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Robert Zirk: What will your business model look like 10 years from now?

Even if you're still selling a similar product or service, your value proposition may have evolved. And over that span of time, the preferences of your customers most certainly will.

As the adage goes, change is constant. Customer behaviors and expectations are always in flux. And it's up to businesses to keep up.

In a Salesforce survey of more than 6,000 consumers, nearly two thirds of respondents said they expected companies to align with their evolving needs and preferences. And a Microsoft report highlighted that 77% of customers view brands that solicit and implement their feedback more favorably.

Frank And Oak is one of those brands that has strived to adapt to customer behaviors and feedback since it was founded in 2012. Back then, according to their website, the company's mission was to "create an apparel brand that would speak to a new generation of creatives and entrepreneurs," and it initially operated on a monthly membership model as an online-only menswear retailer.

Fast forward to 2024, and a lot has changed.

Nadia Famularo: We went from being menswear only and online-only to having both online and brick-and-mortar, adding a women's line.

Robert Zirk: That's Nadia Famularo, director of operations and customer success at Frank And Oak.

Nadia Famularo: And, over time, as we understood where the market was, where our customers were, what they really wanted evolved into a more kind of an everyday lifestyle brand.

Robert Zirk: Having been with the company in a variety of roles through many of these changes, Nadia shares insights on this episode that are valuable to business and CX leaders across industries, covering data-driven decision-making, gathering and leveraging customer feedback and how technology plays an important role in delivering an effortless customer experience.

So today on Questions for now, we'll ask: What is the Frank and Oak secret for adapting to changing customer preferences?

Robert Zirk: Welcome to Questions for now, a podcast from TELUS International where we ask today's big questions in digital customer experience. I'm Robert Zirk.

The Frank And Oak of today is quite different from the company that launched back in 2012. Based out of Montreal, Canada, Frank And Oak began as an online-only menswear retailer with focuses on custom suiting and bespoke tailoring. And it operated on a membership model where customers could choose three articles of clothing that were thematically designed in-house. Once they received their monthly box, customers had a five day period where they could try on the clothes. They'd keep the items they wanted and return the ones they didn't using the included return box.

But as Frank And Oak started to better understand its customers through the technology it used to offer personalized service, the brand's strategy began to branch out.

In 2013, Frank And Oak opened its first permanent retail location. Just two years later, it would have six stores across Canada. And in 2016, following thousands of requests from customers, the brand added womenswear to its apparel line.

A 2015 BetaKit article quoted co-founder Ethan Song describing Frank And Oak as "a tech-first company" where "the experience is the product," highlighting "community, personalization and integration" as the most important building blocks for a brand.

Its omnichannel strategy sought to make shopping for clothes less transaction-focused and more experiential, with its flagship retail location integrating a café and a barber shop and its website featuring a chatbot and team of stylists ready to help customers by making personalized recommendations.

And while the overall experience is still at the forefront for Frank And Oak, the company redefined its mission in 2017 when it pledged to focus on sustainability, starting with more sustainable apparel – a counterpoint to the popularity of fast fashion throughout the 1990s, 2000s and 2010s, informed by a growing number of consumers looking to make more environmentally-conscious buying decisions.

Nadia explained how sustainability is at the heart of Frank And Oak today.

Nadia Famularo: A lot of our products are responsibly produced using more sustainable fabrics, recycled polyester rather than virgin polyester, et cetera. And we try to bring the sustainability mindset to not just the clothing that's produced, but the way we operate as a business as well. And so we're present online, and also we have over a dozen stores across Canada where we do business.

We've had a chance to really become a leader, especially in the Canadian fashion space. We became B Corp certified several years ago.

Robert Zirk: According to B Lab, the non-profit network governing the certification, B Corps are companies that have been assessed as meeting high standards of social and environmental performance, accountability to all stakeholders – not only its shareholders – and transparency in their operations.

Nadia Famularo: We have partnerships with organizations like Earth Day Canada. And with that, I think, as we've seen across industries, there's been more of a call to action, but also just more of a desire to see sustainability in everything that we do.

Robert Zirk: And that coincides with a generational shift toward personal, social and environmental values, like sustainability, as an increasingly important purchasing factor for customers. A McKinsey survey of US-based customers showed that 75% of millennials consider sustainability in their buying decisions, compared to 66% of all respondents. And according to a First Insight survey, 62% of Gen Z consumers prefer to buy from sustainable brands. Brands can't afford to treat sustainability like a trend that goes in and out of style. Sustainability is what a growing number of customers expect.

Today, Frank And Oak's website describes its purpose as to "inspire a better way of living by creating conscious products that last through time." That includes designing its clothing with eco-friendly materials and sustainable processes, reducing the amount of packaging it uses in shipping while also using recyclable or compostable options and even making use of locally-sourced or upcycled furniture in its retail stores. Beyond manufacturing a more sustainable product, Nadia highlighted how Frank And Oak's commitment to sustainability plays a leading role in the decisions it makes as a brand and as a business.

