Win The Moment by Mastering Customer Intent

Stacy Sherman: Hello, Pierre. Welcome to the Doing CX Right show.

Pierre Charchaflian: Hi, Stacy. Thank you for having me.

Stacy Sherman: I’m excited you are here, and I want my audience to know that we got to meet in person, which is a rarity for me. People on my show, I usually meet them after, not before, and so this is super special.

Pierre Charchaflian: Yeah, same here. That’s awesome that we were able to connect in person, and we get to continue the conversation.

Stacy Sherman: Yes. Well, before we dive deep into the topics, Pierre, tell everyone, who are you? What do you do for a living?

Pierre Charchaflian: Sure. Pierre Charchaflian. I’ve been at the intersection of data, technology, marketing, and customer experience my entire life. I’ve lived through several evolutions and reincarnations of marketing, digital [00:01:00] marketing, and customer experience, and now we’re living through the generative AI transformation. Lots of lessons to learn from, lots of lessons to leverage, but not a bit less excited about how we can help organizations and brands transform themselves, given the dynamics and the great opportunities that generative AI is affording us.

Stacy Sherman: Yes. So I got to learn firsthand so much good — I call it gold — of content and lessons from joining IBM at Adobe Summit, and it was… I was like a kid in a candy store, really. It was so informative. Share a little bit about what you were focused on at the summit.

Pierre Charchaflian: Yeah. So obviously you can’t have a transformation conversation today in marketing or customer experience without generative AI. And being at [00:02:00] IBM, sort of the OG of AI with Watson and now WatsonX, really our focus was to drive our point of view and our capabilities around what do brands need to do, and can and should do, to position themselves to win in the future with generative AI on two levels. How to transform your internal marketing operations and processes and operating model. But as, if not more importantly, how do you transform your customer experience and be able to derive a competitive advantage leveraging generative AI, which hopefully we’ll get a chance to talk a little bit more about in today’s session.

Stacy Sherman: Yes, and I want to, during our talk, define what is this agentic and orchestration and all these big words, because not everybody understands, but yet fundamentally they know it’s important and they’re saying, “I should know, but I don’t know enough.” So we’re going to help them out. Before I do, my question for you is, this is the Doing CX Right show, so [00:03:00] therefore I need to ask you, what does doing CX right mean to you?

Pierre Charchaflian: Really good question. You know, I joke, and I’ve been in this business for a long time, a quarter of a century at least, and I joke and I tell people I’ve been doing the same thing and selling the same thing and helping companies do the same thing: right offer, right person, right time. But I think doing CX right is very contextual based on what data you have at a given moment. I think we have an incredible opportunity to do CX right in the age of generative AI by not only delivering on what customers want, but actually anticipating what customers want. You know, generative AI has this incredible capability of understanding intent and deciphering meaning. And with that, we can not only understand what you want, but actually anticipate and really get you beyond just a blue shirt, but an entire outfit in your commerce experience, right? As a small [00:04:00] example of curating not only a seat on a plane, but curating an entire trip that you’re taking with an entire itinerary, and really be able to expand the aperture of what brands can do to round out the experience and the services that we deliver to you. And the brands that will be able to manage that and deliver on that, I think will have an incredible strategic advantage. So doing CX right today and in the future is not only the right person, right offer, right time, but anticipating the need that will drive the right person, right offer, right time. So that’s the key word that I would say in the pivot of CX today and in the future, is the ability to understand intent and anticipate customers’ needs in this really exciting age of technology.

Stacy Sherman: So anticipate, get ahead of, solve people’s needs before they even realize they have it.

Pierre Charchaflian: 100%.

Stacy Sherman: That seems so obvious, yet companies are challenged. They’re having such a [00:05:00] struggle with this. Why?

Pierre Charchaflian: Yeah, I think there are several reasons. You know, if you ask CMOs today, and even if you ask CEOs today, we just did a CMO study about a year ago. We launched it in the summer of last year, IBM did. And we asked CMOs, “What are your top concerns?” And you’d think they would talk about advertising, they’d talk about creative, or budgets, which they always talk about budgets, obviously. But the number one concern they have is their technology stack and being able to deliver that dependable, consistent customer experience, but also a technology stack that allows them to innovate. I think their hands are tied a lot of the time in that they don’t have the right modern technology to do it. So that was top of the list. I think that’s a challenge. Another challenge that was cited: over 80% of CMOs cited data privacy concerns and trust issues, right? How do I [00:06:00] deliver and how do I anticipate your needs while earning your trust at the same time? How do we collect the right data from you? So I think that’s another challenge. A third challenge that was cited is organizational silos and talent, right? How do you solve that? And for us to deliver a comprehensive customer experience, it’s beyond the personalization of a salutation. It’s beyond the personalization of an offer or content. It’s really to deliver that personalized end-to-end experience, including the product experience. So being able to personalize your hotel visit, being able to personalize your trip. I’m using a travel example. But being able to personalize how we ship a product to you, and all of that. So that requires really end-to-end orchestration across all functions within the organization. So I think CMOs don’t lack vision. I think they lack sometimes budget, and they lack also the right technology in their hands to help them [00:07:00] deliver on that promise and that vision. And that’s where IBM comes in and tries to help and solve some of that complexity for our clients. But certainly those are probably the top challenges that CMOs are having.

