Experience 2030: The Future of Customer Experience is Now–Futurum Tech Podcast

To kick off this episode of the Futurum Tech Podcast, my cohost, Fred McClimans and I took a quick run through our recently published research report done in partnership with SAS, Experience 2030: The Future of Customer Experience is Now. We also talked about Russian Hackers, China’s crackdown on deepfakes and fake news, employees who want to get Away from the trendy DTC luggage company, TikTok’s speedy settlement of the lawsuit on children’s data, and Toys ‘R Us and the brand’s new non-store store that may or may not collect more data from customers than consumers realize — or want.

Our Main Dive

We did a massive global research study in partnership with SAS, surveying over 4,000 consumers and brands to explore the state of Customer Experience: Where we are now, and where consumers and brands expect to be over the course of the next decade. Our research showed that the five key things driving the evolution of customer experience and Fred and I discussed those key drivers and shared some data points from our study. The drivers are:

• Smart technology (Customers are digital)
• Immersive Technology (Bridging the customer experience divide)
• Digital Trust (Technology can drive digital trust)
• Loyalty in the Digital Age
• Agility and Automation (Better engagement through technology)

Our Fast Four

• For our Fast Four segment of the Futurum Tech News podcast, we talked about the recent indictment of Russian nationals in a massive hiking and bank fraud scheme. The Russian hackers behind Evil Corp have led ongoing assaults on the bank accounts of thousands of victims across dozens of countries over the course of the last decade. The sophisticated hackers used malware known as Bugat and helped themselves to tens of millions of dollars from victims over the years. How did they do it? Malware installed by way of email phishing scams. The scams would convince users to click on links that looked legit, but once clicked, it would download the Bugat malware. Once installed, the malware would use a variety of techniques to obtain user credentials.
  The problem? Nobody knows where the two Russian nationals are. The U.S. State Department and FBI are offering a $5M reward for information that leads to their arrest. Good luck with that. The Wired coverage on this story is pretty interesting, so check it out if you get a chance.
• China makes it a criminal offense to publish deepfakes or fake news without disclosure.
  Fred covered the news out of China making it a criminal offense to publish deepfake videos or fake news without also providing a disclosure that what you’re sharing is fake. Because of course anyone doing that will want to provide such a disclosure. Always interesting to see what China is doing in its ongoing effort to control all things.
• Employees just want to get away from Away.
  The Verge reported last week on the direct-to-consumer luggage brand Away following interviews with 14 former workers and based on leaked Slack logs.
  The company was founded by Jen Rubio and Steph Korey with a goal of selling “first class luggage at a coach price.” The founders Jen Rubio and Steph Corey came from Warby Parker and followed a model perfected by Dollar Shave Club, Glossier and other DTC brands.
  The luggage startup is definitely an “it” brand with a cult following – popular with celebrities and millennials.
  Speaking of communication: At Away, Slack rules. It’s probably worth noting that co-founder Rubio is engaged to Slack founder Stewart Butterfield, so there’s that. At Away, it was company policy that employees were not allowed to email each other, and Slack was to be the official and the only corporate comms channel. There were other rules governing Slack usage as well. DMS were to be used rarely (never about work and only for small requests like a lunch date). Private channels were to be created sparingly and there was to be no personal talk in any channel. The vast majority of conversations were required to be out in the open, which can be a very intimidating environment for employees. CEO Steph Korey was infamous for tearing into people on Slack, publicly, criticizing work product and other things without any consideration for the impact that might have on culture. There were also consequences for breaking the rules. For instance, once a group of employees were discovered to have been chatting in a private Slack channel, they were called into the CEO Steph Korey’s office and subsequently fired.
  The employees interviewed for the Verge piece described it in the article as rules that had been implemented in the name of transparency, but which instead created a culture of intimidation and constant surveillance. Speaking of culture, there was reportedly much pressure to work long hours and limit paid time off, with executives seeming to glorify making sacrifices for the good of the company.
  The Verge article describes the company’s culture as “image obsessed” and that like other brands who aspire to be something ‘more’ than what they are (think WeWork), the founders insisted the brand was about more than luggage, and that it was more broadly about travel. A very interesting look at Away and one that probably won’t make you walk away wanting to work there.
• TikTok settle children’s data lawsuit one day after it was filed. Speaking of data privacy and kids, social media platform TikTok moved rapidly to settle a lawsuit around allegations about gathering data from children using its Musical.ly app (now TikTok) for 1.1 million. The plaintifff’s complaint alleged that the app filed to provide safeguards to prevent underage children from using the app, and also asked for and collected personally identifying information on minors as they set up their accounts, and also collected location data of users of the app, including minors, for a period of between December 2015 and October 2016. Fred’s take on TikTok’s rush to settle the suit is prescient and it’s likely we’ll see more of these lawsuits along the way.

Tech Bites

First New Toys ‘R’ Us Store Opens But It Isn’t Exactly a ‘Store’. In the Tech Bites section of our podcast, we talk about the new Toys ‘R Us store that isn’t exactly a store, but instead a gathering of brands hoping to sell merchandise to kids and their families. Sounds cool, except the part where the kids and families are monitored while in the store, providing TRU and its brand partners with a sort of a focus group and glimpse into customer behavior, likely without customers even knowing that they and their families are guinea pigs.

Crystal Ball: Our Predictions and Guesses

What’s on tap for customer experience in the coming decade? We’ll tell you what we think, based on what consumers and brands shared in our research report.