Nadia Famularo: We're just continuously trying to find ways to add more sustainability and more eco-conscious ways of doing things across our business. We have some partnerships in our fulfillment and last mile part of the business. For example, we partner with GoBolt, which is a Canadian-based company as well, to provide electric vehicle delivery to a lot of our key markets. And so with that, a lot of our deliveries across Montreal, Toronto, Vancouver – the biggest cities in Canada, but also naturally where our biggest customer bases are – can benefit from that sustainable experience.

Robert Zirk: According to a Statista survey, nearly eight out of 10 shoppers worldwide would consider a more sustainable delivery option when they order online. And a survey from Stuart, a last mile delivery platform based in Europe, found that 27 percent of consumers in the UK would be willing to pay more for a delivery that's eco-friendly.

I asked Nadia what specifically prompted Frank And Oak's pivot to a focus on sustainability.

Nadia Famularo: Customers have just been getting smarter about what they buy, the intent with which they buy: do they want something that they're going to wear once? Is it something that they're going to want to buy and then wear over time? And so that's also part of, beyond the sustainable production of our clothing, is the quality and the longevity and the adaptability of our clothing to the everyday lifestyle of the Frank And Oak consumer. And so that also is just naturally where our customers are evolving to as well. And buying for quality rather than quantity, for example.

Robert Zirk: Although the global subscription box market continues to grow, with an imarc report estimating a 14% annual growth rate and $105 billion market value by 2032, the continued drive for sustainability led to the discontinuation of Frank And Oak's Style Plan subscription service in 2021, which had been launched three years earlier as an adaptation of previous membership programs.

Nadia noted that while the COVID-19 pandemic and a decrease in discretionary spending among consumers accelerated that particular change, sustainability and the customer experience remain the deciding factors for how Frank And Oak moves forward to meet customer expectations.

Nadia Famularo: Ultimately, the subscription was not sustainable on many fronts including the high return rate that comes with a model like that. And so, adding shipments to and from customers constantly on a monthly or bimonthly basis, when you go behind the curtain a bit, it increases our carbon emissions. It increases the shipping. Instead, we've shifted away from that, really focused on driving more meaningful customer experience online and in stores more regularly.

And our store associates are also really versed in our products, can make suggestions, but it's also a great customer feedback point for us, too. We can understand more conversationally rather than just checking off a box on a form, like, what was wrong with the product? Why are they returning it? And then be able to make really personalized recommendations on how to adjust further and then also share that feedback through our internal feedback loops as well.

Robert Zirk: Technology has played an important role in shaping how Frank And Oak continues to strive for a more sustainable customer experience. A recent change is the introduction of omnichannel fulfillment, where inventory could potentially be shipped from a nearby store location rather than the warehouse.

Nadia Famularo: It's more strategically thinking about where inventory is positioned so that if you're ordering in Vancouver...

Robert Zirk: ...on Canada's west coast...

Nadia Famularo: ...and our store in Vancouver has all the items you're ordering, rather than having that order shipped from somewhere in Ontario...

Robert Zirk: ...which is about 2,100 miles or 3,400 kilometers east...

Nadia Famularo: ...we can ship it from there. So it's a shorter distance traveled, whether it's electric vehicle and already carbon neutral, or just offset - regardless, the emissions of shipping that order will be lesser. It's a faster delivery time for the customer overall, a more cost effective one also.

The technology to be able to roll that out required a lot of investment and integration in our tech stack. So it involves introducing a new OMS or order management system that can help route our orders more intelligently to the right location.

There's a logic there as well, in terms of order orchestration, that's very driven by tech and automations to match up where the customer's ordering from, which store location has the full order for the customer if you're ordering multiple items. Does the store have all of the items? Does it have three out of four? So three will ship from there to benefit from that closer distance, that better kind of inventory positioning and have another one come through as well.

Obviously we try as much as possible to ship an order in one package, right? And then it's the fine line of when you think of sustainability, how many packages are we willing to split up that order into to get the customer all the items they want, or on the other side, from a business perspective, do we not share that that inventory can be sold to a customer depending on if it's available only in a store versus our warehouse, for example?

Robert Zirk: Automations and data insights also help in terms of inventory planning, allocating types of apparel based on regional climates and customer profiles. And on the ecommerce side, customer data is also leveraged with AI to create personalized recommendations.

