom, we had a small Entertainment entity and then a small hotel year that we're doing some things, but basically how they're using it was to come up with copy ideas, right, so take copy ideas they have and get two or three different recommendations, or two or three different. You know Additional options to look at right from, and then they're doing some AB testing around it as well. When you, when you, look at AI from product recommendation or marketing perspective, I know what do you think is most effective for brands to be considering and to drive some results In a quick manner?

Andy O'Dell: 4:58

you know, we're in one of the most rapidly changing technology environments I think We've had in 20 plus years, you know, with the introduction of AI, and I think that a lot of the conversation is Really focused on how AI could replace things, as opposed to like taking a more positive look and really kind of throwing a vision out there of where could this take us in 10 years. Right, we shop very differently than our kids will shop. So what are our kids going to expect and how can we use AI to get to that outcome quicker, faster? You know, at some point, you know in theory, if you want to kind of go black mirror and stretch AI out 10 or 15 years, you know it might have access to my calendar. It might have access to every item of clothing I have in my, in my closet, every item I have in my, in my refrigerator, and make determinations based on all of the detail it sees that's going on in my personal life. And it might know that I have a wedding coming up and I need a new suit, and so it'll prompt the brands that I have an affinity for To drop ship items that are specific to my taste, my style, my size. It shows up, unknown to me, I pick out the two or three things I like and I ship all the rest back and I have this sort of seamless retail experience that's cognizant of who I am. What am I doing? What's coming up? Where am I at in my life? What kind of discretionary budget have I allocated this year for fashion versus food versus entertainment versus travel?

Andy O'Dell: 6:31

So at some point, I think, as consumers, we're going to hand the keys over behaviorally, to this AI World that is going to streamline things and make our lives Less-cumbered encumbered by the day-to-day activities of remembering oh, my god.

Andy O'Dell: 6:51

Yeah, I have this wedding coming up and I just haven't had the time to go get a new suit.

Andy O'Dell: 6:57

So I think we need to think about where is AI going to lead us, as opposed to like what? What can we tactically take off the table today? And Once we understand where we want to go with our experience as the brand, then we can kind of take the steps back and figure out what are the first things we want to knock out. Do we want to work on some of the operational inefficiencies that we have that will be an encumbrance to that sort of streamlined delivery side of the equation, or do we want to really focus on optimizing transactional spend Today, because we need to increase our revenue run rate, because we need to make all these investments that we can't otherwise afford from a capex perspective? So I think that the AI conversation can be very tactical, like it is in most cases, like what can it do for me right now, as opposed to what do I want it to do for me tomorrow, and how do I set myself up for that?

Mark Johnson: 7:51

When you look at the opportunity around predictive analytics and retention, many brands are already doing things. ML, AI. There seems to be sometimes a connotative, a denotative challenge with regard to what AI actually is. Machine learning obviously has been around for a while. Many brands are using that from a regression perspective to look at predictive modeling. I think before this call we talked a little bit about some challenges you see with brands and brands knowing that customer. How should brands be looking at AI? Maybe even how do you define AI versus ML and other similar terms? How should they be using it from a predictive perspective, from an optimization?

Andy O'Dell: 8:37

Yeah, a big part of AI is its ability to forecast and predict. I think the easiest way to think about the difference between AI and ML is machine learning is a single algorithm, essentially at its most basic, but think of that as the parts, and artificial intelligence is the car that's made from those parts. So AI is a bunch of different models that are intersected and interconnected and the data flows through those. One model might predict one thing, another model might predict another thing to lead to the ultimate outcome of what that AI model is looking to accomplish. So you need those building blocks. ML is the building blocks to AI. Artificial intelligence at its root is only going to do what we set it up to do.

Andy O'Dell: 9:32

From a business standpoint again, I think there's opportunity to deploy artificial intelligence across the entire spectrum of your business. You can predict inventory in theory Based on my historical spending or my historical revenue how many size small blue items do I need to manufacture and then how many do I need at each location is to optimize my inventory at all of those individual locations, but also to optimize the spend I need to make and the excess inventory I want to buy so that I get the unit economics I'm looking for on the supply side or manufacturing side of the business. So AI can really touch all the different parts of your business. You just need to figure out where the most immediate opportunity for optimization is. It's not always just optimizing the personalization. Some of it's optimizing your cost basis so that you can extend better margin or better discount or better incentive into your loyalty program because you're saving on bloated expense on the manufacturing side.