Transcript:

Shelly Kramer: Hello, and welcome to this week’s episode of the Futurum Tech Podcast. I’m your host Shelly Kramer, and I’m joined today by my colleague and fellow analyst Fred McClimans. Before we dive into the main topic of our podcast today, I want to issue our disclaimer and let you know that this podcast is intended for information and educational purposes only. We talk about lots of different topics, we talk about many publicly traded companies, we are not intending to give any investment advice or any other kind of advice, so take that into consideration as you listen to what it is we talk about.

So, today we are going to cover a research report that we did in partnership with SAS. The research report was focused on customer experience and the report is called Experience 2030: The Future of Customer Experience Is Now. Fred, you and I slogged through a lot of trenches developing this research paper and I’m really excited to talk with you about it today. Welcome.

Fred McClimans: Well, thank you Shelly. Yes, a slog might not be quite the word. Perhaps digging, re-digging, trenching. If there is an inverse the rock and the hill, it was like that-

Shelly Kramer: This was it.

Fred McClimans: … at times it, this was one of the largest research projects that I’ve ever been involved in. It’s not often that we get a chance to sample in the same research project, both businesses, brands and consumers. But we got to do that on a global scale with over 4,000 people involved in this research study.

Shelly Kramer: This was really exciting. And the team at SAS was great to work with as well. And I think that collectively we were just able to an earth some super interesting information. I think that both smart brands we’ll be paying attention to, because of customers and brands told us a lot of really fascinating things. So, I just kind of want, and our goal here is not to take you through the whole paper.

We’ll include in the show notes a link for you to download the paper, which I think, bias aside is amazing and you’ll really like it, so you should download it. But what we’re going to talk about is the fact that our research showed that there are five key things driving the evolution of customer experience, and it will be driving the evolution of customer experience over the course of the next decade.

Those things are smart technology, understanding that our customers are digital, immersive technology which helps us bridge the customer experience, divide, digital trust. And we did a lot of exploration on the topic of trust, and one part of that is how technology can drive digital trust. We explored loyalty in the digital age and how important that is to consumers, and how a lot of times what customers thought about loyalty and what brands thought about loyalty were two completely different things.

And the last of those five key things driving the evolution of customer experience was agility and automation. And the fact that brands could see better engagement through the use of technology. So Fred, you want to talk a little bit about just hit on smart technology and what we learned from our research?

Fred McClimans: Oh, absolutely. So, it’s interesting when we set out at the beginning of this research study, you always have some assumptions out there. You always kind of think you know what’s going on, or you have an educated guess and then you get the data and then you start to dig into it and you realize, wow, it’s not that consumers are adopting digital. Consumers have literally become digital. I mean, that’s the best way to think of it today.

The consumer is so wedded to the digital device, whether it’s for social media, whether it’s for gaming applications, with embedded purchasing capabilities, whether it’s banking applications, all this technology is just there. So, we kind of dug into it, we broke down technology into a group of different classifications of technology and tried to get a sense, what is the consumer really interested in? What are they doing today?

And to kind of give you an example of this, we looked at areas such as mobile tech, what kind of adoption rates are we getting around the country? How pervasive is digital technology itself? We looked at smart devices, the Alexa, the Siri, questionable whether that’s really smart or not, when we went through this, but we also went through, well, like I said applications, banking applications. We tried to understand what people were doing out there.

So, a couple of quick thoughts on this. So, this is kind of interesting. On a global basis now, I’m not going to break this down to regions yet. If you want to get into the regions, please hit our site. You can download the report, you can give me a call, you can hit me on Twitter and we can talk about that in a lot of detail. But some interesting stats here, 36% of the consumers that we surveyed, we surveyed a little over 2000 consumers across, close to three dozen countries.

Those consumers, 36% have three or more mobile phones in their household. And what’s really wild, 69% have two or more. I know that seems like maybe not much. Maybe it’ll happen on a global scale. I thought that was pretty interesting. And by the way, the United States is not the leader in that. We’re not even close to the leader in that.

When you look at a smart technology, the future of the Alexas, the Google Homes, Google Duplex that it can actually act on your behalf in the real world, whether it digital/ real world here.

Those devices we feel are going to be so critical to the future of not just customer experience, but just the way we live, the questions that we ask, the searches that we do. So much of that is on our mobile device today, you key it in. But in the future, that’s all going to be the home device, the smart device, the AI inside the chat bot there. So, it’s interesting as 35% of the consumers that we survey have two or more smart assistant devices in their household. To me, I thought that was pretty impressive, 60%.

Shelly Kramer: How many do you have?

Fred McClimans: I have, aside from my phone now on my phone, I have Siri, I have Alexa, I have Cortana, I’ve got several different ones that I play around with. But in the home itself, I have zero. We have zero Alexa devices in the house, because personally I don’t trust them at all, not even close to trusting them, but 60% of the households that we surveyed say, “Yep, we’ve got at least one of those devices in here. We have more devices.

Shelly Kramer: I think sometimes we know more than other people know. I will say that we have a number of Alexa devices, but our use of them is very limited. So, my teenagers use them to play music, to stream music or to set…one of them uses it to set an alarm and so we rely on them very, very sparingly. But yes, I’m kind of with you. I don’t trust them. So anyway, we’re going to talk about wearables.

Fred McClimans: Yeah. Real quick on wearables. Wearables, right now the Apple watch, the Fitbit and so forth. Those are just starting to come into their own right. And when you look at the opportunity out there for wearable devices, right now 42% of the consumer households that we surveyed have at least two wearable devices.

Now, in my house we’ve got several Fitbits lying around for that, but the adoption rate there, I thought was really interesting. Not just that, but 67%, two thirds of the consumers we surveyed said they want more, they expect to own more of these devices. And in fact, what’s kind of interesting here is two thirds of the consumers as well expect that they’re going to be able to control other devices with their wearables within the next five years.

