Happy Superbowl Sunday, Everyone!

I hope everyone's having a good week and - if you’re like me stuck in the northeast US - finding a way to stay warm during the “hard freeze” (or whatever meteorological branding is now in vogue).

The idea for this week’s issue started earlier this week (yes, I do write these every week!). After months of putting it off, I finally organized my closet. Donated bags and bags of stuff I never wear to people who will (hopefully) appreciate them. Took dozens of items to the dry cleaners to be cleaned/pressed/fixed. In the midst of that rage-clean, I found a few bags of items from several stores, all of which I forgot I purchased: jeans, shirts, shoes, a sweater. Unfortunately, none of it fit, so I threw it in the car to return while I was out running the other errands (dry cleaning, donations, acquiring new clothes).

The first few stores I stopped at to return were easy - no hassle, no fuss, took the items back, processed a refund. My final stop was Nordstrom + Nordstrom Rack (they’re both in a single building). The returns at Nordstrom were a breeze. Nordstrom Rack? Absolutely horrific. Refused to issue a refund. I asked if I could simply exchange the items for the same items in a smaller size (which was there, in stock). Also flatly refused. Then the manager told me, “Next time, you’ll make sure you read our return policy or get the right things the first time.”

Uh, what?

Now, I’m a loyal Nordstrom-ite. I love the brand and experience they deliver. The quality of what they sell is exceptional (I’d rather buy fewer extremely high-quality items vs. a never-ending stream of cheap things). I really don’t want to know how much I’ve spent with them over the years, but it’s at least one Honda Civic (men can engage in retail therapy, too!).

All this to say: I was blown away by the response from Rack. I know it’s the bargain end of Nordstrom, but it still bears the Nordstrom name. I thought - at the very least - they’d make a semblance of an effort to create a good experience for a loyal customer. Alas, I was wrong.

And not only was I wrong, but the experience was so bad, I’m questioning whether I should continue shopping at Nordstrom. After all, if the brand is willing to tolerate that from some employees, how long until that’s where the Nordstrom experience goes?

Think about that for a minute: I’m reconsidering a decade-long relationship with a brand because of a single terrible experience.

Relationships, just like trust, are built in drops (hundreds of experiences over years), but lost in buckets (a single bad experience with an affiliate bearing the brand name).

All of that leads me to a conclusion that doesn’t get nearly enough airtime in marketing conversations: customer service is the most important marketing you can do.

That's a bold statement, especially coming from someone who makes a living helping brands run better ads, build better funnels and optimize better campaigns. But hear me out.

Everything we do in marketing — the creative, the targeting, the landing pages, the email sequences, the AI-powered optimization, the attribution modeling — exists to connect people to a brand. Whether that specific thing is earning attention, building trust, creating a relationship, helping the customer/client make an informed decision is immaterial; the goal is the same.

And then what?

For most companies, the answer is: hand them off to a customer service (or, even better, a “customer success”) team that's been gutted, outsourced, automated or — in the worst cases — all three. So, marketing invests millions to acquire customers, only for the brand to treat them like a nuisance the moment they need help.

Put another way: we invest everything in getting people to the front door, and then act surprised when they leave through the back.

That Nordstrom experience I described above? It's a perfect illustration of the divide. One version of the brand invests in making you feel something. The other optimizes for throughput. One builds loyalty. The other processes transactions. Same company. Wildly different outcomes.

And here's the thing: I don't think this is just a retail problem. It's an everywhere problem. It's a marketing problem. A brand problem. A business problem. And it's about to get significantly worse (or better, depending on how you play it) because of AI.

The Service Experience IS The Brand

I wrote about this concept in my 11 Lessons You Can Learn From Luxury Brands article — luxury brands don't separate "marketing" from "service." To them, the service is the marketing. Every interaction is a brand touchpoint. Every conversation is an opportunity to reinforce (or erode) the brand promise.

When you walk into a Hermès boutique, no one hands you a number and tells you to wait. You're greeted. You're engaged. Your time is respected. That experience, that feeling, is what justifies the price tag. It's what creates the story you tell your friends over dinner. It's what makes you come back, time and time again. It’s what compels you to spend untold thousands of dollars on a bag or belt or scarf or shoe.

Now contrast that with the average customer service experience at most companies today: a chatbot that doesn't understand your question, a phone tree designed by someone who clearly hates human beings, an email that gets a templated response 72 hours later (if you're lucky), and — my personal favorite — the "we value your call" recording that plays on loop while you're on hold for 45 minutes. (If you valued my call, you'd answer it.)

