343: Are Subscription Boxes Filled with Data Gold?

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Your hosts, genie, Walters, and Adam pork are two of the most recognized and respected names in customer experience and they have dedicated themselves to helping you improve your customer experiences. Adam, I know you care a lot about, you know, close. Okay. I'm out for. I don't even know if you're starting that way. I think I already. Oh, well, today we're talking about subscription boxes which have which have like exploded in the last few years. Seems like everywhere you turn, there's a new box that you can get delivered right to you by, you know, mysterious means personalized for you, your family, your kids, your dog, whatever you want, you can get a box delivered. And one of the ones that really took off from the beginning is stitch fix. Have you heard of stitch fix the clothing, right? Yeah. See, I guess, because it says stitch and you might, I know, and they, I mean, they have a great story. It's really interesting, but I think one of the things that I noticed was that before I really heard about it on the business pages, I was starting to hear about it from my neighbors and my friends who were saying, look at this, I got this from stitch fix and it's so cool on. So I think most people. Title kind of dove in thinking, wow, this is amazing. Like who goes to the store anymore? Who does this? We, we do so much online shopping and delivery seemed like a no brainer. The challenge that they overcame, which I think most of these have is that instead of just getting close and being like, you will wear these you. I mean, obviously some clothes fit better than others. Some we like we don't like whatever they made returning releasing and they also made it so that you could talk directly. You could chat with your stylist. You could send ideas all these things. Now you get a new clothes every month or every certain period house our because we're talking about subscription boxes, so like, right, how does that? So basically you give them a range a pretty close range of hears about what I want to spend every month. And here are how many pieces I want, and you can even customize like, do not send me shoes, do not semi jewelry. Don't, you know, semi things that are short skirts or whatever based on where you work and what you do. So the idea of it is very custom. It feels very, very personal. When they started, they had, you know, real stylists and they still have several, but then they moved. They started moving to a I and they started moving to algorithms essentially that told the, you know, the stylist on the other end, here's here's what they would like next, and this is totally subjective and totally outside of any data. So I'm just going to say that. But what started happening that I noticed was that some of my friends and neighbors who had solely on this idea. They actually started saying things like it's not the same because there I feel like my stylist isn't listening to me and it's because the stylist really wasn't because the stylist was about. And they're listening. There does not understand. Exactly. And so I thought this was so interesting because you brought up this topic to discuss about how all these subscription boxes actually are amazing for data because if I send something back, they know that maybe I don't like that or maybe I, that's not my thing immediately, and so then they can change. You know, the algorithm can respond to that. AI can respond to that me like, oh, right. Do not send Jeannie hula skirts in, you know, January because she lives in Chicago. Or whatever. I never received a hula skirt just to be clear, but but I think the whole idea of it is really it's really interesting because it sounds perfect. It sounds like if you get this data of what people what the customers are sending back and what they're keeping that tells you so much about them. But in reality, even though the example I used, they made returning super simple like the the envelope was in there. There were very easy instructions, but you got a bonus. You got a little discount if you kept a certain number vitamins. So you had to actually way the value of, okay. Do I want to send this back for ten dollars or do I wanna get twelve dollars off of my whole order here because that way I'll get that discount. So there was a value equation in returning something not just, oh yeah, I love it and I'm gonna keep it. So I think that. As much as we want data to be perfect and tell us everything about our customers. It really is challenging to really understand, you know the human experience, but I can see why why marketers and why suppliers in a really are getting so excited about this because the data that you can get is so much richer than somebody who goes and browse through a store and happens to buy something that one day and then maybe brings it back six months later. Maybe they never bring it back, but it hangs in their closet forever. So you don't really understand their tastes and styles and preferences with this. It's immediate feedback which can be really, really helpful will. Yeah, it's not just individuals it back. So I'm so a lot of traditional retailers are getting this WalMart targeting gap. They're hopping on the Medway. Nordstrom bought trunk club a awhile ago and that. How close and Nordstrom bought them because they wanted in on this. So yeah, I mean so, but the thing that does not just individuals. So what happens the way a lot of these work I guess is you know the first few deliveries gives you a feedback loop when your data where the machine starts to learn about you then, and I don't know about your stitch facts in your your friends. But yeah, the the concept at least is then it really starts to understand the do's and the don'ts around what you want. Right? That's that's powerful individually, but here's what gets even better. This is all immediate data that they now have across everyone, right? So while they get, you know, ninety percent don'ts on something boom, they know by by we're not doing that anymore. Right? That's where I mean, how? How do you compare that to somebody walking in buying a sweater. You know, off a rack in a department store, checking out, you don't know if this was for them, their grandma, their kid, right. You don't. You don't know who if you don't know anything about who bought it unless you're matching the credit card data and some stuff like that. But yeah, it's it's an immense. It's just very interesting how organizations are using every action we take as a data point to understand us. Well, and in a way the subscription box thing is actually taking some of the script from dating apps. You know, like dating apps, often use these types of algorithms to figure out an to be clear. I have not used a dating because I've been married way too long, but swiping left for a while. But it actually will not only tell them about the individual and what they're looking for as far as okay, we know that this guy likes Brown hair, whatever it is, but it also tells them about segments of society and what they actually are looking for as well. So if you think about the subscription boxes, you can start seeing trends across demographics. You could start seeing trends across age groups, neighborhoods, professions, all sorts of things. Because part of the customization