Shelly Kramer: I use my device, I use my wearable to find my phone all the time, Hey Siri, hey Siri, where’s my phone?

Fred McClimans: Combine that wearable device with a smart bot and you’ve really got something there. Augmented reality, virtual reality. Another area that we dove into there and this was kind of interesting because it’s not just an issue of augmented reality and VR, AR, VR technologies. It’s what they’re planning on doing with it.

And it was amazing the number of people that we surveyed that said quite literally, I expect AR to be part of my brand experience, not just in five years but today, I expect it to be part of my brand experience. They want to go into the shop, they want to be able to see things in their phone. They want to be able virtually try on apparel and devices for that or furniture that I could try it on. But it’s amazing.

Shelly Kramer: To see what furniture looks like, will look like in your home.

Fred McClimans: Yeah, exactly.

Shelly Kramer: I mean, these immersive technologies really can bridge the customer divide because I don’t have to go and buy a sofa and get it delivered and see what it’s going to look like. I can use virtual reality, augmented reality to see it in space, in place and I think and also a younger customer base, I mean I’ve already tried on used AR to try on glasses, and my girls have used it to try on clothes, and I’ve been in dressing rooms before that are fitted with that.

So it really is kind of the more tech savvy you are, the more you realize this is just at my fingertips. Another one I think that is really common is that people use these apps to see what paint colors are going to look like in their home.

So, it solves a lot of problems. And one other point on that front, I was just reading today that in Kentucky they’re using AR devices. No, it’s VR devices. I get confused between the two sometimes. They’re using VR devices to train college students and high school students on certain skills and really kind of get them sort of technologically savvy.

But they’re also using these same devices to train coal miners and other workers in the coal industry who need to re skill in order to be able to do something else as a profession.

And so, Walmart uses these kinds of technologies to train people and it’s also really attractive, especially to young people in the workforce to be able to work with this kind of technology. So, it really is an important… these are both important tools.

Fred McClimans: The warehouses I was last year down at a chemical facility down in Houston, Texas. And they’re using AR glasses that mount off their helmets to provide, not just status information on all the IOT sensors throughout their facility. But in the case of an emergency, it guides them out. It shows them visually when they can’t see through the smoke, where the obstacles are, where the correct path is and where other people are in that facility.

So, it’s a huge thing there. There was one interesting point here on the mobile tech in the applications. This is something I think we should probably explore at a much greater level at some point other than today, but real quick banking apps, the number of banking apps that people use, it’s becoming almost part of the lifestyle today. It’s interesting here, it’s like a 30% or so of the people we surveyed use three or more banking or financial apps.

What’s really interesting about that, is that the more regulated, the more mature the economy and the more legacy infrastructure you have in place, the fewer banking apps people use. So, we see the greatest adoption of mobile banking apps where people are using four, or five, or more applications on a daily or regular basis in parts of Asia, in Africa, in the middle East, these areas and Latin America as well, where there’s a lot of demand, you’ve got to grow in consumer market, they’re not able to access all the financial infrastructure.

And a lot of the companies don’t have to deal with the regulatory constraints that we have. And they’re quite literally leapfrogging parts of the U.S. and Europe as they move ahead into the space. So anyway, just some interesting tidbits there on how consumers are becoming digital.

Shelly Kramer: Yeah. And I think that speaking of digital, let’s talk a little bit about trust and how brands can and should be thinking about how they can use technology to drive trust. I think that we’ve got technologies like IOT, Edge computing, the Cloud, Blockchain, all these things allow brands to behave in a way that inspires consumer trust, that earns consumer trust. I think we live in a world where we’re used to, oh wait, there’s another data breach or whatever.

So, we do worry about that. And one of the things that I think that was a disconnect here was that, brands seem to think that things like VIP programs, or incentives, and things like that drive consumer loyalty. And our consumer respondents really didn’t agree there. They told us they preferred other things that were touchpoints of drivers of loyalty. And I thought that that was really interesting. And they wanted alternative payment apps. They wanted to be able to order through their smart home systems. They wanted to be able to do things in a way that was easier and they don’t really care so much about the silly VIP programs. That has never inspired me too, yeah.

Fred McClimans: Not so much. But I mean, you mentioned trust there. Trust is so essential to the way that brands can engage. And we started to look at that whole issue from a number of different perspectives and we actually identified some pretty significant gaps between the way consumers feel and brands feel, which it’s just mind blowing that they can be so far apart on so many things.

If you ask consumers, are you an easy dealing with technology in stores? 35% of consumers say yes. But when you ask brands, how many of your consumers don’t like technology in stores? They say close to 80%. How can they be that far apart? I mean, it’s just an amazing gap. We see the same thing in areas such as smart AI bots, Alexa, Siri, Bixby, Dewar and others.

Consumers say close to half, 48% say, “Yeah, this is a good way for us to get information in a store.” Brands on the other hand, almost 79% think that’s already a good way. So, and they’re pushing technology in there. And that’s a big risk because one of the things that we found was that consumers across the board are overwhelmed by technology sometimes, they feel like they need to take a break, they feel like they’ve wasted too much money on it. And at the end of the day, brands need to provide a trusted experience. They need to drive loyalty. And when it comes to loyalty, what are consumers really interested in? They want it now and they want it to be high quality. That’s pretty much it.