Stacy Sherman: Well, another thing I’m seeing as a challenge, going back to the silos statement earlier, is that we have human silos, we’ve got data silos, and now we’re almost having this AI silo problem because we’re deploying so many different tools. I remember working at a couple of corporations where they had the most sophisticated technology, but none of them interfaced with each other. And so, how do you get around that?

Pierre Charchaflian: I think it takes a couple of things. I think you need to have the vision and you need to have the leadership in place. I’ll give you a great example. Telco. I was meeting with an AT&T executive at Mobile Congress in Barcelona about three months ago, and he said the number one reason why customers leave a network [00:08:00] is the quality of the network. So being able to anticipate that Stacy had, or continues to have, a bad network connection, right? That really allows a marketer or an experienced executive to say, “I want to do something about that for Stacy.” Now that data is there. That data is residing in the logs. But to get that data out of the logs and create an insight that is attached to Stacy’s profile so we can act upon it, is a lot of work. It takes an executive that is willing to do that, that convinces the organization and marshals the organization to actually act upon that and prove the ROI around it. That is what is really needed. So I would say executive leadership and convincing the organization to become more customer-driven and really operating based on customer-driven principles is really, to me, the number one ingredient that differentiates [00:09:00] the organizations that deliver on really best-in-class CX and Doing CX Right versus others that don’t. Does that make sense?

Stacy Sherman: It does, especially because you didn’t realize that I worked at AT&T for 12 years or longer, and Verizon for five or six years. So telecom, I know it well.

Pierre Charchaflian: Yeah, yeah.

Stacy Sherman: I know it very well. Now, leadership is clearly a huge factor here, and they are the ones who need to implement the technology to anticipate needs and bring the organization together. You have a report about “Winning the Moment.” There’s a lot of really good data in that. Can you share what stands out to you?

Pierre Charchaflian: You know, “Winning the Moment” was a response to anxiety among our executives around two things. This thing called agentic: what do I do with it? What does it mean from a customer experience [00:10:00] standpoint? And the other was, “We’ve got all these agentic search engines. How do we win within that, but also how do we win despite that?” Because here’s the thing: agentic search engines are both a great opportunity for us to enhance our content and information architecture on our website so we can show up higher, but also there’s a threat. These search engines are pretty smart. They’re anticipating our needs. They’re understanding and decoding our intent. So there is a huge threat, in my opinion, that at some point they’ll take over conducting not only the search for us, but actually transacting on our behalf, and almost in a way threatening the core existence of a brand’s digital entity, organization, or store. So what do brands do in that context? How do brands win in that battle? And so the whole report was really about what do I do [00:11:00] to really win in this sort of environment, and what does the future of CX look like? And it’s really about decoding customer intent as one of the key principles. And decoding customer intent not only comes down to asking you a few questions, or looking at the log to see what products you looked at so I can give you an offer based on that. But actually it was about gaining the trust with you, Stacy, so I know from you what your favorite color is, what your favorite cuisine is, and what are some of the key preferences that you have so I can tailor the experience for you based on those preferences. That is a huge element of the future of customer experience. And how do I feed that into an agentic engine that says, “Based on Stacy’s preferences, I think she would like this outfit, or she would like this trip, or she’d like this mobile plan since she worked in telecom,” and so on and so forth. So it was really about how do brands win in the future [00:12:00] in the age of agentic and generative AI.

Stacy Sherman: So agentic, how would you define that? Because there are a lot of different people using it in different contexts.

Pierre Charchaflian: Yeah. Without geeking out on it, to me, at the end of the day, what agentic does is it allows an agentic transformation of a workflow. Think of it as intelligent workers. It’s the replacement of people that are making decisions based on inputs of data to orchestrate a process or a workflow on behalf of someone. So we are doing it today in terms of going onto a ChatGPT and trying to answer a question. But it actually goes beyond that, well beyond that. It can go in and say, “I placed an order,” and then agentic looks at the order. It is intelligent enough to go and check in the warehouse and say, “Wait a second, do I have that product? If I don’t have that product, I’ll come back and make a recommendation for Pierre about a substitute product.” Or it can say, “Hey, you’re going on vacation. I can’t get you that product on time. How about if I ship [00:13:00] that package to your destination?” So it’s the intelligent orchestration of tasks together to achieve a process and replace humans. Now imagine doing that without gen AI: a person would have to go through that process, reason, and come back. Almost like a clerk in a store: “I don’t have that product. If you give me the address of where you’re going, I can ship it to you.” But imagine doing all of that through an agentic application that does that. We are on the cusp of probably the most exciting transformation of customer experience that I’ve seen, and I’ve seen many transformations. I would say we’re on the cusp of really, really transforming how brands interact with customers. So to me, agentic is an intelligent digital co-worker, a digital worker that can make decisions and execute not just a task, but an entire workflow on behalf of you as a customer or you as an [00:14:00] employee.