The simple fact is: your customer service experience is your brand. Not your logo. Not your tagline. Not your Meta ads. Your brand is what people say about you when they need help and you either show up, or you don't.

In Issue #140 – The Next Era of Marketing, I introduced the Audience of One philosophy: the idea that the next era of marketing won't belong to the brands that reach the most people, but to the ones that matter most deeply to a few, then expand outward from that center of gravity. Truly exceptional marketing starts with an obsession about a single person, not a persona on a slide - a human being with emotions, dreams, fears, contradictions and challenges.

That philosophy applies here. You cannot matter deeply to someone if you treat them like a ticket number the moment something goes wrong. You can't build that kind of connection through a chatbot that loops people back to an FAQ page. The brands I referenced in that piece — Hermès, Apple, Patagonia, Porsche — every single one of them is legendary for customer service. That's not a coincidence. That's the whole point. Depth of connection and quality of service aren't two separate strategies; they're the same thing expressed in different ways.

Which raises an obvious question: if great service is this important, why are most brands about to make it worse?

The AI & Automation Paradox

Let’s start with an obvious truth: AI and automation are transforming customer service at an unprecedented pace. Chatbots are getting smarter. Voice agents are getting more natural. Ticket routing is getting faster. And the cost to “resolve” a customer interaction is dropping faster than Bitcoin this week.

On a balance sheet, that’s fantastic news. In practice, it's a minefield.

Why? Because here's what's actually happening at most companies: they're using AI to replace human service rather than enhance it. They're automating the interaction, not improving it. The goal isn't "make the customer's experience better" — it's "make the customer's experience cheaper."

I’ve been in boardrooms where CEOs + CFOs + Chief Experience Officers (real title) swear up-and-down that their customers LOVE these automated experiences. I’ve also been on the phone with their actual customers, who share - in no uncertain terms - they’d rather spend an afternoon at the DMV vs. the “improved” customer service experience.

I don't need a research report to tell you this (though there are plenty that confirm it) — if you've tried to get help from any major airline, telecom or SaaS company recently, you've lived it. The chatbot that goes in circles. The "smart" routing that sends you to the wrong department. The AI-generated email response that addresses a problem you didn't have. We've all been on the receiving end of automation that was clearly designed to save the company money, not to solve your problem.

I talked about this dynamic in my 2026 Predictions (Issue #148) — the central paradox of 2026 is that to win in an AI-first world, you must become aggressively human. As AI commoditizes competence, the baseline for quality goes up, but the ceiling for differentiation collapses. Every brand starts to sound "professional" and "optimized", yet none of them sound real.

The same thing is happening with customer service.

When every company deploys the same thin-GPT wrapper chatbot, the same automated email sequences, the same "smart" ticket routing, then the service experience becomes indistinguishable. It becomes a commodity. It becomes - at best - the Nordstrom Rack of customer interactions: functional, but forgettable.

The brands that will win are the ones that use AI to handle the logistics so their humans can do what humans do best: empathize, solve complex problems, make judgment calls and (most critically) make the customer feel like they matter.

I've seen this firsthand across dozens of accounts: the companies using AI to free up their best people (not replace them) are the ones watching their retention numbers climb while everyone else scrambles to figure out why customers keep disappearing.

Here's my framework for thinking about this:

Automate the process. Humanize the moment.

Let AI handle the data lookup, the order tracking, the FAQ responses, the appointment scheduling - all of the transactional, repetitive, low-stakes interactions that don't require emotional intelligence. But the moment a customer is frustrated, confused, upset or at a decision point? That's when a real human needs to step in. Not eventually. Not after 3 escalation attempts. Right away. This should be easy - the same pattern detection technology that goes into crafting those low-stakes responses can easily be used to escalate the high-stakes ones. This doesn’t require more tech; it just requires thinking.

The companies getting this right are using AI as a co-pilot, not a replacement. AI surfaces the customer's history, suggests solutions, drafts responses, while a human reviews, personalizes and delivers. The customer never knows AI was involved. They just know that the experience was fast, personal and resolved their problem.

The companies getting this wrong are using AI as a wall between the brand and the customer. And every time a customer bounces off that wall — every time they get stuck in a chatbot loop, every time they scream "REPRESENTATIVE" into a phone — that customer’s perception of and relationship to the brand erodes a little more.

The LTV Equation Nobody Talks About

Let's talk numbers, because this is the part that should keep your CFO up at night.