Nadia Famularo: So rather than a group of people curating things, we can read customer data to understand what products are they most likely to buy? Mirroring, let's say, this customer bought one of our skyline bombers in black, and they also bought these other things. Maybe another customer who bought that same bomber jacket will also be interested in the same product. And being able to make recommendations around that based on customer profile, building more dynamic product feeds on our website and our email content to customers so that it's more relevant and essentially, hopefully, converts into a more successful customer experience purchase. You're being served the content you want and you're more likely to be interested in not just based on anecdotal or kind of gut feeling things, but based on what kind of more measurable insights that we can get from technology and data.

Robert Zirk: According to an Everest Group survey supported by TELUS International, CX leaders identified personalization and customization of customer interactions as the number one reason to consider generative AI solutions in their CXM operations. Looking toward the future, Nadia highlights that Frank And Oak is continually looking for new opportunities to leverage automation and AI, but in a way that maintains the humanity that comes along with the brand experience.

Nadia Famularo: I think the challenge is to understand how to do that responsibly and not over commit in any kind of way to leaning into only AI and automation, for example. I think there's been a lot of learnings that we've been able to gain from those already in terms of the product recommendations and understanding our inventory in certain ways. But I think, ultimately, it's identifying some of the key touch points where we can reasonably rely on those to enhance the customer experience without taking away from what we also want to protect as our kind of very personalized experience and keep that kind of very human connection with our customers as well.

Robert Zirk: And while technology plays a critical role in creating a personalized customer experience, Nadia noted it can have an equally important influence on the agent experience. In understanding the intricacies of the customer service agent role, having started her career with Frank And Oak as one herself, she emphasized the importance of ensuring agents have the right technology and processes at their disposal.

Nadia Famularo: We, our CS team, relies on an internal CRM tool and through working with our tech team, we're able to integrate a lot of our different tools and platforms to help the customer service agent have a quicker response time, find the answers to their questions more easily, be able to serve the customer. Ultimately, it's about the efficiency that we're able to provide to the team. And so you move from having a smooth customer service agent experience to them having a smooth er customer experience as well.

Robert Zirk: In an Eagle Hill Consulting survey of 1,000 US-based employees in a variety of industries, 67% of respondents said that technology improves their ability to assist customers. The same survey noted that 70% of respondents say their productivity is directly affected by their day-to-day work experience.

High-quality digital tools and streamlined processes that reduce agent effort translate to a better customer experience. And better customer experience means increased profitability.

That aligns with research from Deloitte, which shows that customer-centric companies were 60% more profitable than companies that didn't prioritize their customers. And a Forrester report found that the brands who excel at delivering customer experience generate 5.7 times more revenue than rival brands who aren't as proficient.

One of the key ways Frank and Oak maintains a customer-centric focus is by gathering customer feedback and then combining it with quantitative metrics to gain a holistic understanding of consumer behavior and preferences to make decisions accordingly. Nadia stressed the importance of finding the right balance between the quantitative data and qualitative data as the company continues to grow in a sustainable way.

Nadia Famularo: There's definitely a balance to be had of that. But you need both, always. An anecdotal piece of customer feedback might be a customer saying what they think they want, but the real truth lies in the bigger picture of what the data tells us and helps us understand our customers in a lot of different ways. and as much as we can trust our instincts and our gut feelings in some cases, it's often not enough to get buy in from other stakeholders when pushing customer experience initiatives or are trying to convey the importance of certain things that are impacting our customers.

Robert Zirk: One important point in the customer journey for feedback is customer returns. It's important for retail brands (and companies in other industries that have equivalents to return policies, like a satisfaction guarantee, for example) to ensure a smooth return process that minimizes customer effort. The Interactive Media in Retail Group, or IMRG, notes that 92% of customers who have a positive return experience will make another purchase from your brand. And Nadia reiterated that the reasons behind customer returns also provide important data about customer behavior and preferences.

Nadia Famularo: Why are they returning? Is it an issue with the product? Is it the fit? Is it the design? Is it the pattern? That can turn into insights for our design and product development team to inform their future collections. Or is it more that they didn't get their order on time and so they missed the chance to use the product? And so it's more about an operational SLA and a miss there that we need to address. There's so much around returns that is like a huge well of information that can help inform the customer journey and the customer experience.

Robert Zirk: Nadia described additional ways in which Frank And Oak gathers data to measure how well it's meeting sustainability and CX objectives.

Nadia Famularo: We have a number of touch points for customers to share feedback. So when thinking about the typical customer journey and their online order or their in-store purchase, we have post-purchase surveys where we capture feedback consistently. We have surveys through our customer service team as well to capture customer satisfaction on those interactions. Those are very direct customer feedback loops.

But then, beyond that, we can read into things like our SLAs - are we meeting our average time to ship the time that we say, or it'll take for an order to reach a customer? How much are we meeting that? And that becomes a proxy for customer satisfaction as well. Are we meeting that customer promise?