Stacy Sherman: On a small scale, I’ve been using it a lot in the way of Claude Cowork. And for people that know Claude, you’ll know exactly what I mean, and for those that don’t, it’s incredible. I mean, it’s looking at my computer, and it’s doing tasks and working with me and analyzing stuff and writing comments in my documents. It truly is like I have a team of 10 people.

Pierre Charchaflian: I think it’s truly transformative, and I think we’re just merely scratching the surface of the potential of what it can do.

Stacy Sherman: Yes, absolutely. When we talk about the functions and tasks that are saved by agentic AI and it’s orchestrated across an entire customer journey, where does, in your opinion, the emotional level and the sentiments come into play? Because we know that humans are emotional beings, and we [00:15:00] can’t ignore that, but yet AI is robotic.

Pierre Charchaflian: Yeah, it’s a good question. I haven’t thought about the emotional being of a customer. I think that to me is a higher-level frontier of customer trust and intimacy. And I think customers, if we build the right trust with a customer, the customer can share that information with us, and we can be able to customize and personalize our experience based on that. But I think it’s a bit too dangerous to have gen AI try to interpret the emotional state of someone. Gen AI is very smart, but it’s also limited by the data that it can ingest and act upon. So I would say I’m going to trust that if a customer is giving a brand a certain level of data and we’re responding with that data in the context that is delivering value to that customer, that we’re going to be delivering on that emotional being or emotional state of a customer. Maybe you can elaborate a little more on that so I can answer in a different context, Stacy.

Stacy Sherman: Yeah, well, what you said is very fair. I’ll shed a little light on that in terms of using AI to look at all of your customer conversations — both structured data like the surveys and the customer service calls, feeding the system all that information — as well as the unstructured conversations on social media and rating reviews. [00:16:00] Bringing that all together, AI can actually detect the positive and negative frustrations and use that to anticipate: is someone going to leave? Are people talking about a lawsuit? And predict: this is going to be costly. We’ve got to get bells ringing.

Pierre Charchaflian: Yes. No, for sure. I did build a solution for one of the largest automotive retailers in the country of basically doing just that. Taking their customer satisfaction survey, right, and being able to take that content and feed it into a gen [00:17:00] engine and say, “Okay, what’s the tonality of that content? Is it angry? Is it happy? Is it frustrated? Is it satisfied? Is it elated?” And being able to come back and do two things. Number one, speak back to the customer in the tone that is appropriate. But also build the next action to say, “I need to route this comment to operations. I need to route this comment to marketing. I need to route this comment to store ops,” and so on and so forth. So I think gen AI could play a really, really good role in deciphering that. Again, it does have the ability to really understand intent and meaning and being able to make intelligent decisions based on it. So for sure, Stacy.

Stacy Sherman: Yeah, I recommend every person listening make sure that you are measuring the positive and negatives, you’re using the tools and technology to save you time in analyzing, and then using those insights. It’s really powerful. On [00:18:00] that note, do you have a favorite metric to measure customer experience in this day and age, outside the traditional Net Promoter Score and CSAT?

Pierre Charchaflian: Yeah. I mean, to me, I’m a behavioralist, right? Customers can say yes and no, but at the end of the day, what matters is what they do. To me, it does come down to engagement. It does come down to transactions. It does come down to visits. Ultimately, that’s what matters at the end of the day. We could have the happiest customers, but if they’re not buying from us, that’s a missed opportunity. I go back to conversion. I go back to conversion as the number one metric that matters at the end of the day, right? If I get someone to buy — price, quality, satisfaction, loyalty, all of those — that conversion is the moment of truth. And I think everything else is secondary, with all honesty. So I always have that conversion number. Again, you can drive traffic to a website, [00:19:00] and top of the funnel could be great, but at the end of the day, a brand doesn’t make money until someone buys. So I’m very keen on that conversion number because, like I said, it’s really the moment of truth in a relationship.

Stacy Sherman: Leadership. As a leader, you’ve been with many teams. You’ve also had bosses of your own. When you think about it all, what’s the best leadership advice you’ve ever received or been given?