Shelly Kramer: Well, yes and no. Yes and no. Two points here. One thing I will say is that for me, sometimes brands, and I’m pretty all in tech adopter, right? But sometimes brands want too much too fast. And by that I mean, I’ll be looking at something online and I’ll be opting in for something and there’s a pre-check box that I’ll get a 15% discount if I’ll give them my phone number. Not only no, hell no. And the last thing I want is for you to be showing up. That’s like my private space. And so, I feel like brands do try to overstep their bounds sometimes when it comes to consumers.

So, that was one point, where my other point was that talking about loyalty, certainly loyalty programs, I think there is a little bit of the disconnect there because 50% of brands consider quality as the highest rated factor, driving customer loyalty. We have great products, that’s what it makes our customers come back. What consumers said however, was that quality was behind low cost and discounts.

So, it kind of depends on who you’re talking to and what you’re talking to. But there’s a whole lot of people out there who say, “You know what? I’d really like to buy a Tumi backpack, but, and they’re great quality. But you know what, I’m going to buy a Timbuk one instead”. You know what I’m saying?

Fred McClimans: This whole aspect though of where we are with customers and maybe it’s just because we’ve got the holiday busy shopping retail season coming up here, that it’s kind of the forefront of everybody’s mind. But the consumer, especially the digital consumer has become addicted to overnight shopping. They become addicted to, in fact, we have it here in our area and I’ll raise my hand, it’s something I occasionally use, but we’ve got two hour delivery on groceries for less cost than it takes for me, for my time and the car and everything there.

So, you’ve got this base of consumers out there and everybody now has a loyalty card. Everybody has a VIP program, they’ve got all these things out there. And if everybody has it, it’s kind of-

Shelly Kramer: It’s not a differentiator.

Fred McClimans: … yeah it’s not a differentiator. So, what does it come down to? They want a cheap, they want it high quality and they want it now. They want it same day delivery or next day delivery. In fact, we have consumers that were saying, “I’ll even spend more for same day delivery,” but they also wanted at lower cost. So, I’m not sure they’re quite getting that as much there as they might expect. But I think that is a big driver of things. But I do want to mention two last things here before we kind of wrap up.

The first is trust. Trust is such a huge issue with consumers, we ask consumers to rate the industries that they trusted the most or the least, or actually the most and the least with protecting their private data and not abusing their data. Which is an interesting challenge because the overwhelming majority of people that we surveyed, not only do they feel that they’ve lost control of their data, they feel like they’ve lost control of the data that their children have or create. And they feel that brands by and large are abusing their data and not letting the consumer know.

So, with that in mind, the most trusted industries out there in terms of protecting data, healthcare providers, grocery and food providers, some of the things that we need every day, restaurants, fast food. I thought that fast food part was kind of humorous. Education and advocacy groups and then retail, but brick and mortar retail. And when it comes to distrusted, wasn’t actually a distrust. We actually were pretty explicit, how much do you distrust this company? And, no surprise here, social media, the number one out there-

Shelly Kramer: With good reason.

Fred McClimans: … with good reason in almost every market segment that we looked at. But what was really surprising here, number two on the list of the most globally distrusted industry sectors, news, advertising and publishing followed by government and public services. And then online e-commerce. 39% of the people we surveyed say they simply do not trust anything that comes out of the online space.

Shelly Kramer: Well, and to your point there Fred, and to those of you listening here, please know that we are hitting the tiniest, tiniest bits of information. This is a 75 page report, so in depth and so we are really barely scratching the surface. We surveyed, we asked these questions about trust globally and some of the responses from North America were different than the responses that we got from the Asia Pacific region. And so, really was a fascinating look at how different parts of the world feel about different things.

And so, it really was a great look and I do want to wrap this up and just say that the last key point that we wanted to touch on that we really spent a lot of time on in this report is agility and automation. And really how these two things are truly driving the future of brand engagements, and customer experience, and that being agile, and embracing, and practicing extreme automation is going to be in the next decade. How brands are going to be able to deliver on the promises they’ve made and meet the expectations of the customer.

We are not sitting around and waiting for what it is we want. We want it right now, we want our groceries in two hours, all of these things. So, the speed of performance is really considered crucial to the creation of great customer experiences. And so, it’s really necessary for businesses to embrace agility and have the ability to leverage automation.

Fred McClimans: So, now Shelly, let me break those down. Five things that are going to shape the future of this. We talked about the trust and we talked about these various aspects, but when it comes to technology, number one, immersive technologies are the heart of the consumer, the customer experience. Feeling, living the experience, whether it’s AR, whether it’s your wearable devices, whether it’s implantables or embeddables as well. That is going to be where a lot of this is at.

And number two, agility and automation as you mentioned, that they define and they enable customer experience, the ability to capture data to move and react quickly. In order to do that, point number three, real time analytics have got to be a part of creating and understanding the customer journey. And then of course consumer engagement, becomes really device engagement. As brands become more digitized in their outreach and as consumers become more digitized at some point it’s really their tech talking to consumers tech that kind of move everything forward.

But all of these things combined, they are going to create such a rich immersive experience for consumers.

So, as you mentioned, this is all in the report, the 75 pages or so. It was originally 150, I think the first draft that we went through. So, please hit the futurumresearch.com website. You can download a free copy of the report here and you can always reach out to myself or to Shelly. We were both intimately involved in this entire research process.

Shelly Kramer: Well, and so this’ll be in… our link will be in our show notes and so you will not be able to not find this report easily. So, with that said, we’re going to move on to the next segment of our show, which is normally called the fast five where we hit on five key pieces of news that got our attention. And today since it’s just two of us, we’re only going to do four fast.