means that as the individual consumer, we are actually saying, here's all of my personal information, use it as you will. You know, like I will give you everything they know, you know, for these clothing ones, they know measurements. They know, wait, they know sizing, they know all of these things about people for the. There are some that I've seen that are subscription boxes aimed at parents for. Children. So things like and we actually used one for awhile that came with these little kits that were like mechanical things that could be built. There are all sorts of maker kits. There are craft kits, there are, there's one that teaches kids about different parts of the world, so they get a little suitcase, and then they get to learn about these different things. They get stories and food and things from all over the world so that they can experience that there are so many food ones now that are really about the experience of creating a meal together. So the fact that we are basically saying when we sign up for these services, here's a whole bunch of information that is personal because that way I'll I'll get more personalized experience back that gives them an incredibly deep. You know, pool of resources that can en- data that can be used for not only determining what this individual person, but also determining what's going to work in the marketplace in a year, what can we? What can we actually predict with trends and things like that? So that part, I find really exciting. The part that I think is still challenging no matter what is that we are still humans and every once in a while we're not going to match that data. And so that's going to feel like we're not being heard, it's not personalized. And at the end of the day, one of the biggest drivers around feeling connected to a brand is feeling known and recognized. And so if we start feeling that is not being fulfilled them, we're going to start canceling these boxes. So I'm curious what's going to happen in the future? Well, thinking about this as you're talking through it, and so this is sort of an informed idea. But I would imagine that a lot of. These companies are really. I mean, they certainly want subscribers on attrition one. They're all using VC money, so they need those numbers, get more VC money. So just to be crass besides that, you know, I think when they're more mature, they probably are less concerned with, you know, sorta minor attrition as cul calling their customer base for the most valuable customers. And when you think of a subscription blocks model, I would assume the biggest other than maybe experiential problems, service issues out, assume. The biggest reason is the box just doesn't fit what you want right. That people canceled decide just not using the box every month, whatever. Zenit I don't like this. I don't like that, but I think over time particularly as they reach maturity in each subscription that is going to be less of a concern. I mean, nobody wants to lose a customer, but if they are continuing to. Sorta find who their customer is and the ones that are going to have the most lifetime value and to target around them. They're going to just fight the nature of this type of service. You know, sort of a trite, a good number of customers doing that. Right, right. Well, and I think the. You know, it's funny you say that because I bet like Nordstrom in some of the classic retail stores would like to do that, and they don't always have a mechanism to do that. So this is where I think the the power is with this type of data. But I don't know I, it's gonna be fun to watch like what's subscription box could possibly be next at this point because it feels like we've seen a little bit of everything, but. You know, they're, they're, I think they're doing it all wrong personally, really? Why it's you have? Yes. I think what they do is the first box just comes with a piece of paper and it says, give us your Facebook log in and then they don't need to do all this research and all this. I just well they do. They ask for that in some cases, they say, if you're comfortable, let us let us do this and that way they can get to know you a little bit better. So they're already doing that atom. They're asking, they're saying, let's be friends. There's Intersil reason. I don't know that. I know that would creepy out. But I think it's it's just another way that this type of data revolution that we're kind of experiencing is impacting our our world, our daily lives the way we shop the way we interact what we do at home, all sorts of things. So. Just, you know, the robots, they're coming, they're they're coming. There's nothing. She just understand this. It used to be the the saying online with free services like Facebook is, you know if you're not paying you are the product, right? I want to be clear to everybody even if you are paying your still the product now that's true. It has changed or basically the product for any service that has any remotely, any kind of remotely digital component or the product as well as customer? Well, and I bet a lot of people who have signed up for these things and provided all that very personal information have not thought twice about it because they think about it as that one experience that they're having to get their personalized experience. But yes, you're absolutely right. If you're if you're giving away all of your personal information, you are actually giving them. Part of part of the product that they're settling, whether you knew it or not. Exactly. That's from the company's standpoint, you gotta do it up. Just be aware as a consumer and it's finding the balance because I mean, Vom advising the company. I'm gonna tell him to get every piece of data they can get. Yeah, absolutely. Got to hope that the companies I talked to are using it ethically and responsible about it. But of course you want to know. I mean, this has been our goal since before all of this, right? It's always been get to know your customers right now. You can just do it and really Orwellian and creepy ways. Right, but you can still do it. A lot of companies take it seriously and use it ethically. So it's not by default. Bad just know that once you give it, it doesn't come back. Well, on that creepy note. Hey, I was making a pro pro company statement when you talking about. Well, thank you guys for listening and we, you know what? We're not gonna. We're not gonna do anything with your data today. We're just going to let you listen to us. How's that? That's our agreement. While. So if you haven't yet subscribed, of course, we do like that. So please go ahead and subscribe wherever you listen to podcasts to crack the customer code. Our subscribers, get newly released episodes immediately. And of course our undying gratitude crack the customer code is a proud member of c. suite radio, be sure to check out all the great business content at c. suite radio dot com and c. suite tv.com. We appreciate you spending your time with us. I'm Jeannie Walters. You can learn more about me and our trademarked customer experience investigation process and more at experienced investigators dot com. You can learn more about me. My keynote speak in customer service bookshops and trading at customers that stick dot com. Next time carry yourself and take care of your customers.

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