Pierre Charchaflian: One of the things that one of my first bosses ever said to me, and I repeat it to everyone, is: “Go figure out your T model.” Right? Your T model, as in the letter T, meaning for you to be successful, you have to be good at a lot of things that your job requires. But you’ve got to pick that one thing that you’re an expert in, that you have passion around. And if you can’t find it, you’re never going to be happy in your job, and you’re going to compromise your success. So I would say the best advice that I’ve been given, and the advice that I give to everyone that I [00:20:00] work with and that works in my organization, is find your T model. It’s okay not to be great at everything, but find that one thing that you are really going to be the expert in and find that passion around it. Because at the end of the day, we all have jobs, and a lot of the tasks in our job don’t make us get out of bed in the morning. But it’s that one dimension that allows us to have passion. From a leadership perspective, I think you’ve got to do two things. One, you’ve got to give people the vision. You’ve got to tell them where you’re going. That’s always been a trait of mine — communicating the purpose of what we’re doing today and really allowing people to operate freely with that guiding light of where we’re going. And most of the time, people end up performing really well in that environment. So I would say those two things are what have always stuck with me and that I’ve always shared with everyone else.

Stacy Sherman: Currently, right now, when you’re talking about vision, and earlier in our conversation you [00:21:00] spoke about the importance of anticipation of customer needs and designing those experiences. Would you say that is the vision that you’re communicating, that you’re striving for?

Pierre Charchaflian: Absolutely. With every CMO that I’m working with right now, there are really two visions that we’re driving. One is an internal vision and one is external. The internal vision is all around how do I transform my marketing operations with this new technology that’s emerging, so I can maximize the efficiency with generative AI. We know that generative AI can create content. We know generative AI can make decisions. So with that, there are tremendous opportunities to reduce costs. With that efficiency gained, how do I take those cost savings and that incremental investment and really place it in transforming the customer experience? Because I talk to CMOs all the time, and nobody’s getting [00:22:00] significant increases in budgets. As a matter of fact, the name of the game is cut, cut, cut. So CMOs have to find a way to fund their own growth. And we’re finding the message and the passion around two things. One is how do you reduce your cost and leverage this technology to drive efficiencies in the process? But the growth is going to come from how do I take that investment and really invest it in transforming my customer experience, so I can anticipate the needs of my customers, so I can deliver that personalization, and I increase the conversion of my customers? That’s really the agenda that we’re driving, and I think it’s getting a lot of traction. And the sequence matters as well: really drive the efficiency to fuel the growth of the brand.

Stacy Sherman: And get ahead of it.

Pierre Charchaflian: 100%. Yeah, for sure.

Stacy Sherman: My last question, my favorite one. I’ve asked over 200 people. Pierre, if you could go back in time and talk to your younger 20-year-old self, based on what you know now that you didn’t know then, what would you say [00:23:00] to the younger you?

Pierre Charchaflian: I would say take more risks. When you’re young, you can afford to take risks. Take risks with your career, take risks with endeavors, take risks even within your job. And if you have your passion driving that risk, I think you’re going to be okay. In your 20s, you’re going to have a lot more time to make up. Even if you make a mistake, you’re going to be so much smarter from the mistake that you made and the lessons that you’ve learned. So I would say take more risks, and with hard work, and as long as the risks are coming from the right source — from passion — you’re going to be more than okay.

Stacy Sherman: I’ll need to play this for my young adult children in their 20s.

Pierre Charchaflian: Maybe they can talk to my young children in their 20s, because they don’t listen to me.

Stacy Sherman: Well, that is true. I think about what I knew then and I didn’t look at time in that I had so much more going forward, [00:24:00] and that I could take the risks. But yeah, it’s a really good topic. It could be an hour conversation.

Pierre Charchaflian: Yeah, for sure. For sure. I wish I took more risks, whether that’s starting my own business, or taking an idea to my boss that I was just too afraid to do, or actually going and building something on my own time and sharing it. There are a lot of ways to take risks without being foolish, obviously, that I think could have some good rewards and really good learning experiences as well.

Stacy Sherman: Yeah. And to kids who are in college, I heard a saying which is really good about risk, and that is: be really smart when you’re doing dumb things.

Pierre Charchaflian: Yes. That would be a risk. Yes, that’s a good idea of a risk.

Stacy Sherman: Yes. Well, thank you, Pierre, so much for being here, and I will share more about the Winning the Moment report and you and all about IBM’s [00:25:00] newest, latest, greatest things in the show notes. So thank you for being here.

Pierre Charchaflian: Thank you, Stacy, and thank you for having me.

Stacy Sherman: [00:00:00] Hello, Martin. Welcome to the Doing CX Right show.

Martin Villanueva: Thank you. Thank you for having me.

Stacy Sherman: I am thrilled to have you, and it’s also really cool because you’re in Amsterdam and I’m in the United States, and we are so far apart, yet I feel so close to you right now.

Martin Villanueva: Thank you. Me too. We had a really nice conversation before recording, right?

