Adobe Inc. (ADBE) Earnings Call Transcript & Summary

Thanks.

And stop by the booths. Bye.

So I'm so excited to be here with you today. So my name is Olivia Kwon Best. I am Adobe's GM of Digital Strategy Group for Retail and Consumer Goods. So a little bit about myself. So I've spent over 20 years driving omnichannel transformation in retail both as a strategy consultant, as a retail executive, so I'm also ex-Macy's, and now as a software provider. So I'm really excited to have Bennett Fox-Glassman, SVP of Macy's customer journey, here with us to share this really iconic brand's story of how they're using personalization to drive really amazing customer experiences. So Bennett, tell us a little bit more about yourself and your role.

Thank you, Olivia, and thank you for having us here today to tell that story. As Olivia said, I'm Bennett Fox-Glassman. I'm Senior Vice President of Customer Journey at Macy's. I am -- I would tell you, I'm a retail enthusiast, as I'm sure many of us in this room are. Hard to be in this business if you don't love it. And as many of us also know, retail is such a team sport. And so my time at Macy's has really been -- could path through all the different parts of the company. I've gotten to work with so many different teams and so many different parts of the organization. And that's been really formative in my career at Macy's and also, I think, has really set me up for customer journey and the role in the team that I lead today. Customer journey is a new concept that we introduced a couple of years ago. Our reason for being is really to bring together all of the different parts of the company around the customer and to make the company, to make Macy's more customer-obsessed, more customer-driven every day and in everything we do, whether that's in how we plan product, whether that's in how we deliver store experience, digital experience and so on. And so customer journey at Macy's, we have consumer insights and analytics, how do we understand our shopper and what they do and what they're interested in. We have some of the technologies we'll talk about today that powers better and richer experiences for our customer and then the programs that we rely on in order to create customer-led, customer-driven growth like loyalty, like our owned media and notably like personalization.

So that's a really unique role, and I love that because I feel like when we speak to different customers, one of the challenges that's often cited is being able to cut through the departmental or functional or channel silos. So I think you guys are really headed in the right direction. So I think personalization continues to be one of the most relevant topics in retail. And I think the reason why is that many retailers -- I mean it's not a new concept as we all know. But the reason why is that retailers still struggle to deliver it at scale in a connected way to all customers in real time across all channels. So tell us a little bit about -- more about your strategy.

So personalization to us means context and relevance, right? So often, we are attempting to have a conversation with our customers, but we pick up as if we don't know you. You may have been a Macy's customer, some of you in this room, for 20 years. But when you come to us, if I know you and I bump into you, I don't say, "Hi, I'm Bennett. It's nice to meet you." I say, "Hey, great to see you. How have you been? How are your kids," right? Like I bring context to that conversation. And that's really what we're aiming to do with personalization is how do we make sure we pick up where we left off, how do we make sure we bring context to each conversation and interaction we have with you. And so you can see here sort of a funnel view to thinking about that, we expect personalization to drive relevance all throughout the customer's journey with Macy's; whether that's when you're top of funnel and we're thinking about inspiring and attracting a specific customer to the brand; whether that's as you move down the funnel and we're thinking about how do we engage you, how do we provide you relevant product, how do we provide you relevant experience; whether it's as you move even lower in the funnel and we're thinking about how do we convert, right, what is that offer, what is that communication at the moment of purchase that's really going to get you over the line. And then finally, how do we use personalization in order to drive rich engaged relationships over time and that feedback loop over time as we think about growing customer lifetime value, which is a term I know a lot of us use, but it can often be hard to put into practice. How do we enrich that relationship over time in a way that delivers loyalty and then ultimately, as a result of that, sales and profitable growth.

Yes, yes. And that is the Holy Grail, right? So most retailers have been at this for a while. So tell us a little bit about what's new and different now.

I think you hit in your question a minute ago on some of the things that are most important to me.

Yes.

We have -- many of us have been doing personalization for a long time, and I would expect many of you in the room feel that way, too, right? I'm doing some personalization. It's not like I'm at 0, whether that's through e-mail or whether that's through paid media or product recommendations maybe. But what I think is different and what we're finally really getting to, in my view, is, a, we are getting to a point where we really can get more one-to-one. Historically, it's been larger segments or smaller segments. We're really getting to a point with all the technology coming into the market where one-to-one is more practical. We are getting to a point where we can really do it in real time, right, where an action you took just now not only can inform how I speak to you in that same channel but in another channel. And finally, to that point, we're doing it in a connected way, right? Again, I -- you want the conversation to feel like I know you regardless of where you show up in my experience, whether that's digital or stores or the contact center or somewhere else. And so being able to connect it across channels, I think we're having a breakthrough in that as well.