I've audited hundreds of ad accounts over the years. And one pattern shows up over and over again: brands spend 10x more acquiring a customer than they do keeping one. Brands will spend a fortune to get a new customer through the door, but balk at spending a minuscule fraction of that to delight them once they’re there.

That approach only works if you assume your customer’s loyalty is greater than their tolerance for annoyance, frustration and/or poor treatment. But that’s no longer the case. We live in a world with infinite choice, near-zero switching costs and AI-powered comparison shopping. I can go to Gemini, type in the brands I typically buy at Nordstrom, and it spits out the other stores nearby that stock those same brands, as well as a list of those brand websites where I can buy direct, along with a list of other brands I should consider.

I know that’s true because that’s exactly what I did after the Nordstrom Rack experience - and I found three brands that I have since purchased from, all via Gemini: N Peal (if it’s good enough for Daniel Craig AND Stanley Tucci, I’m so in), RM Williams and Paige.

Think about your own behavior for a moment.

When's the last time you switched away from a brand simply because the experience was bad? The return was a hassle. The support ticket took weeks on end to resolve. The bank screwed up and didn’t make it right. The chatbot that made you want to throw your laptop out a window. You didn't leave because the product failed. You left because the brand failed you.

Your customers are doing the same thing. Right now. And most of them won't tell you about it; they'll just quietly disappear. The ones who do complain publicly? Those are the tip of the iceberg.

Here's what I know from working with brands across every vertical: the ones that invest in customer experience (and I do mean genuinely invest, not just slap a chatbot on the website and call it innovation) see the returns of that investment everywhere. Customers buy more. They stay longer. They refer friends/family without incentives. Their paid media performs better (because they're advertising a brand people actually like). Their exits are better. Every aspect of their business is better.

The brands that treat service as a cost center? They're stuck on the hamster wheel, spending more and more to acquire customers who stick around for less and less time. It's the middle-is-death problem applied to customer experience: good enough to not get fired, bad enough to never create real loyalty.

The reason customers stay isn't a loyalty program. It isn't a 10% off coupon. It isn't a birthday email (although, for the love of all that is holy, please stop sending me birthday emails for products I bought once 3 years ago).

It's how you treat them when they need you.

I've said it before and I'll keep saying it: the brands that win are the ones with leadership close enough to their customers to feel the pain. In Issue #150 – The 5-Interaction Rule, I argued that if your leadership team doesn't have at least 5 direct interactions with actual customers per month, they should be fired. I meant it then. I mean it even more now.

Customer service isn't a department. It's a culture. And culture starts at the top.

When your CEO reads support tickets (not the polished summaries - the raw, unfiltered, sometimes-profane tickets), something shifts. When your CMO sits in on a customer service call and hears the frustration in someone's voice, priorities change. When leadership understands that the $50 refund they're debating for 20 minutes isn't about $50 - it's about whether that customer tells 10 friends to try you or 10 friends to avoid you, the calculation changes entirely.

Brand Reputation in the Age of Radical Transparency

Here's the other piece of this puzzle that I can't stop thinking about: we live in the most transparent era in human history. Every interaction is one screenshot away from going viral. Every bad experience is a potential TikTok. Every "your call is important to us" hold message is a meme waiting to happen.

In the luxury brands piece, I wrote about how luxury brands communicate only when they have something worth saying, and when they do communicate, it demands attention. Customer service works the same way. Every interaction is a communication. Every hold time, every chatbot response, every follow-up email is your brand speaking directly to a customer.

And in 2026, those conversations are public.

A single negative service interaction can undo millions in brand marketing. I've seen it happen more than once. A customer posts a screenshot of a dismissive response from your customer success team, it gets 50,000 views, and suddenly your carefully crafted brand narrative is competing with a very real, very unflattering customer story. It only gets worse when that story (inevitably) finds its way to Reddit, then into AI overviews (since Reddit is one of the most frequently cited sources in AI Overviews + AI Mode). Suddenly, that one exchange is the entire perception of your brand for hundreds or thousands of people.

The flip side is equally powerful. Exceptional service creates stories people want to tell. Nordstrom built a legendary brand reputation largely on the back of service stories — the famous tire return, the personal stylists who remember your name, the no-questions-asked return policy. Those aren't marketing campaigns. They're organic, authentic, shareable moments that build brand equity more effectively than any ad spend ever could.

This connects directly back to the OPP (Organic to Paid Pipeline) concept I explored in Issue #150. Your best marketing content isn't manufactured in a conference room. It's earned through genuine customer experiences that people feel compelled to share. And absolutely nothing generates that kind of organic advocacy like an unexpectedly great service experience.