Stacy Sherman: Yeah. Yeah, we did, and so now it’s time to let the audience hear our fabulous thoughts together. But before we do, can you give a little glimpse of who you are? What do you do professionally?

Martin Villanueva: So I’m Martin, originally from Argentina, living in Amsterdam, as you said, and I work for IKEA.

I have a global role. I’m responsible for personalization and loyalty in this IKEA world.

Stacy Sherman: IKEA, I know the brand very well, and a customer of IKEA for many years, and I bet many listeners will say the same. So we’ll dive into what makes people loyal to IKEA and some of the work you do. But before, what is a fun fact [00:01:00] about you that people might not know?

Martin Villanueva: Something that people don’t know. Well, that I work at anything I could in Australia. I even cleaned toilets in a hotel, for example, or I was a Spanish teacher in Australia, or I sold used secondhand cars as well. So like I did so many things which made me go out and experience a lot of stuff.

Stacy Sherman: Wow, cleaning toilets and these other roles.

I guess you were delivering a customer experience without really defining it at that time. Yeah, totally. So when I say doing customer experience right, what does that mean to you from the lens of loyalty and customer retention?

Martin Villanueva: I work for many brands, for many big- Mm-hmm … huge corporations, most brands in the world, Nike, Adidas, McDonald’s, and now IKEA, and what I’ve noticed is that many of them separate CX over here, loyalty over there, service in another team, and personalization somewhere else.

But customers don’t experience companies or brands in silos, right? They experience one brand only. If your loyalty program [00:02:00] says, “We know you. Thank you for sharing this data with us,” but then you go to customer support and it says- Well, can you start over and explain everything again? That’s not loyalty, that’s fragmentation, right?

So the brands that do this right can create an actual experience where every touchpoint reinforces the same feeling, right? So that’s how I will see CX done right. When you feel that the brand gets you, that it helps you, and it makes your life better, that’s what I will say it’s a good CX.

Stacy Sherman: Yes, and I also say that customers do not care about your org chart.

No. But yet silos is everywhere. I’ve worked for over 25 years in corporate and mid-size companies. So when you say that silos is problematic, and I agree, how do you stop that? Can you stop that?

Martin Villanueva: It’s very difficult, and of course, you were talking about org charts and people, and people in corporate that we do this every single day.

And I think it’s one of the biggest challenges around how you can stop those silos to [00:03:00] happen because everybody in any company wants to do their job right, and they have their own objectives, and they want to reach out to those OKRs from the inside, right? But from the outside, it’s not what the customers will see.

They will see silos. I guess what you can do is just to try to align strategies and try to get to the same objective if you can and try to merge it as you can. Nowadays, I work on personalization, for example, and we always say personalization can be everywhere or it can be nowhere because it’s so broad.

Yeah, be aligned to many topics like loyalty, customer support, marketing, you name it. So we are trying to find those alignments within those areas to have a unique experience, seamless experience.

Stacy Sherman: Alignment is a great word. The way I would create alignment across the different departments is through a tool of journey mapping.

Has that been something you’ve done or found valuable?

Martin Villanueva: Absolutely. That’s one of the first things I did in my role at [00:04:00] Ikea. We built a full customer journey within different customers, putting on each moment of interaction with the consumers which opportunity we could apply for loyalty and for personalizations.

When you are scrolling on your phone and your, uh, social media, since that moment to when you actually do a purchase in store and you buy a hotdog when you leave. So we did all these experiments and all this, uh, mapping, and it really, really helped us.

Stacy Sherman: And for listeners, you might be saying, “Well, what does journey mapping have to do with silos?”

Well, the answer is that by bringing every department together into the same room and mapping out walking in the customer’s shoes, how they learn, buy, get, use, pay, get help, every role understands the domino effect and how they affect each other. So I love, Martín, that you said you do that, and it’s so important.

Martin Villanueva: Yeah, totally agree. And one thing that we all need to understand in the industry is that sometimes personalization will lead, [00:05:00] sometimes loyalty will lead, sometimes customer support will lead. So if we get that right, everybody will know their role and their part in each moment of that interaction, and that’s putting the customer in the center, right?

It’s not putting the topic in the center.

Stacy Sherman: So research has shown that companies spend so much more money to acquire a new customer, and they’re focusing on acquiring new, getting new than retaining an existing customer. It’s like they’re not loving the ones they have, in, to quote myself. Yeah. Most budgets are still skewed towards acquisition, and we know that loyalty is important.

Yet a lot of those in roles like you and I have that we have to make the financial case to the C-suite that loyalty programs deserve an investment. So first question is: What’s your advice how to get the C-suite to believe that loyalty matters, that you need to [00:06:00] focus on loyalty programs?

Martin Villanueva: That’s a great question, and it’s part of what I’ve been doing in, in these last 15 years with all these companies.