Okay. So let's drill deeper. So tell us about the specific capabilities that you guys are using to really execute on that strategy and vision.

There are 5 -- I've got a visual aid for you all here. I think they flow quite logically, though. The first to me is can we bring that data in -- all the phones went up. I love that. Thank you. That was good. All right. It's a good slide. Noted. The first is really data foundations, right? Can you bring your data and have it centralized in one place where you can actually get at it, right? Again, those of you who work in this area know that just having like data unification, this is nontrivial. So getting it all in one place where you can use it. Then being able to access it. I can actually understand what it's telling me. My marketers, my analysts can actually get access to that data. Deciding what should I do with it, what comes next, right? What is the action that I want to take with my customer? Then being able to create a message around that, put that into something you could actually deliver to a customer and finally do that and do that across channels. I think of those as kind of the breakdown of what do you have to do to actually deliver personalization and to do it at scale.

So these desired capabilities are very much in line with what we see many retailers trying to seek. So tell me about kind of what use cases are you going to execute with those. Because often, we do find some organizations have a very strong library of use cases road mapped out. So tell us a little bit more about yours.

We started with a list of many. And one of the best things I think we did actually was to choose at the early onset to focus on a few. And so a handful of ones that we have focused on early, they include first-to-second purchase for that new customer I bring in. How do I get them to that second interaction with the brand? Include helping to -- for -- particularly for Macy's as a department store, one of our great strengths is the ability to sell many categories and to put it all together. And so to complete the look and build the outfit for our customer. Another great strength we have as a brand is the strong omnichannel nature of our business. We have many stores across the country. We have an incredibly strong digital business. And not only do our customers love that about the Macy's brand, but those are our most engaged customers. And so helping customers who may be shopping more in one channel or another to see the benefits and to engage with us on an omnichannel basis. For members of our loyalty program, really helping them to understand the benefits of that program and engage. And if we see them doing -- transacting outside the program, how do we make sure they're seeing and realizing the benefits of Macy's Star Rewards? And finally, for those customers, tear to my eye, who we start to see engage less with the brand, how do we get them to reengage? How do we re-up their interest and retrigger whatever brought them to our amazing brand to begin with? So we've started with those 5, and I think it's -- there's plenty of room to grow there.

Yes. So what I love about these use cases is that I feel like it really covers a full customer life cycle, from getting that very important first-to-second purchase, right, building more engagement, increasing the basket and then also just winning back potentially lapsing customers. So let's segue into kind of the role of the technology, right? So we all know you need technology to enable these capabilities. So how did you go about choosing the right technology platform and partner?

A few things were important to me -- continue to be important to me as we evaluate who are our ecosystem of partners around personalization. First off, it is critical to me that our partners be vision-aligned. They have to share what we want to accomplish. They have to share the level of ambition, right? It's not just like we're sort of doing this space. Like we're in it to win and to really transform the customer experience through the technology that we're delivering. We look for partners who deliver and can deliver at scale. Macy's is a large brand and a complex brand, and we want to make sure that the customer doesn't feel that, right, that they feel the personal interaction. And so companies who are able to do that and who are able to scale with us and who are able to work at the speed that we want to work. My partners, any of them in the room will joke -- will know that I'm very serious when I say we want to move fast. And I say this to people sometimes and they're like, okay, most brands will, and then they feel it after a few months of working with us.

And we did.

And so we're intense about it. But because we are fueled by what the customer is looking for us, and the customer is changing and evolving so quickly, and that's our North Star. And so we're chasing that. And our -- we expect our partners to race towards it with us. And then finally, personalization, as those of you who work on it know, is complex in terms of how you have to drive change and how you have to drive that change across the organization and with your partners. And so a partner who is able to help think about that operational change, the change management. And so Adobe has been great on all those dimensions. I think you actually put personalization into your company's mission last year, and that was exciting to me. And ACS or the consulting arm have been great partners to us as we think about the change. So thank you for all you have done to live up to that goal, but we really do. It's a high bar that we set and hold on the team for our partners.