We’re going to do fast four instead of fast fives. And I’m going to lead off and I’m going to talk about Russian hackers that had been charged with a malware attack on the U.S. And there’s a $5 million bounty on their heads. So, what happened to Russian hackers behind the company while it’s an entity called Evil Corp, clever name, have led ongoing assaults over the course of the last decade on the bank accounts of thousands of victims across dozens of countries.

These hackers have been incredibly sophisticated. They’ve used malware known as Bugat, and they’ve literally helped themselves to tens of millions of dollars from their victims over the years. How did they do it? Malware. The malware was installed by a way of email phishing scams, phishing scams are things that show up in an email inbox and they look legit and they are… actually, I got one today, purported to be from a T & T and I just knew that I know so much about security and phishing scams that I am very suspicious. But I’m looking and the language was just a little bit wrong and the URL was just a little bit off.

So, I knew that it was an attempt. It was a phishing attempt. So, but what happens is that, scammers use these emails, email phishing campaigns, and they get people to click on links that look legitimate, and then once they click on it, the malware is downloaded. And then once that malware is on their computers, it uses a variety of techniques to obtain user credentials. That’s the shortest version of a long story.

The problem with this news, and it’s great that these guys have been identified and charged, but nobody knows where they are. The U.S. State department of the FBI are offering a $5 million reward for information that leads to their arrest. That sounds like a commercial. And my thought on that is, good luck with that. We’re probably not going to find those guys, but I’m going to link in the show notes, the wired story on this and it’s pretty interesting. So, I’ll link it in the show notes and take a look if you get a chance. And so, talking about doing bad things on the internet. Fred, you’re going to talk about what’s going on with regard to China and deepfakes.

Fred McClimans: So Shelly, this type of restriction on deepfakes is already something that the U.S. has done in California.

Shelly Kramer: We’ve covered that on the show.

Fred McClimans: Yes. So, he signed a law 8730 that makes it criminal act to use deepfake or AI manufactured fakes for political purposes.

Shelly Kramer: Or revenge porn.

Fred McClimans: Or revenge porn as well. So, I think there’s a little bit of a difference here though. In California, I do feel fairly comfortable that the technology and the laws or the laws regarding technology are lining up to actually truly prevent fake news, fake information. I’m not so convinced about that in China, because it’s just this feeling in the back of my mind, this little bell going off here that says, China’s interpretation of what’s fake and not fake is something I don’t quite trust-

Shelly Kramer: Especially as they relate to news.

Fred McClimans: Yeah. I don’t trust certain people in the U.S. as well to make that decision. So, how a deepfake is defined or how fake news is defined will become very important as we move forward. But that’s what’s going on with the deepfakes china and some policies that I think other nations will be adopting very soon.

Shelly Kramer: Yeah, I think so as well. Deepfake scare the heck out of me. And it’s one of those things, the more you know about it, the more you just realize the potential there. So, we’re going to get away from all that and we’re going to talk about the company away. And a story that came out a couple of days ago, The Verge reported that the direct to consumer luggage brand Away has some culture issues perhaps.

And the story came out following interviews with 14 former Away workers and it was also based on some leaked Slack logs. So, Away are the makers of kind of a cool line of luggage. And the company was founded by Jen Rubio and Steph Korey. And their goal was selling first-class luggage at a coach price. And the girls, the founders came from Warby Parker and they really followed a model that had been perfected, a direct to consumer model that had been perfected by the Dollar Shave Club and Glossier and other direct to consumer brands.

And I thought this was interesting now, these are smart marketers and they’ve learned great lessons with the other companies that they’ve been with. One of them was also with Bloomingdale’s. So they really brought a lot of marketing savvy to the equation, and really understood how to work with influencers. And so, it is fair to say that this startup is definitely considered an it brand and has a cult following. It’s popular with celebrities and millennials and they’ve done all kinds of influencer campaigns.

So, if you walk through an airport, I can promise you, you’ll see Away bags everywhere. So, what was interesting to me, this was really pretty in depth story. What was interesting and I always take everything with a grain of salt, because there are many sides to every story and every situation, right? But what I thought was interesting was that the people interviewed talked about the rules around communication and collaboration within the Away organization.

And there were really some very strict rules and internally they used the Slack communication platform. And it’s probably worth noting that the co-founder Jen Rubio is engaged to Slack founder Stewart Butterfield. Okay. No. So I understand why they use Slack and not that there’s any, I mean, Slack is a great platform. We use it too. Anyway, there are rules within the organization were that employees were never allowed to email one another.

Slack was the official corporate communications channel. They were specifically instructed that they were only to use direct messages between one another and very rare instances. They were never to use direct messages, private messages to talk about work and they were really only supposed to be used for things like, “Hey Fred, want to go grab a sandwich?” Just really kind of a small little requests. And you weren’t supposed to create any kind of private channels. And there was to be no personal talk in any channel, no clutter.

And the whole goal here purportedly was transparency and that all conversations needed to be out in the open. What came out of these interviews was that this was really a very intimidating environment for employees. And they described it in the article as rules that had been implemented in the name of transparency, but that they said created a culture of intimidation and a feeling of constant surveillance. And I thought that was really interesting from a culture standpoint. The example that was given was a group of employees. Some LGBTQ employees created a separate little channel and they were just kind of instances where they perhaps felt a little marginalized and perhaps felt like they just wanted a closer connection with one another.

So they created this private channel against company rules and they talked about silly things. They weren’t necessarily bashing the company or anything else. It was just kind of their private space, they felt a kinship with one another. And somehow somebody in HR discovered that this channel existed, invited the CEO, Steph Korey into that channel. And the minute they saw her there, they were kind of like, “Oh wow. Hopefully she laugh at some of the dumb things we talk about.”