Think about the last time a brand genuinely surprised you with how well they handled a problem. I'd bet good money you told someone about it. Maybe multiple people. That's the kind of marketing money can't buy, but great service produces naturally.

What To Do About It

I've been heavy on the "why", so let's get to the "how” to make it happen:

1. Audit your service experience as a customer. Put away the dashboards and customer success reports. Pick up the phone, write an email, log on to the site and go through your own customer service experience. Time how long it takes to get a real person. Count how many times you have to repeat yourself. Reach the dead ends and the rejections and the frustrations. Take stock of the entire experience - good, bad and ugly - firsthand. If your leadership team hasn't done this in the last 90 days, make this the #1 thing you get done this week.

2. Calculate the real cost of bad service. Start with your churn rate and identify what percentage of it is driven by poor service experiences. Across most businesses I’ve worked with, that number is far higher than leadership expects (typically 40–50%, sometimes more). But this is where most people make a critical mistake: they multiply that churn by historical or “average” LTV, which dramatically understates the damage.

Service-driven churn is almost always premature churn. You’re not losing what the customer already spent; you’re forfeiting the future revenue and margin you expected to earn but never will. The correct number isn’t LTV; it's the remaining LTV. But the loss doesn’t stop there. Every customer you lose to bad service has to be replaced just to maintain revenue, which means additional acquisition spend with zero net growth. So the real equation looks like this: (service-driven churn × remaining LTV) + the incremental CAC required to replace those customers.

All of which ignores the marginal costs to reputational damage incurred as a result of customers churning – sure, most won’t say anything. But some will - maybe at a family gathering or over beers with friends, maybe on the internet, maybe to a friend or colleague. And every time that happens, your cost of acquisition goes up, because now your brand must work harder - whether it’s through ads, emails, discounts, sales rep time, direct mail, whatever - to acquire new customers.

Add it all together, and that figure — the true cost of bad service — is almost always larger than a quarterly marketing budget. It’s just hidden across retention, acquisition, and cash-flow timing rather than showing up as a single line item, which is why so many companies keep underinvesting in the very thing that’s quietly making growth more expensive over time.

3. Redefine your AI strategy around augmentation, not replacement. If your current AI customer service strategy is "reduce headcount" or (my personal favorite) reduce time per call, you're optimizing for the wrong metric. Reframe it: "How do we use AI to make every human interaction faster, more informed and more personal?" The companies I've seen get this right are using tech to make their best people better. The results show up in retention, upsell and (ultimately) in how much those brands need to spend on acquisition. The other path (replacing humans entirely) is the path to becoming another brand that customers switch away from without even telling you why.

4. Make service metrics a marketing KPI. NPS, CSAT, first-response time, resolution rate should be on your marketing dashboard right next to ROAS and CPA. They're directly correlated. The brands I work with that track both service and advertising metrics on the same dashboard consistently outperform the ones that keep them in separate silos. While there’s often a temporal off-set (CPAs rise after customer service problems), the relationship/interplay between customer service and marketing performance is unmistakable.

5. Invest in service like you invest in creative. You wouldn't run a $500K ad campaign with stock photos and generic copy….yet brands are happy to hand off interactions with their highest-value customers to a chatbot that can't solve basic problems? Put the same rigor, the same budget, the same talent, the same attention into your service experience that you put into your advertising. The ROI is higher. I promise you.

The Bottom Line

To be candid, I think the marketing industry has been sleeping on customer service for far too long. We've been so obsessed with acquisition, with the top of the funnel, with reach, with impressions, with new that we've forgotten the fundamental truth every luxury brand has known for centuries:

The most powerful marketing in the world is a customer who feels genuinely cared for.

That's it. That's the whole strategy.

Everything else — the ads, the content, the funnels, the automation, the AI — is in service of (pun intended) that moment. The moment when a customer needs you and you show up. Not a bot. Not a template. Not "we'll get back to you in 3-5 business days." You.

If you can do that consistently, everything else gets easier. Your ads perform better because your brand has genuine advocates telling real stories. Your content resonates because it's rooted in real relationships (not manufactured personas). Your retention improves because people don't leave brands that care about them. Your LTV grows because loyalty — real loyalty, not points-and-perks loyalty — is the most powerful growth engine in business.

Here's your homework: this week, go through your own company's customer service experience. Start to finish. Call the number. Use the chatbot. Send the email. Time it. Feel it. Then ask yourself: would I come back?

Customer service is the only thing that ultimately matters. Everything else is a footnote.

Until next week,

Cheers,

Sam

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