It, it’s a key question, and it, maybe it’s difficult to apply it. But first of all, I will try to move the conversation away from loyalty as a cost center, you know, as something that will bring costs, and bring it towards loyalty as a growth engine. Because when loyalty is done right, it improves multiple levers at once.

So you can think about frequency, basket size, retention, CLTV, advocacy, first data, quality, you name it. There are several metrics that it can improve. So when I talk with executives and I have these conversations, my first question was why loyalty often gets underfunded, right? And, and it’s not because leaders disagree with it.

I think everyone agrees that loyalty programs are really, really important. But I think sometimes it gets framed as a, a nice-to-have marketing layer, you know, instead of a business model multiplier. It will multiply your business in many ways. So I usually make the case, I use, like, maybe three, four [00:07:00] models or conversation topics to change this around.

The first one is the retention economics. We all know that keeping customers longer generally improves profitability, right? And it’s more efficient to do this than to replace churn with new acquisition. So that’s the first one, and there is no battling against it. I mean, it makes sense, and it’s in lo- in all the books, right?

Second is the behavioral value. Loyal customers don’t just buy more, but they trust you more. They, they forgive you more of the things that the brand, uh, maybe is doing wrong or is not doing correctly. So they engage more. They give you permission to know them better, so that’s amazing as well. So there’s your behavioral value within.

And then the strategic, maybe resilience about it. It’s, acquisition is getting more expensive day by day. We all know that. So attention is fragmented. I can experience myself on social media, right? AI will make comparison even easier. So retentions becomes a defensive, a defensive layer. I think also really, really important to understand.

If you don’t invest in loyalty, you’re choosing to rent your growth instead of owning it, you know? So [00:08:00] Yeah, that’s what I would say.

Stacy Sherman: When we talk about loyalty, I feel like it’s so overused, it’s becoming cliche. Yes. It is. So how can we reframe that? What could we help the audience listeners understand when we say loyalty, even loyalty programs, what are we talking about from your perspective?

Martin Villanueva: I think it’s getting a cliche because all loyalty programs today are reward systems. I truly believe that. When they should be designing loyalty programs as relationship systems, right? So you go from rewards to relationships, and that, I think that’s the biggest cliche ever, and people are not understanding it completely.

They give discounts. They start with maybe a birthday email, maybe a tier structure. Remember when I worked at Nike, we had all these tiers, and we tried to simplify the program. So now it was called Nike+ and now it’s just called Nike Membership because that’s it. Everybody that buys at Nike and it’s a member receives the same benefits.

It’s a relationship status. It’s not that I’m gonna treat you differently, right? And that’s not nice in a [00:09:00] relationship. That’s what I do every single day when I interact with a brand. Like, why should I share my data with you? We are not thinking as customers, because I am a customer, too. How many points do I get per euro?

Like airlines, for example. How many points do I get? That’s an example that we all do, but then mostly we are focused on relationships with customers.

Stacy Sherman: Why should I have a relationship with you? I wanna pause on that. That is such a important point. Now, as customers, we’re not actually saying that to ourselves out loud.

Mm. If neuroscience and psychologists were here, they probably could really lend some insights here that that is really what’s going on in our minds as we think and feel- Hmm … at every interaction.

Martin Villanueva: It’s also a hot topic. In every conference I go or I speak, professionals tend to speak about relationships, right?

Like emotional loyalty. That’s also a, a very hot topic nowadays, but I don’t think everybody’s getting it correctly because a relationship should be both ways. It’s not [00:10:00] just one way, and that’s how I would start answering your question. How do you generate trust with another person, for example? It’s by sharing both of you- Things of yourself, things that you actually care about, and then you start building that trust and start sharing more with the other person.

And I think that’s exactly what is happening or, or what should happen with brands. Like, we should actually get to an instance of trust with a brand. I hope we can get it with Ikea. I think we have a really good brand trust. That’s where it should be, based in trust, and that’s how you build a relationship, and that’s what we are pursuing.

Stacy Sherman: So pursuing, how do you know that your loyalty initiatives are working? What are your favorite metrics to actually know that you’re doing it right?

Martin Villanueva: Many. I will say customer lifetime value could be one of my favorite ones. To go a step below, I should say I like metrics that connect behavior, economics, and the emotional and strength that it builds.

So I care about the classics, of course, repeat purchase rate, frequency, CLTV, as I mentioned, active member rate, churn. But I also want to [00:11:00] know, and I also will also pursue and, uh, try to understand, are members getting more engaged over time, for example? That’s a question I, I make myself. Are we increasing relevance, not just activity?

Because activity is, it’s not a good indicator, right? That we are actually getting more from the customers. That’s another question I do. It’s like, are we earning more permission from customers to personalize? And that’s a signal of trust. That’s what I was talking about before. It’s like, are they actually sharing more data with us?

Are we asking them questions and they are replying? Are we reducing friction in service and experience? So maybe they are soft questions, but I think they are really important.