Anyway, in a very short period of time, this group of employees was called into Steph’s office and they were fired, because they broke company policy. So, I thought that was kind of an interesting thing. But The Verge article was a terrific read. It described the company’s culture as image obsessed, that the founders insisted the brand was about more than luggage. It was about travel. Who does that remind you of Fred? What company comes to mind that wants to be something completely different than what they really are?

Fred McClimans: Not going down.

Shelly Kramer: Okay.

Fred McClimans: Of course.

Shelly Kramer: Well, it reminds me of WeWork and really there was so much more in the article, but it just talked about how there was tremendous pressure on these employees to work long hours and to limit paid time off, and the executives with the organization would use these fact channels to criticize employees work publicly. And it really, really did not sound like Away was a great place to work. And so, culture matters and this would not be the kind of publicity that any company would want at all. So anyway, I thought that was interesting.

Fred McClimans: There’s an interesting point in there about the surveillance society, surveillance culture, surveillance business that we’re getting into the U.S. and in China and many other countries. We are humans by our nature, we are outgoing generally, we need communication, we need contact, but we also need privacy. And as we become more and more of a monitored society, whether it’s a facial recognition cameras, whether it’s through the data on our phone, or geolocation, or even where we walk in a toy store, at some point we need to say, Hey, enough is enough. We need some privacy.

And I can see in some countries perhaps where creating that private chat room at some point it does become illegal. It’s a forbidden communication. And certainly look at the countries that are trying to restrict the flow of encryption technology, as a good example for where that’s going. But that’s a great lead into this next story here. If you could take a dead brand, a dead mascot, and probably the deadest idea anybody has ever had and sprinkle a lot of rejuvenation, animatronics, Disney stuff on top of it, you would get Toys “R” Us that is back in business.

So, as we all know, Toys “R” Us, and we’ve talked about this on the store, Toys “R” Us found themselves in financial straits. They missed a little bit of the digital push, but more importantly they made some poor decisions on expansion and pensions and so forth. So they went under, but thankfully the brand was saved. A group of buyers got together and they bought the rights to the Toys “R” Us name, but not actually Toys “R” Us per se. And now in 2019, we have stores popping up around the country, several of them that are Toys “R” Us stores, and kids can go there and they can buy toys. But that’s not the purpose of the Toys “R” Us stores.

It turns out that what Toys “R” Us is really doing is, they are renting space in their facility for other sellers of toys to come in and set up their little mini shops. So, if you went into a Toys “R” Us, there could potentially be a Nintendo section in the store that would mirror what had been there previously. There could be a Hasbro or there could be a Lego section, but Toys “R” Us isn’t actually selling the toys. It’s the people who are there that are selling the toys, which sounds kind of weird. Toys “R” Us, the company now isn’t making money off the sale of product. They’re making money off the space that they’re renting to the people who are selling in the store. But it gets even better.

Shelly Kramer: Or worse.

Fred McClimans: Or worse, yes. So, it turns out that what they are doing here, and this is and I said, that there was a brand, a dead brand, a dead mascot, and a dead idea. Consumer market focus groups where they would bring people together and say, “What do you think about this product here?” I never really got into that aspect of the industry there because it was so poorly done.

When it’s done really well, it can be great, but it was poorly done in a lot of cases, you have an issue, let’s get a focus group. What they’re doing here is they’re turning all the kids and their parents into a massive focus group, by installing surveillance equipment that monitors where the kids are going, what they’re playing with, how long they play with it, what they do when they’re done, where they go next. It’s literally this massive flow of information that they’re gathering.

So, the Toys “R” Us business model, sad to say has become one of real estate. Kind of like WeWorks in a way and although much lower valuation and extracting behavioral data from the parents and the children that go into the store to figure out what products are going to sell best, and I’m assuming at some point to sell that data as market research. That’s what appears to be happening. I think it’s a travesty, I do not think that this is a good thing for anybody involved.

Shelly Kramer: Yeah, I agree. As both a parent and a marketing brand strategists, that just really pisses me off, and I think that I can’t imagine that they can do that without getting some kind of a waiver signed. And I’m not sure how you can, “Hi, welcome to our store, here, sign this waiver.” You know what I’m saying? Because-

Fred McClimans: Well…

Shelly Kramer: … yeah. Anyway.

Fred McClimans: Little sign up front that says this surveillance cameras for your safety in use.

Shelly Kramer: So, moving on, that’s really interesting and it does just really hacked me off. So, speaking of data and children in our Tech Bites, we are going to talk about TikTok settling a children’s data lawsuit one day after it was filed. Do you know a little bit more about this than I do? So tell us about it.

Fred McClimans: Yes. So, remember a few years back, there was this hot app out there called Musical.ly?

Shelly Kramer: Yeah. Oh yeah, my kids loved it.

Fred McClimans: Yeah, absolutely. So did mine, they couldn’t get enough until I took it away from them and said, “No, you can’t do that anymore.” Musical.ly was a place where kids could get together and they could perform their little songs, skits, share music, the things of that nature. And of course create a lot of data in the process. Well Musical.ly went away, you don’t hear the name Musical.ly anymore, but you do hear the name that they changed the company into. And that of course is TikTok.

So, TikTok is owned by their parent company ByteDance. So TikTok formerly Musical.ly was sued within the past week, within the past few days they were sued with a lawsuit that said essentially TikTok was not being upfront about the data use that they had and that they were allowing children under the age of 13 to sign up for the app without any type of a verification.