Beyond that, we also have product reviews on our site. Once you purchase something, you can leave a review on the product and that can tell us: Is there an issue with this product? Are customers looking for something else? Is there a new feature we could add to it that would further improve on customer satisfaction?

That helps us evaluate product performance itself and can have further actionable insights to our product and design team. And the reviews can also serve as a form of social proofing as well and when a product gets really great reviews, if other customers see that, it also encourages them to buy those as well.

Robert Zirk: However, Nadia noted that sometimes CX leaders tend to focus disproportionately on negative feedback, but a single criticism doesn't necessarily tell the whole story of what the majority of your customer base's journey looks like.

Nadia Famularo: You tend to zero in on some of those more negative experiences.

But then, when you can take a step back and look at the bigger picture, you'll see, "Oh, that's maybe a lesser portion of our customers are being affected by this." And they absolutely deserve to have that problem solved, but maybe it's not the bigger picture, the biggest problem that you thought it was, and it's really important to be able to take that perspective shift and take a step back from the one and look at the hundred or the thousand and how to best serve the majority that you can.

It's also nice when you take a step back and realize it's not as big a problem and it really helps with contextualizing things and keep control of what's a critical issue and what's not as critical and helps you prioritize and find what are the big initiatives that you can continue to pursue while solving smaller scale problems at the same time.

Robert Zirk: As we neared the end of our conversation, I asked Nadia for one piece of advice she had for CX leaders or emerging leaders listening to this podcast, and she referenced how crucial it is to be an advocate for your customers within the organization.

Nadia Famularo: Something that becomes really important is in your position, you are the voice of the customer internally, right? And it can become very challenging to get stakeholder buy-in sometimes, but you also always have to make sure that someone's leaving a seat at the table for the customer to be represented.

And it's not just purely about business goals, which should ultimately serve the customer, granted, but it would be to always remind people that the customer has a voice and it needs to be listened to with data and with actionable insights. But I think that would be the one thing is to not let the customer's voice go unheard.

And I think customers might tell you what they think they want, but ultimately as a customer experience leader, you have access to the data and the insights, the customer service feedback, to really know more tangibly and quantifiably what's really needed and how to make those recommendations to the business to respond to the problems that actually need to be solved.

Robert Zirk: Through this case study on Frank And Oak, Nadia underscored the importance of understanding customer behaviors and expectations, using customer feedback and data analytics to make informed decisions, and providing a seamless and personalized customer experience from both customer-facing and agent-facing perspectives.

I'd like to thank Nadia Famularo, director of operations and customer success at Frank And Oak, for joining me and sharing her insights on these topics today. And thank you so much for listening to Questions for now, a TELUS International podcast.

If you enjoyed today's episode and want to hear more compelling insights on all things digital customer experience, be sure to follow Questions for now on your podcast player of choice and make sure you're getting notifications every time there's a new episode.

I'm Robert Zirk and until next time, that's all... for now.

On this episode, we explore how eco-friendly apparel brand Frank And Oak evolved its business model to adapt to customer expectations — and how data, feedback and technology are used to optimize its CX strategy.

Episode cover image for Questions for now, a TELUS International podcast, featuring a character browsing an ecommerce website and pointing to a shirt with an eco-friendly tag

Questions for now Frank And Oak image

Founded in 2012 as an online-only menswear retailer, Frank And Oak used data and insights from customers to change course over the following decade, reinventing itself as a sustainable lifestyle brand with both an online and brick and mortar presence.

Listen for the informative insights of Nadia Famularo, director of operations and customer success at Frank And Oak, as she discusses how data-driven decision making influences Frank And Oak’s business strategy, how the company leverages technology to enhance the customer experience and why CX leaders must ensure the voice of the customer is heard in their organizations.

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Customer Experience

What is the Frank And Oak secret for adapting to changing customer preferences?

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The future of content moderation: Strategies and tools for 2024 and beyond

Intro: TELUS International Studios, where customer experience meets digital transformation.

Patrick Haughey (PH): Welcome to TELUS International Studios, the podcast series about world class customer experience and digital technologies and how the two increasingly intersect. I'm Patrick Haughey. Throughout this series, I have been meeting the people on the front lines of CX and technology. And if you have been listening, if you've been enjoying them, please do click, follow or subscribe and leave a rating or review so that other people, just like you, can discover the series. And if you haven't been listening, if this is your first time, please do make sure to go back in the back catalogue and listen to some of those great interviews we've done. Hopefully you enjoy them. Now anybody in North America does not need any introduction to the Home Depot. Would you believe 90 percent of the U.S. population lives within 10 miles of a Home Depot store? It turns over around one hundred billion annually in revenue and over four hundred thousand associates work for the company. All that means that today's guest, Mike Jones, senior director of customer care at the Home Depot, has an awful lot of customers to care about.