Stacy Sherman: You mentioned a word before and I wanna dig into emotion. Say more. How is emotion important in business and even in the loyalty initiatives that you’re working on?

Because a lot of companies say emotions don’t matter. They’re very transactional. They’re very profit-driven. So where does emotion come into this?

Martin Villanueva: Of course, emotions are different from person to person or human to [00:12:00] human. They are different than a brand to human or human to brand. I think we all expect when we have a level of trust with a brand is to get some value from it, and that value will bring me some emotions.

If a brand knows me or I, I share with a brand data for the brand to know me and understand me, what I’m expecting is some value for me which will bring me better choices, better life, better commitment to the brand. So I kind of relate emotion to value.

Stacy Sherman: When you’ve done a journey mapping with your teams, where does emotion come into that exercise?

Martin Villanueva: Not specifically. We, we don’t put emotion in the, in every single touchpoint because that will feel creepy. You know what I mean? If we think about getting emotional connections in every single touchpoint of the journey, it will start feeling like too much. It’s like when you ask chatGPT for answers and it says Oh, that’s amazing, Martin.

You– Good job. And at some point, you start feeling like, well, stop talking like that. You know? Like, stop telling me, like, being so soft and gentle with me. It’s not [00:13:00] true. It’s not how I want to experience this. Try just to be human, human-centric, and then understanding the consumers from another perspective, which, yeah, that brings emotions.

That brings good vibes and good intentions. And so that’s the spirit, you know, when you talk about emotion.

Stacy Sherman: My two cents is, and I agree with what you’re saying, when you are designing the experiences at these micro moments, you do have to ask yourself as a team, are we creating a positive or negative experience, that emotional connection to the brand?

So it may not be specifically happy, overjoyed. You know, like, it, it can get a bit over the top. But as a rule, it has to be positive at every micro moment. So let me ask you this: AI. How does AI affect these loyalty programs and designing these initiatives? Is AI a factor? Is it helpful or not?

Martin Villanueva: Absolutely, and mostly for personalization.

Personalization will [00:14:00] be the base of a- any loyalty program in the near future. Maybe next year should be the average for e- every big brand. And then you can’t personalize without AI, I think. But it’s not about just making it more efficient. It’s not about sending more personalized messages to more people.

It’s about making it more relevant and more human, and that’s what we are aiming for at IKEA. We want to use AI in a way that it can be relevant to you and bring value to you, the consumer, in a human way. Because you can automate more generic messages faster, but it will be irrelevant, right? Last year, I focused in this keynote I, I did.

The title was, “Can You Actually Fall in Love with a Brand?” How AI is changing the intimacy within brands and consumers. I touch upon the base of building trust. At some point, agents will speak to agents, right? So your agent, Stacy, will talk to any brand’s agent, and it will try to understand it, and it will try to buy things from it.

So where does loyalty stands in that specific moment of loyalty, like agents talking to agents? So I think that trust will be the major [00:15:00] topic next year or even this one. How you can actually, as a human, say, “Hey, agent, you can trust IKEA. You can trust Nike. You can trust Adidas. This is a brand I trust.

This is a brand that goes with my ideas, my values, so go just interact with it.” And I think that’s gonna be more difficult for brands coming in to play, rather than the ones that have already a reputation and have already trust built with consumers.

Stacy Sherman: Yeah, and the reason this is so important, which is another whole conversation another day, is that AI is recommending brands.

We’re becoming in a zero-click economy, and therefore what people say about your brand and those sentiments out in the public matter so much more than they ever did before. For someone listening who wants to start a loyalty program in their company, what’s your advice to them? What are two, three things they should go do right now?

Martin Villanueva: Try not to think about rewards. Try not to think about promotions, discounts. Try to think about generating a connection with the [00:16:00] consumer. Focus on that. Focus on trying to understand that customer. So I think if you scale it, you can actually think about generating value to the consumers, and that’s what I would start.

How do I generate the value to us, the consumers? That’s what I will start with

Stacy Sherman: At IKEA, you know what works. Without giving any trade secrets away, is there something that IKEA’s really known for in team on some of the things you’re actually doing? Can you shed any light on that?

Martin Villanueva: I think I said some stuff already, but IKEA is well known by generating the transparency and building trust with its consumers and everybody that enters to the store.

So I think we try to follow these values in every single thing we do. You name it, personalization, loyalty, customer support, and being human. That’s also a very big value from IKEA, and that’s w- how we are well known, for being human. And that’s our biggest metric.

Stacy Sherman: So to get tactical, you’re starting with values- Yeah

and then making sure that everybody at every touchpoint is acting upon that shared [00:17:00] value. Is that what you’re saying?

Martin Villanueva: Exactly like that. Values are- Okay … the starting point at IKEA.