Shelly Kramer: Well, but though I will say this, I mean, in all honesty, I’ve set my children up for accounts that they weren’t old enough to have and lied about their age. So to me, that’s not the thing that really is important. It’s that, and not that it’s not important, but the app requested that kids fill in personally identifying information, their name, their phone number, their email address, their photo and their bio. And kids are dumb. I mean, I look at my kids’ friends Instagram accounts and I’m constantly saying, “Oh my God, she has the name of her school and 2020 in her bio, get that out of there.”

Fred McClimans: The information that’s in the videos or in the pictures, the metadata in those tags, the location, the time of day. And then think about what you can tell from the background of a picture where somebody is, who they’re with, time of day, other noises. I mean, there’s so much information there. So yeah, I mean, Musical.ly was pulling in all this data that they shouldn’t have from kids that were under age that they shouldn’t have. And then of course, making it available for lots of people to see and enjoy out there. So, here’s where it gets really interesting. So TikTok now has-

Shelly Kramer: 110 million downloads.

Fred McClimans: …110 million downloads, something like that. So, this lawsuit is filed and within a day or two, settlement, $1.1 million settlement. This was not the U.S. Government to the FTC coming after them. This was a group of parents are suing saying, “Hey-

Shelly Kramer: Yes. Earlier this year they reached a settlement with the FTC of 5.7 million over other violations. So, the reality of is they’re just writing checks. They don’t care.

Fred McClimans: They are. And unfortunately I think what could happen here, given the volume of new users onto the site, the potential money that’s being raised here by TikTok and their parent company, you could see a whole group of small little lawsuits coming in, and my child signed up, here they are with five of their friends. You are being sued.

And I’m not saying that’s a good thing or a bad thing, but you’ve got to expect with the bead with which this was settled, that TikTok’s parent company has now said, “We know what’s going to happen here and we’re baking that cost into what we’re doing. We know our cost of business is going to include X number of dollars to pay out settlements for things that we’ve done wrong.” And when your business model has that baked into it, there’s something fundamentally wrong.

Shelly Kramer: There’s something fundamentally wrong. And the one thing that we didn’t mention is that TikTok is a China based company and so, the company has gotten the attention of regulators and lawmakers over the course of the last year because of course we have sticky relationships with China right now. So anyway, my kids used Musical.ly for a little while, and they’re all over TikTok now, and I will say if you are a parent, you need to be popping into those channels and looking at what your kids’ profiles look like, what their bio’s look like, check out their friends, see who’s communicating with them.

I will tell you I’m the mother of two almost 14 year olds, and they have a handful of very close girlfriends, most of whom who have been hit on by some stranger in social channels claiming to be a teenager at a different school, whatever. I mean, this is scary stuff. So, don’t trust TikTok, don’t trust anybody with collecting kids’ data and don’t trust that your kids know what to do, because they don’t.

Fred McClimans: There you go.

Shelly Kramer: My public awareness message. So, we’re going to move on to our crystal. Crystal Ball part of our show and that’s how we end every show. We generally circle back to our main dive topic, which is all about customer experience and the future of customer experience. And Fred, I really stink at coming up with predictions. So, what do you think, what’s your question? What’s your crystal ball question?

Fred McClimans: I’ll come up with a crystal ball a question for you, absolutely. 10 years into the future from now. So, it’s the year 2030. A consumer walks into a store and engages with the brand and that brand has to make decisions about what they’re going to do with the consumer. Decisions in real time. In the moment, in the store. What percent of those decisions do you actually expect will be made by smart technology? AI, Smart Chat bots, Voice bots, something in that area where the decision is actually not just made and then approved by a human, but a machine actually dives into it.

And I’ll tell you upfront, about two thirds of the company or the 2000 brands that we surveyed globally, their estimate was roughly about two thirds of all realtime decisions, about engaging with the consumer will be made by smart technology, not a human in 2030. I want to know what you think that’s going to be.

Shelly Kramer: I think it’s easily going to be that says the person who needed to cancel a subscription that my kid signed me up for on Amazon, and I literally went to the Amazon app and opened it and I realized I wasn’t in a store, but I went to the Amazon app and opened it, clicked on a thing and into the chat box. I said, want to cancel subscription. Two seconds, here you go. Here’s a link. It was like, oh my God, this is so easy. This is what it’s about.

It’s about making things easy. It’s about making things easy for people to come, experience, buy, enjoy, cancel, whatever. And the reality of it is that technology can make those things happen more quickly than humans can. So the more… and that doesn’t mean that I don’t think humans are going to be part of the equation, I think they’re very much are. But I think that when you’re looking for quick, fairly reliable, and Chatbots and automation, you’re going to get so much better over the course of the next decade. It’s getting better every month. So anyway, I think that it’s going to be at least two thirds.

Fred McClimans: It’s funny because one of my biggest fears in all of this, and I agree, I think the technology is developing, will develop very rapidly in this area. But I’m concerned about the mic decisions made by these systems where everybody kind of gets the same solution. And that’s unfortunate. We already see that today in human decisions where they’ll say, “Look, here’s a customer we’re a mobile services provider. We would almost rather lose that customer that’s unhappy because they’re going to come back to us in two years. It’s not worth our time and effort to save that customer.”

So a lot of these organizations, they just kind of let that customer go, and they’ve got to… it’s like an actual real table. Here’s our cost benefit equation here. If the following things happen, we jettison the customer. But at least today, in many instances, not all, but in many instances there’s a human that you can touch out to, reach out to, and touch a touch point and have that communication and get a little bit of empathy and understanding, and maybe have a little bit of actual individual treatment. Because we talk a lot about personalization and technology, but there’s a downside to that.