PH: He tells me about his approach to CX and how the Home Depot has grown so successfully since its founding in the late 1970s by really listening to its customers. But Mike's priority is not just those customers that buy the company's products and services, but also what he calls his internal customers, those 400 thousand associates that work in the Home Depot every day. And indeed, the company has a unique management philosophy based on what he calls an inverted pyramid, which he tells me all about. Mike also describes how he has kept up with the pace that the company has seen in the last 18 months or so. Huge explosion of growth there, particularly throughout COVID. He also talks about creating a set of company values that will last for decades. The advice he would give to other CX leads navigating busy periods like he is going through himself using data to do better business and lots and lots more. That is all coming up with my interview with Mike Jones right now. I hope you really enjoy it.

Mike Jones (MJ): So the Home Depot was founded in a perfect time in the late 70s, over 40 years ago, as really a way to be able to solve customers’ problems when they needed to go and fix something in their house. And that time the do-it-yourself market really didn't exist. And you would pay a contractor and that contractor would, generally speaking, would charge you for their labour and then charge their customer significant increase rates on products. And our founders, Bernie Marcus and Arthur Blank, thought they could do it better by having a direct to consumer model. And then really the differentiator at that point was staffing our stores with experts, expert contractors, people who knew the trades, people who could teach and help our customers solve their problems, whether it be as simple as replacing a faucet or is as complex as installing an entirely new kitchen. And so that was, that was our roots over 40 years ago. And we've since obviously expanded our business to the pro side, to the maintenance, repair and operations on the professional business side, the B2B consumer, the B2C consumer and a whole host of other opportunities as that's grown in the U.S.

PH: Well, give us a sense of the footprint, I guess. Is there, is there Home Depots all over North America?

MJ: Yeah. The easiest way to think about it is our focus footprint is primarily in the U.S. and in Canada and in Mexico. Within the U.S., about 90 percent of the U.S. population lives within 10 miles of a Home Depot. And so we have leaned heavily into that footprint as the consumer demands have shifted and changed and expectations around being able to fulfil their orders very, very quickly, very rapidly has changed certainly over the last year, but even over the last 10 years. And so we've had a unique position in terms of real estate to be able to take care of our customers being on the pro side or on the DIY side. On an annual revenue basis, we're north of one hundred billion dollars, U.S. dollars, in revenue and we employ over four hundred thousand orange blooded associates.

PH: Oh, my goodness. That is just incredible. So basically, you, senior director of Customer Care, have a lot of customers to care about.

MJ: Certainly we do. And I view that role as twofold. One, our internal customers, we operate under a management construct and a management philosophy of an inverted pyramid. And if you can visually picture an inverted pyramid with various levels. But the top of that pyramid is our customers and right with them is our front line associates and then all of the lower levels of the pyramid are the kind of management structure all the way down to the bottom of the pyramid, which is our chief executive officer. And that's very, very important to always keep in mind, because ultimately we believe that if we serve and keep our focus on serving our customers and our front line associates who are serving those customers, then that's the right recipe for success. So the internal customers is a big part of my role, as well as the external customers that have a need and have support and have desire to be able to shop with us.

PH: And what difference does that make? You know, I think that inverted pyramid is maybe not unique to the Home Depot, but it's certainly something that we don't understand as a normal corporate structure, that most of us might see it as. So what difference does it make on the ground in a very practical way, in a daily way to life and work in the Home Depot?

MJ: Yeah, it's a great question, Patrick. And I'll highlight a couple of very real world examples. First, it puts us in a position in leadership, a position of humility, in a position of grace. And what I mean by that is in any organisation, if you drive a construct where every good idea emerges from the top and is driven down through the organisation and more of a typical corporate hierarchy approach, you're not ever going to get the best ideas because those ideas will originate from those furthest from the customer. We believe that the best ideas emerge from those closest to the customer. And by living that sort of value construct and that sort of leadership construct where you empower the front line folks who are belly-to-belly with the customers in the aisles or in our centres serving our online business, that you're going to get a much better solution. And it's also going to be much faster when you have a problem to be resolved. If it has to go up and down through a very hierarchical, rigid chain, you're not going to be successful. And when you think back of the landscape over the last 40 years, of all the retailers that are no longer in business, you could pretty much draw a straight line to leadership philosophies and how they've not been able to evolve and change rapidly with the times to ultimately their demise.

PH: Well, that's very, very interesting and I think you've mentioned a number of times in this interview already fast solving customer's problems, not just sort of in the sort of quickly. So am I right that this is a core part of your philosophy when it comes to how you apply and carry out your role?