Stacy Sherman: Okay. So give us one more. You’ve got your values. Now you’re creating a program. You’re creating personalization. What’s something people can literally go do in terms of optimizing that loyalty program?

Martin Villanueva: I think you start with the values, and you try to actually continue with the brand proposition and be an extension of the brand. From the values, you start building value to the customer. Why would I be sharing data with you? Why would I be sharing data with IKEA? Why would I share, as a customer, data with you if it’s not bringing me any value or it’s not bringing me anything to this relationship?

I’m just sharing with you. What are you sharing with me? That, I will say that’s, uh, really, really important, and we really consider that.

Stacy Sherman: So are you saying when you design any program, you are making sure that there’s a value exchange- Yeah … with that customer so that they want to give you their information?

So you’re designing a program, that exchange is [00:18:00] easy, simple, and that they want to.

Martin Villanueva: 100%, and that’s what I meant when I said a two-ways relationship.

Stacy Sherman: All right, final questions. What is the most important takeaway you want people to remember from this conversation?

Martin Villanueva: Build trust, build a program that it’s built to last, and always, always keep the customer in the center, and always put yourself as a customer.

That’s what I do every single day.

Stacy Sherman: Go be your customer. Get on the calls with your customer service team. Exactly. Oh, there’s so much to say on that. So

Martin Villanueva: much to say, and, and, you know, at every IKEA office in the world, they are based in a store. So actually, every single day, we have to go through the store and see people interact and customers interact with our products in real time.

Stacy Sherman: That’s well said, and I… Everybody listening can go do that. Go be your own customer and go observe. Love that. And leadership, best leadership advice you’ve ever received or given.

Martin Villanueva: Try to move the needle when it will generate value. [00:19:00] Don’t try to shake status quo just for doing it. When I was younger, I wanted to change everything in my area.

We should now put AI into working and changing everything radically, and the main questions came, and they were, like, very simple. Why would we do that if this is actually giving real good value? We should focus on things that will move the needle in the right direction, and not just doing it because it’s a trend.

Stacy Sherman: I have to comment on that, because in my corporate life, there’d be so many reorganizations, and I felt like it, they were just changing for change. It wasn’t purposeful, and it was disruptive, and it was happening every six months. And so I love that point, and I hope that leaders listening to this understand that, that change just to change, it, it’s gotta be valuable, and learn from every change.

Just don’t change just to say you did it.

Martin Villanueva: Exactly. Exactly. Not everything needs to be changed every single time.

Stacy Sherman: Yeah. And my favorite question of the entire show, if you could go back in time to your younger 20-year-old self, based [00:20:00] on what you know now that you didn’t know then, Martin, what would you say to the younger you?

Martin Villanueva: I will tell me, my first thing is go do it. If the opportunity is out there, go do it and pursue it. Try everything you can try. Always healthy, stay healthy, but try everything, everything that, that you see as an opportunity, because you will learn from it, and you will get it right in the end. So that’s what I will say.

Go for it. If you have to clean floors just to surf in the afternoon, go for it. If you need to sell cars just to buy a ticket to go and study in, uh, Hong Kong like I did, go for it. And then if you need to move across the world like I did with all my family from Argentina to Amsterdam to pursue another opportunity, do it.

Life is too short, and I think it’s worth it to try.

Stacy Sherman: To try, and I would say don’t even try, just do. Do it. Don’t try. Try is thinking. Try is pondering and hoping. You did it.

Martin Villanueva: Yes, exactly. Just do it.

Stacy Sherman: Just do it. Nike says that very well. Well, before we go, I [00:21:00] wanted you to tell one short story that I got the same thing from my mom growing up.

Please, share your story about Mom.

Martin Villanueva: So our conversation started off the record. Stacy asked me about my birth date, and I said, “Well, tomorrow is my 40 birthday,” which is quite a coincidence. But then she was doubting about her age, and she was, like, counting the years, et cetera, and I was like, “Well, my mom never said her own age.

She always said she was 24.” And until we were 12, 14 years old, she was, like, still saying, “I’m turning 24.” And we still believed her at some point, but then we realized it didn’t. But then herely- Yeah … you have the same case.

Stacy Sherman: So my mom every year would say, “I’m 21.” Then the next year, “I’m 21,” and then, “21.” And then eventually I got smart and I said, “Mom, you can’t be 21 every year.”

And she said, “Oh, you’re right, I’m 21 plus this year.” 21 plus. And so that’s been the running joke. And so I love that our moms from all different parts of the [00:22:00] world have a great philosophy about age and youth.

Martin Villanueva: Go moms. Go moms.

Stacy Sherman: Well, thank you so much for being on this show, and I really appreciate you and your insights, and I’ll share all about you and ways to connect with you in the show notes.

So thank you again.

Martin Villanueva: Thank you, Stacy. It’s been a pleasure. Thank you so much.