Yes. And it is true. So Adobe's entire go-to-market is personalization at scale. And I think that we really did find a common shared vision upfront, and I feel like that's really helped pave the way for the partnership. And we have really been privileged to help you along this journey. So tell us a little bit more about the specific technologies that you're using to enable these capabilities.

So I'll walk through it again sort of from beginning to end. And I find it's helpful to use a specific example. So let's take first-to-second purchase as an example. Data foundation, being able to bring all that in one place, as I said, so capturing knowing where that customer came in. What we learned about the customer as they had that first purchase interaction with us, understanding which channel that was in, what category they may have purchased, what price point perhaps they purchased at and maybe geographically where they're based. A lot of information you can learn about a customer in an initial interaction. And so making sure we have all of that, we have all of that consolidated is an important first step. Then, as I mentioned, being able to give this to our marketers and to our analysts so that we say, okay, how does this align with our strategy, right? None of this is without the context of what you're trying to do with the brand and how you're trying to grow or what your merchandising strategies are. And so being able to marry those things because you can create access to the insights is important. So on that first dimension, we've stood up Adobe Experience Platform, AEP, and we've used it in conjunction with a product called Customer Journey Analytics in order to provide more and more real-time insight around the customer. And as we move through, what do I want to do next? And so we've done a lot of proprietary work here, actually building our own model. So if you've made a first purchase with us, I still have to decide what would I like to talk to you about next? What should that be? What's going to be engaging to you as a Macy's customer based on what I learned as you came in? And so again, whether that's category, whether that's channel, whether that's level of offer, whether that's price point, whether that's brand, we want to make sure we get that next interaction right. It's really important to retaining the customer. Putting it together with content and message. So we've been implementing Adobe Experience Manager, AEM, as a product to help us marry the marketing message, assets, content together in a more dynamic way in more like real time. As I mentioned earlier, it's an important part of how I think we're all transforming our experiences. And then finally, you got to practically get it out the door. And all these things sound easy, and I know all of you in the room who do this day in and day out know it's always harder than it sounds. But you got to get it out the door. And so Adobe Journey Optimizer has become an important part of our ecosystem there and to be able to deliver it as we talked about in a synchronous way across multiple channels. So whether you choose to come on to the website, whether you receive an e-mail, whether you show up somewhere else and I'm serving it through paid media, I want that message to be consistent so it feels like Macy's is talking to me and they get me and they know where we left the conversation off and they know where we're picking the conversation up.

Yes. And those are some really like truly aspirational capabilities because being able to connect that across those journeys is really important. And you guys are going after really tailoring one-to-one offers. If you're showing a potentially lapsing customer a particular product category offer 25% off on e-mail, well, when they show up on site, you better show them that consistent message. And it's really difficult to do that without an integrated technology platform. So we've been so excited to be on this journey with you. But moving beyond technology, and I think this is a really, really key learning from Macy's, is that I think organ op model is just as much, if not the most important thing, beyond the technology to make sure the teams adopt the technologies, you're getting the results and the benefits that you're seeking. So -- and you also have a very unique role as that SVP of Customer Journey, bringing along a lot of different disparate teams. So tell us about how you guys are driving adoption and success.

So I'm going to shout out to some of my team here in the room who I came to visit. They work hard every day in order to drive personalization across the enterprise in this way, right? Retail, I mentioned I'd said at the beginning, my deep held belief that retail is a team sport, and personalization is no exception to that. And so whether that is partnering with our merchants to understand their priorities, whether that is partnering with other marketing teams around the organization in order to ensure that this is part of the overall message that we're telling to the customer right now, right? We may be in the context of Mother's Day or Valentine's Day or Black Friday, we still want to make sure the way in which we're communicating to you feels relevant to you, but in the context of the overall brand story we're telling in that moment. And so having this team that's really focused on personalization as a capability, I think, has been incredibly powerful for us to navigate the organization and break down what traditionally may have been silos around whether particular marketing tactics or particular categories or however your business is structured, right? That could be regions, that could be brands for you, but having a team that really allows you to break through that and to put the customer at the center of the conversation in order to deliver that experience, we've found has been incredibly important.