MJ: Yes, you are. You've heard already about our management construct, we have another very simple visual that is our eight values and we actually have a values wheel, but, they're a list of our core values, values that our founders gave us years ago. And it is honestly their greatest gift and values. Like taking care of our people, doing the right thing, respect for all people, it makes decision making much faster when you have that sort of a value set. And one example, very early on in the pandemic over a year ago now, our chairman and chief executive officer, Craig Menear, had a very profound and very simple statement. And he said every decision we make from this point forward, and this was in early March, I think we all know what was happening in late February, early March around the globe. But he said every decision we make from this point forward will be with the safety of our associates and mine in the safety of our customers and mine. We will run this business not for the short term, but for the long term benefit of our customers and our associates and talk about something that made all of our jobs in leadership much easier as we had to wrestle with the challenges of moving people out of our offices and getting them home and the expense associated with that. We moved over five thousand people from an office environment to a home environment in a very, very rapid amount of time. And they're certainly an expense impact to that. But I was never once asked about it. We just did it and we did it because it was the right thing to do. And that sort of values-led-operation, it certainly makes speed a priority. But it also, it also makes living our values much, much easier and makes all decisions that flow from that much easier to make and execute in rapid fashion.

PH: Well, speaking about the execution of that, what are some of the things that you have introduced into the stores are introduced into the customer journey to speed it up? A couple of interesting examples I came across.

MJ: Yeah, I mean, the very first one is if you think about customers’ expectations of fulfilment over the last 14 months and how that has changed. People had already expected you'd call it the Amazon effect, but people that aren't expected to be able to click and get whatever their needs were fulfilled in very rapid fashion. We had to pivot, though, to an in-store environment where we intentionally restricted traffic. We intentionally, I remember again, spring - we normally, spring’s a very, very busy season for us. And we reduce marketing dollars. We reduce marketing events. We did not want to drive people into the store, but we still had a need out there because people were home. And in the springtime, certainly in the U.S., people wanted to plant, they wanted to do gardening work and they wanted to do interior projects because now they're at home. And so we had to figure out a way to safely and rapidly fulfil those expectations. And we introduced curbside pickup at our stores that really wasn't even on the drawing board for us to be able to have a customer place in order via their app and go to the store quickly and have it delivered to their car. And within a couple of weeks, we were able to take that from a proof of concept stage and a couple of stores to the entire chain. And that's just one example of how we rapidly changed the operations of our stores to still live with those values that I spoke about earlier, about safety and keeping our associates, our customers in the forefront. But also there's a real need there. You think about the customer who has a water heater go out and needs a water heater element because now they're home and now they're using their water heater much more or they're using their refrigerator or their appliance much more because they're having all of their food. It's being delivered as well. So we certainly saw opportunities to be able to meet the customer's need with a high degree of satisfaction.

PH: You will also, I'm guessing, stock an awful lot of different products that come from different manufacturers. They have different types of packaging. They're made up in certain ways. And do you ever have to have conversations with them on behalf of your customers in order to enhance the customer experience, that you will get feedback about the way certain things are put together or packaged or whatever. That then gives you an insight into how to make it better for them, which you then need to pass on to a third party or a trading partner.

MJ: Yeah, I think one of the biggest value ads that any anyone in the contact centre space in the customer experience space has to add, has to add in terms of value, is taking the data that you have from any one individual customer experience and extrapolating that out across the entirety of the customer experience to really weigh and decide where the big pain points are. And that is what we do every single day through a whole host of analytic suites. And this could be something as simple as, hey, we're introducing a new patio set that is globally sourced. But very early on we find out that there may be a problem with a joint in connecting it. And how do we feed that back in that information, back in to the designers and the manufacturers so that we ultimately stop that call from coming in by fixing the problem on the front end? That is a daily responsibility across all of our contact centre spaces. And we try to use a very data rich environment to target those opportunities to ultimately improve the customer experience much more globally than just the one off. Obviously, every day you're going to solve a one off problem. But how many of those one offs, when they're added together in aggregate, represent a much bigger opportunity?

PH: Well, that data analytics, I assume, has become a very big part of your job in a relatively short space of time, maybe because I think the leaps in technology that we've seen in very recent years in the customer experience industry have just been mind blowing.

MJ: Yeah, it's been amazing to be a part of that because now you have technology that can measure inflection. It can measure friction in people's voices. It can measure cross talk between a front line associate and a customer, can measure pauses. And so you're able to look at that and really the word we often use is sentiment. Now, historically, people will complete surveys and there's a whole host of biases that come along with surveys and take rates and nonresponse biases. But you can take all of those out when you look when you're listening to every single call and you've got proper software that's able to look and say, hey, where is the highest sentiment factor? What are we doing a really good job in, and rewarding and recognising and those partners and those associates. But then also, where do we have pain points? Where do we see the lowest sentiment scores based on the data? And then how do we ultimately go out and fix that? Is it a product design element? Is it a supply chain element? Is a manufacturing element? Is it just hey, we've got some associates that need to be trained and coached on how better to interact with a frustrated customer. It opens up an entire doorway that in past years we simply did not have and the timing couldn't have been better given the volumes and the volume increase that we've seen in our stores, which, of course float our stores but also flow into our contact centres in our online business is just exploded over the last 18 months.