Mark Johnson: 10:42

When you look at AI a question I had there's a group that are somewhat optimistic. There are also some that have more of a pessimistic perspective as well. Actually, I'm not sure if you watched the 60 minutes piece. I think it was two Sundays ago. One of the fore fathers of AI wasn't entangling about the opportunities for AI. How do we look at those who may be some of the naysayers within organizations, if they exist. How could we switch them over to be more optimistic and more, at least, neutral?

Andy O'Dell: 11:22

I think we need federal guidance. I think we need some oversight on how AI could and should be used.

Andy O'Dell: 11:33

That's not to say that we censor what AI is doing, because that would be not the best outcome by far. But I think there are a lot of things that we intend AI to be used for that are positive, but if you change a couple of outputs, it could actually become a net negative. I think there is a good rationale around some skepticism for how AI should be deployed and how it should be used and what we should use it to accomplish. The best intentions don't always lead to the right outcome.

Andy O'Dell: 12:08

I think it's not inappropriate to ask questions and to show some restraint when you're thinking about it. I think that's why there's more investment today on the back end of AI, around operationalizing the business and finding efficiencies there, than you're seeing on the front end. And there's a lot of questions around intellectual property. Sarah Silberman launched a lawsuit that generative AI is using her intellectual property her comedy, whether it's TV or written, or what have you to inform the AI outputs on the generative end of AI. So I think there's still a lot of questions that need to bear out. So I think we're definitely at the fledgling level of introducing AI in production.

Mark Johnson: 13:06

Absolutely Last question Can you give an example or two of how brands should or could be using AI to craft better experiences, to craft more personalized offers or even enhance the efficacy of the loyalty program?

Andy O'Dell: 13:24

Yeah, I think so. There's a bunch of different ways to optimize the experience, whether it's when I receive communications or which communications I receive, the content that's in them, the type of offer that I might be receiving. The four of us on this call might have very similar demographics or behaviors on paper, but we're clearly not the same person and AI is much more attuned at figuring out the nuance differences between the four of us and determining the best path forward or the best offer to present, or the best time to present that offer to get the conversion. Ultimately, the brand wants better conversion metrics, they want to spend less, they want to touch you less frequently and have a better outcome of that communication. So I think that's one way that AI could do a lot to benefit both sides of the equation.

Andy O'Dell: 14:19

I'm not going to get overwhelmed with communications which I think we're all kind of tired of. We're kind of tired of getting a daily email from a brand we shop with every 90 days. Like that's not the right level of communication for me personally. That's not to say I don't want to hear things or know things about that brand, but there's got to be some sensitivity to what my interests are, and it's obviously expensive to send those communications. So if you can optimize the intersection between what I want when I want it, and you actually spending the way you are today to get in front of me, I think that's a great intersection for AI to step in and optimize the business expense and optimize the customer experience. That should net out to better conversion.

Mark Johnson: 15:06

Interesting perspective. Sure Definitely appreciate you taking the time to walk through some of the things you're seeing with our AI and how it should be used, so looking forward to see how this plays out for the next couple of years, for sure Awesome.

Andy O'Dell: 15:18

Yeah, thanks for having me.

Mark Johnson: 15:19

Absolutely, and now we have our quick fire question segment. Quick responses, fast responses, quite entertaining and educational, and it can be funny as well. So looking forward to seeing your responses. And what is your favorite word?

Andy O'Dell: 15:37

Oh love.

Mark Johnson: 15:40

What is your least favorite word? Andy: Loser? What excites you Andy: Sports?

Andy O'Dell: 15:48

Mark: What do you find tiresome?

Mark Johnson: 15:50

Andy: Gossip. What profession, other than the one you're currently in, would you like to try, or would you have tried?

Andy O'Dell: 15:58

Professional coach.

Mark Johnson: 15:58

There you go. What profession would you avoid? Being a lawyer who inspired you to become the person you are today.

Andy O'Dell: 16:08

I don't know that I can put it onto a single person. I mean, I'm really a culmination of a lot of positive and negative experiences and influences.

Mark Johnson: 16:16

So yeah. What do you typically think about at the end of the day, how did I do, and how do you want to be remembered by your friends and family?

Andy O'Dell: 16:24

Someone that tried hard, loved people and had fun. That's good. I like that.

Mark Johnson: 16:32

I was writing that down Again. Thank you, andy, for taking the time to talk with us today. It was great to get into perspective on AI and love your quickfire question responses and looking forward to hearing more from you and the clutch team to remain there 23 and 24. Andy: Thanks, Mark. Mark: Absolutely, and thank you everyone for taking the time to listen today. I'm going to join us again for another edition of Loyalty Live. Until then, have a great day.