And I love that it's not just like a talking point. You guys are actually executing it. So kudos to you. I know that Macy's is already seeing value, although we can't share the numbers. But tell us a bit how -- tell us about how you're measuring value and proving it to the entire organization.

One of the most important things to me on value has been that what we do with personalization is incremental. If we simply do something different, kind of moving value from the right pocket to the left pocket, we haven't accomplished anything for ourselves. We haven't accomplished anything for our customer. So again, we hold a very high bar for ourselves, for our partners about what does it look like to have succeeded. And we look at that in terms of incrementality and specifically incrementality at the customer level. Because again, that's my measure of success. I want to see that the customer is coming back to us more frequently. I want to see that they're having a longer length of relationship with Macy's. I want to see that they're engaging with more of our brands or more of our categories, right? All of these are indicators to me that they are deepening their relationship with us. And so we've been very excited about what we have seen early on with these journeys that we've talked about. We are seeing that incrementality at the customer level in a way that's meaningful, and we are very excited to continue scaling that as we move into 2024 in a way that drives meaningful growth for our business.

Yes. I love that. And we know that retail is tough, especially now. So we know that we need to drive incrementality, incremental results. And we're really excited to partner with you on the dashboard to make sure you have all that -- all those insights in real time. All right. So we do know that true transformation, I find, is a multiyear journey. So tell us a bit about where you are now.

I would still characterize us as being at the beginning. Even though, as I said, we've done personalization for a long time, and actually for many years. So it's not that it's brand new. But I'm so excited about where the speed of customer change is aligning with the technology to deliver better experience and how we are keeping up as an organization with the pace of that change. And so though we've been at this for a little while, I think of us as being still just at the beginning of delivering the type of really deep engaging customer experience that we're reaching for, for our customers.

Yes. We're all excited to work on the next set of use cases with you. So seeing more and more value. Okay. So to wrap up, what are some of the biggest learnings, those critical success factors that you can share with this audience?

I would absolutely prioritize. I spoke to our 5 use cases that we've been -- we've started with. But I think an early learning for us was make sure you pick a little bit at the beginning to start with. There's often a temptation to want to do it all or to want to buy into the big, big vision. But you got to start somewhere, and it's really helpful, I find to ground that starting point. Additionally, the point about not trying to do it alone. You have to do it with your partners around the organization. I have found you can't really leave anyone behind. Everybody has to understand how this is going to change not only the way that the customer experiences the brand, but the way that every single one of our functions has to work and think in order to successfully deliver on this experience. And once you really start comprehending the magnitude of that change, it can be quite intimidating. But it is, we find, so critical to making this stick and last and ultimately delivering for the customer.

Yes. I think you're so spot on with that because when we've looked at different retailers tackling transformation, we found that really, there's been 2 major paradigms. I think the old way has been letting all the different teams tackle personalization on their own, the e-mail team try to do better targeting with better data; the site team, improve the product recommendation algorithms. But I think those who have proven to be successful have created an enterprise-wide strategy because we do know that customers traverse multiple channels. So you need to make sure not only are your marketing and digital teams involved but your merchants, right? There may -- they may have to give up kind of more control around how the homepage looks like to really be customer-centric. So thank you so much for sharing the story. I think we've been so excited about this partnership. And if you guys have any questions, please come and chat with us. We also have the Adobe booth. And go shop at Macy's, which is only about 3 blocks away.

Come shop, open until 9 p.m. this evening.

Yes. Yes. Does anybody have any questions we could take?

What is the biggest challenge that you're doing like the personalization, like digitally, technically? And then how do you overcome the [indiscernible] for CDP platform?

So the question was what do we find is the biggest challenge technically and how do we overcome it. I think being as clear in your technical strategy as you are in your business strategy is very important. We come from an environment where there are many systems, many of them older than I'd like to admit, where there are lots of different vendors we're playing with and who play an important role for us. And so being focused about what role do you expect each piece of technology to play and what do you want that to do for the end experience. And I have some fantastic technology partners, one of whom happens to be sitting next to you here, who are actually very rigorous with us about what is it that you want this piece of technology to do for the customer and then we'll build it. So I think being customer-first in everything we do has actually really helped to inform and help us to work through some of the technical obstacles.

Any other questions? All right. Well, thank you so much, Bennett. I'm so excited about this. And please come to learn more about Adobe and Macy's.

Thank you, everyone. Thank you, Olivia.