PH: So basically, things have improved in such a big way in recent years around what you've just said. But what it also means is your job has grown and grown and grown. How do you keep up with that? How do you personally actually cope with the increase? And I guess tangentially, do you have to grow your team to keep up as well?

MJ: Yeah, I think it's very, very important to early on establish what is your strategy and what do you stand for, because it's very easy to get distracted. Our former chairman, Frank Blake, had a great quote, and I will probably butcher it a little bit. But he said, "you know, the reward you get for solving any problem, is you get to solve a bigger problem". And it's absolutely true in my role and in the roles of so many on my leadership team over the last 18 months and over the last couple of years, really in solving bigger and bigger problems. And I think it's extremely important at the outset to establish what any organisation stands for, how you define value? How do you define what you're going to deliver? How do you define the business benefit? It gives you a lens in which to make decisions that ultimately will get you to the right place without being distracted and going down too many wormholes.

PH: Well, listen, let's jump to the last year so, and one thing I'm kind of curious about, and certainly it's something that personally I have experienced is that a visit to a store like the Home Depot stopped becoming a necessity when something broke and you have to fix it or whatever, it almost became like a pleasurable leisure experience because, you know, there's very few other places we could go. Suddenly we had more appreciation for our homes and wanted to make them beautiful. And a trip to the store, like the Home Depot, became a very different experience. Was that just me or is that something that you saw in your own stores?

MJ: I think you may have shared that with certainly hundreds of millions of people around the U.S. and most likely around the globe. It was, you know, it's fascinating. We have become experts at dealing with natural disasters. And if you think about all of the hurricanes or tornadoes or floods, but certainly hurricanes, I think it’s relevant because we have established a pattern of purchasing behaviour that happens pre-storm. Right. So you're thinking about generators and you're thinking about water and then post storm activity, it's chainsaws, it's blowers, it's trash bags, and then it goes out where there may be significant water damage. And so the purchasing behaviour is drywall and kitchens and then ultimately flooring. And so we become really, to a high degree, we can target exactly where sales are going to spike and when they're going to spike pre-storm and post-storm. We didn't have any of that for what does a pandemic look like. And certainly we all know the history of toilet paper and paper towels and what took place with people's demand for that, which I'm still trying to get my head around, why. But we saw the single largest growth in categories that are somewhat intuitive, looking back on it. It's, hey, I'm in the house and I want to do a painting project and myself and my significant other are at the house now and we want to go ahead and paint a room.

MJ: So interior paint, gardening and all of the yard work that took place in the spring. But even as you got in the summer months, things that we sold traditionally through an online channel, whether it be outdoor playsets or pools or activities to be able to entertain folks in a quarantine type environment, those with children, I think we've never seen the kind of growth in those product lines. Appliances right, so just appliances overall, we've seen great success with. But I remember last April and May, as concerns grew about the supply chain for meat products and proteins, the rate of sales for freezers and big box freezers to be able to hold supplies. So it's been fascinating to watch consumer behaviour shift and consumer thought shift. And we became kind of early and often observers of what those changes mean and then obviously being thoughtful; how long lasting they are, how short lived they are, and how do we make sure that we can still meet the consumer demand.

PH: And have you had to ramp up your teams, ramp up the amount of agents in your contact centers in order to cope with the demand?

MJ: Significant, significant ramp up, I would say we have a portion of our business that is through third parties and we generally have a third party strategy that supports staff and ramps going into and out of season. We still believe that the majority of our customer experience and our customer service associates should be internal, but we offset ramp ups and ramp downs with using third parties. But it was globally and across the board, throughout all of our partners and internally. And while at the same time, obviously there's disruption because all those folks in centres are also trying to move home and being able to do that in a very effective business continuity manner, it presented its own challenges that we were able to certainly get through. But as I look back on it, it's absolutely one of the most proud things that I have for the team. And in the last year is how we were able to keep the associate experience our values, the safety of our people, the comfort of our people, because everyone had different levels of anxiety. And so we both had to ramp up and then also have to deal with significant capacity constraints because we were ramping up due to volume. We also had challenges moving people out and home at the same time. So all of that was taking place at about the same sixty to seventy five day period last spring.

MJ: Indeed. Indeed, Winston Churchill had a great quote, "When you're going through hell, keep going." Yeah, that was the focus point for all of us working through those times. But certainly very rewarding.

PH: You know, as you say, you've run up against some hurdles in the last twelve months, but you've also learned some interesting things. So would you share any advice, any of the things that if I was to ask you for the one or two things that you have come out of this period - well as we emerge out of this period - that you would say, you know what that's one thing I really learnt, that's one thing that's going to stick with me for the next twenty five years in Home Depot.