Systems that are not designed properly could be used to provide sort of a same experience, but persuade the consumer that they’re getting something unique. Because one of the interesting things about Chatbots and AI technology, AI is great at persuasion and negotiation. It does that very well. I mean, that’s something that I think we need to be wary of moving forward. But yeah, I think it’s easily 60%, 70% at least.

Shelly Kramer: I think there are two other things though that are important to mention. One is that we have and I’m a fan of people, I don’t want to take people out of the equation. I like people, but I think that we are experiencing a generation of people that don’t know how to talk to other people because we are all, and our young people are immersed in our devices and we have our earbuds on, and we’re tuning out the world, and we’re not having random conversations with people.

And I feel like my experience is when I’m in a store or when I’m on the phone and I’m getting customer service from somebody. Sometimes people just don’t know how to deliver great customer service. And I’m someone who came of age, working a fast food job or and really taking care of people and serving people. And in many ways my waitressing jobs relied on me being a great server or I didn’t make any money.

So, I learned customer service and taking care of people from a very young age. I’m not quite sure that’s as much with young people. And this certainly isn’t a knock on young people, but I feel like in general our communication skills are suffering because of our absorption in our devices. But the other thing is that, I feel like brands have us hostage and I’ll use our example with Gusto.

Fred, we’ve been enrolling in benefits coverage over the course of the last month, and working with a couple of different people that our benefits provider and by enlarge Gusto has done a great job for us as it has related to this particular experience. They are invisible and they do not provide a phone number of your rep that you can call and reach out to them even in times of the most stress. When you’re trying to meet a deadline that they’ve imposed, they don’t make getting to them easy.

And by the way, Gusto is far from the only company who does this. Many companies today erect very steep barriers. And you have to rely on conversation with bots. You have to rely on very impersonal interactions. And I’ve been thinking about this, especially with this Gusto experience like how brands are training us to like be in a state of rage, but to feel 100% totally powerless, because there’s just nothing that we can do.

We need them, we have to take whatever it is they dish out. We can’t walk away. I mean, without a lot of inconvenience in trouble. So, I think that those are big challenges for brands. And I think that when people figure out that there’s a better way, or there’s a provider who can offer, it’s kind of like the taxi, Uber situation. Taxis took advantage of us for a very long time and subjected us to really crappy experiences, bad time to be talking about Uber and Lyft, by the way I know that.

And then people said, you know what? There’s got to be a better way that I can have a clean car and a nice driver and hopefully not get sexually assaulted along the way. But my point is that for brands who are paying attention to customer experience, there has to be a better way. There is a better way and it’s figuring out how to have technology and humans work together. That really is going to be the magic equation.

Fred McClimans: I had that exact same experience with Bank of America, financial fraud and in the time it took me to argue with the bots on the phone. And go from menu, to menu, to menu only to finally get in touch with somebody in, 35, 40 minutes later they were able to correct the mistake in the system. And a lot of the challenges, these systems, they have to be able to address every issue that could possibly come up. And I hit a point where late at night, something has taken place. You’re trying to correct it. It says you need to speak to somebody but the office is closed. You can leave a message on the automated system. And you can’t deal with that.

I think there’s sort of a fundamental process or a step that I think a lot of brands are getting wrong with technology. They’re building their interfaces to handle the most likely type of situation. 25% of our consumers do this. Let’s put this here. 25% do this, let’s put this here. And what they’re missing is, very often it’s not what somebody’s going to do most often. It’s that thing that they do rarely. That’s so critically important.

So you need to think of it not in terms of how quickly can I satisfy the basic needs, but how quickly can I override the system and have that alert button, big dead center on there. So that when something does happen, you can immediately punch out, talk to a live person, stop the car, stop the bus, do whatever you have to do to deal with that. And that’s-

Shelly Kramer: Well, but they have to figure it out because the thing about it is that Bank of America? You don’t really need Bank of America. There’s a whole lot of other banks out there who are probably perfectly happy to serve your needs and that’s really the big challenge that they-

Fred McClimans: Exactly.

Shelly Kramer: … and the brands need to figure out.

Fred McClimans: I’ve identified one.

Shelly Kramer: Exactly. Trust me, I’ve had my own thoughts about replacing Gusto over the course of the last couple of days. And I don’t want to, because they’ve done a great job up until now, but I’m really irritated. So anyway, with that we’re going to wrap up our show. Thank you for joining us today. Thanks for listening. We’ll have links to all the articles that we covered in our fast four. We’ll have a link to download the Experience 2030 Report. We encourage you to do that, I think you’ll find it really fascinating and thank you for joining us.

There will be plenty of more tech topics and tech conversations right here on the Futurum Tech Podcast, FTP. Hit that subscribe button, join us, become part of our community. We would love to hear from you. We’ll see you later.

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Author Information

Shelly Kramer

Shelly Kramer is a Principal Analyst and Founding Partner at Futurum Research. A serial entrepreneur with a technology centric focus, she has worked alongside some of the world’s largest brands to embrace disruption and spur innovation, understand and address the realities of the connected customer, and help navigate the process of digital transformation. She brings 20 years' experience as a brand strategist to her work at Futurum, and has deep experience helping global companies with marketing challenges, GTM strategies, messaging development, and driving strategy and digital transformation for B2B brands across multiple verticals. Shelly's coverage areas include Collaboration/CX/SaaS, platforms, ESG, and Cybersecurity, as well as topics and trends related to the Future of Work, the transformation of the workplace and how people and technology are driving that transformation. A transplanted New Yorker, she has learned to love life in the Midwest, and has firsthand experience that some of the most innovative minds and most successful companies in the world also happen to live in “flyover country.”