MJ: Patrick, hard to narrow it down to one thing. I'll probably, I'll try to do two. One is a word that I use daily and often, and that's empathy. So empathy for your people, empathy for your work force, empathy for your customers in making sure that that is always at the forefront, because everyone, you know, the phrase that we all heard is we're all in this together, but we're really not because everyone has their own unique experiences and situations that they're living through. And so whether that is the single mom at home with four kids who are now at home with her or the single father who's now got four kids at home with them and trying to still do their job while also taking care of a parent who is at high risk of contracting COVID-19 and being able to lead with that sort of empathy to make sure that we're doing the right thing by them. So I think it's always been a hallmark of me personally and the Home Depot at large. But the need to lead with empathy has certainly been driven home throughout the experience. So making that a hallmark of any leadership style in approach has been critical.

MJ: The other thing, the other word that resonates with me is, is humility. You are the - anyone in leadership is generally the dumbest person in the organisation because they're the furthest from the customer. And you have to have a degree of humility that allows you to be comfortable saying "I'm the dumbest person because I'm the furthest from the customer". So having a culture that goes back to that inverted pyramid of putting our associates who were belly to belly with the customer first and foremost in mind, and I'll give you one example. In the early days, we had to immediately move everyone out of our centres. There's no playbook for that. And I remember I was on a - we had daily twice daily conference calls with all of the leaders of all of the sites as we were working through all of the different challenges of moving people home. And someone called out one of the team and one of our sites. It said, hey, this was the first site to move home. When we pulled up, everything was ready to go. And they had all of the computers and work from home equipment in these plastic storage bins.

MJ: And they were laid out on six foot banquet tables that were out in the street so that you can picture an associate driving up in their car and, you know, distancing and masking, we take the whole kit out, we put it in. And someone asked me, I said, Mike, can you send us the playbook for that? Can you send us to the how to guide? And I remember saying I have no idea. That was a couple of the supervisors, a couple of supervisors in one of our centres that just did all of that. They grabbed our American Express purchasing card. They went across the street to the Home Depot and they bought out all the containers to be able to put the equipment in and then took all of the banquet tables out of the cafeteria and put it all outside. There's no playbook for that. And if the team had laid it on anyone in leadership to put all that into a manual, they'd still be waiting for it. And so because we have that, that degree of empowerment and we lead with a degree of humility, you've got people feeling empowered to make those decisions. And ultimately, it all worked out.

PH: You know what, it sounds like it, it's such an interesting time, and I guess one of my final questions then, Mike, the Home Depot was set up 40 years ago with a set of principles and values that remain to this day. And I think we often see, you know, large companies who go through several iterations of a value set, different mission statements, and they spend, you know, probably hundreds of thousands of dollars or euros in order to create a new set that represents the time that it is. But, you know, 40 years with the same set of values, what's the lesson there? Is that like, to, if you're going to start anything with a set of values, make them true to who you really are and also make them simple? I don't know. What do you think?

MJ: I think you're right when it comes to simple. It's interesting that you talked about the time and one of our statements within our values is that values do not change over time. It is a hallmark. And if you, if you have a values set that you feel needs to evolve, then I would say you probably don't have the right values set because things like taking care of our communities, things like taking care of our customers, things like doing the right thing, they transcend time. And when they're that clear and they're that simple and they never waver, it makes the collective jobs of the enterprise and of every leader in the enterprise so easy to execute because I'm not constantly having to go, Hey, let me go ask my boss if it's aligned with our values and it's morally and legally right. Then just go do it and you're going to do the right thing almost every single time.

PH: Well, it's been lovely speaking with you. Mike Jones, senior director of Customer Care at the Home Depot. Thank you very much for joining us here on TELUS International Studios.

MJ: Thank you, Patrick. Great talking to you. Thanks for having me.

PH: Well, that is it for this episode of TELUS International Studios. Thanks to my guest, Mike Jones. Thanks to you for listening to this episode. And we will be back very soon with another great interview. And I hope you can join us then. Take care.

On this episode, Mike Jones, senior director of customer care at The Home Depot, explains how an inverted pyramid management style, along with a set of timeless core values, are fundamental to The Home Depot’s CX strategy.

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(Previously recorded as TELUS International Studios) On this episode of TELUS International Studios, Mike Jones, senior director of customer care at The Home Depot, explains how an inverted pyramid management style, along with a set of timeless core values, are fundamental to The Home Depot’s CX strategy.

This approach proved especially valuable over the last 18 months, when the company experienced explosive growth. You won’t want to miss Mike’s advice for other CX leads navigating busy periods, including how to use data to do better business and more.

The Home Depot on shaping CX with strong values

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