Transcript

Rapid Response: Cultivate loyalty at every level, with Chewy’s Sumit Singh and former Exos CEO Sarah Robb O’Hagan

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Join us at masters of scale dot com slash apply twenty six. That's mastersofscom slash apply. Twenty six. Hi everyone, it's Bob here. On today's episode, I'll be talking with two guest together, Sumit Singh, the CEO of Chewy, the online pet goods retailer.

And Sarah Robo Hagen, former head of Gatorade, Equinox, and most recently Exos, the high-performance fitness and corporate wellness firm. Arconversion focuses on building loyalty. It was recorded live on stage at the Masters of Scale summit in San Francisco. And you'll hear a reference to a previous speaker, Bret. That's Brett Taylor, the chairman of OpenAI, who just before us

Was talking about AI аженс провинден кастомер сервіс. These two leaders take a different emphasis. As one of them puts it, it's all about humans. So let's get to it. I'm Bob Safien.

And this Із рапід респон. Join me in welcoming Smith Singh and Sarah Rob of Hagen. Great to have you guys here. Great to be here. So w what we're gonna talk about today is uh is building loyalty.

Building loyalty from your team, from your customers. From your investors, our pets, of course, are our best friends because they are so loyal. Right. Um I w I wanted to uh start with you listening to um To Brett. Talk about the future of potential customer service.

Chewy has distinguished itself often by doing things that are very human and bespoke. The sort of moments of surprise and delight. You know, for customers like pet portraits and and birthday cards Um, and I know that your healthcare business in PetSurf came from human interaction from your salespeople. So I'm I'm curious how you think about

Kind of. Surprise and delay. Building customer loyalty and Kind of the ROI of it. relative to sort of keeping everything, you know, keep those numbers good.

Yeah, um it's great to be here. Thank you. Yeah, I'm here to Postulate or appeal. So one I think what's well understood is good service. good experience costs less over the long term.

Yeah. So if you start from that mentality, What I'm here to appeal to you is You know, ultimately it's good experience that builds loyalty. And if you agree with the postulate on the purpose of a brand is to acquire and retain customers.

Then retention and loyalty building is the In fact, you'd argue whether it's causation correl uh correlation or causation to building loyalty. So Yeah, you can buy

Dog food. From anywhere. Yeah. It's not. You know.

We're not in the we're yes, we're in the business of selling dog food. But that's not what makes the job fun. What makes the job fun is to recognize how empathetic This category is And how customers

you know, in this particular category treat their for members as family. Mm. And how do you build that empathetic connection? So Yeah, it is unfortunate.

That Over the last many number of years. Customer service has come to be It's it's become so bad. that

We're actually excited by the prospect of Talking to an AI chat agent. Right. That seems like a an improvement. Yeah. And I'm not saying that you know that doesn't have a place. It does, and I'm going to come to that, because it's not like we run. Yeah, so the it's it's in the mentality. It's in

You know, how do you it's in your culture. Ал компанії I want to appeal to you that customer experience or customer service can build loyalty that can build a defensive and offensive moat around your brand that b allows you to compete. against the large stalwarts of the world which we've been competing for the last many years.

So when I joined ChUI, it was a billion dollar brand. This was seven years ago. Today we clocked twenty five percent of North American households shop at Chui and we're a twelve billion dollar brand. This is top line only, it's not market cap. So You know, but and how much of that though is about like humans? Yeah. So it's it's you know it it's it's it's all about humans in my opinion. Because The concentric circle of w what what's the mission that we go to market with to be the most trusted, convenient destination.

for pet parents and partners everywhere. So what you should you should hear there is you know trust and convenience is important. Building a marketplace for customers but also partners that serve in the pet space is important. And then the brand extensibility is super important. But alongside that what we're really standing for is delivering the scale and convenience of e commerce. which you would get from large companies like Amazon.

But at the personalized care and service that you would expect at a local neighborhood pet store. Right. Yeah. And so so we use this word surprise and delight, and you're led by pet portraits. Yes. That is go that is going beyond the ordinary.

But customer service today is so poor. that we have to first start with making the ordinary extraordinary, right? So how do you do that? One. Courtesy.

is more important than process or efficiency. Number two. You know We pick up the phone uh Br Brett was talking about the metric contacts per uh yeah, cost per contact. Yes, it's a real metric.

At the same time, maybe you would be surprised to know that that is not a metric that is prevalent in the Chui Customer Call call call center or within our company. We do not measure a agents by productive any metrics like these. We measure by Yeah, the amount of amount of resolutions that you conducted no matter how long you were able to to to talk to the customer. We measure statistically accurate results on how quickly we picked up the phone.

He was talking about IVRs. He's exactly right. Hate IVRs. We're likely one of the only companies in North America, maybe in the world, that has Twenty four seven live Human. Right? Customer service.

And we pick up the phone. in two second in four seconds or less. That is two rings or less. But And so that itself, when customers call with an issue, that itself disarms them. Because they're not expecting it. They're expecting call an airline company or a cable company or any other normal company that wants to provide good service, but kinda has been brought up brought up in this culture of IVR or cost cutting.

Customer service doesn't have to be a cost center. Well I and I I just want to note that that not everyone may know this, so during the pandemic when things were really tight and it was hard to get folks and Maybe you use more bots. He was like No, we're going with the humans. And they brought him his human folks brought him insights that said, Hey, maybe we should start. Like veterinary care and for pets. And it it spawned a whole new business, which is You know, the the things that humans bring to you sometimes are are not what you expect. So so what do you do when you go beyond the ordinary, right? So we're picking up the phone in two seconds. The crowd's like, wow, that's amazing.

You guys don't have I VRs. Wow, that's amazing. Wait, but that should be the basic expectation. Why do you want to stop with IVR and figure out for the first one minute and wait five minutes and then get in cue for us to call you back? So that's the ordinary. So we've gotten our arms around that. Yeah. Now, you know, a customer calls. And uh in the conversation, the agent essentially says, How did you name your dog Becky?

And so the customer says, Well, it goes back to the Beyonce song Becky with the hair. And so the poll progresses, you know, normally. And a few days later, the customer receives a A custom painted beyond C C D with her her pet's portrait painted on it.

That is going above and beyond. What does that do? That creates conversations. You'll talk about this story. That story got talked about at dinner reservations. It got posted on social media, got two hundred and fifty thousand reposts, seven hundred thousand likes, et cetera, et cetera. Yeah. So this traditional science of customer relationship marketing, it starts with doing the basics right. And the basic was Courtesy over process and efficiency.

than the ordinary extraordinary in the ordinary, and then truly going above and beyond what customers are expecting. Because it's just I'm not sure. Um you've worked with brands that engender a lot of loyalty at Exos, at Equinox, at JetBlue, where you're on the board. You also worked at at Nike. And I I'm I'm curious about How the relationship you have

and loyalty among your staff, your team. impact how your loyalty builds with your customers. Yeah. No, I I love this question, Bob, because I think it's so important. And Like my early days of my career I actually started at Virgin, like the days, the early Richard Branson days and then Nike where and the days at Nike where we were just bleeding the swoosh, like people had tattoos who work there, you know. And

We would like shame anyone who worked with us who didn't wear the product. Whereas I remember m actually when I began I led Gatorade Globally, which was part of PepsiCo. At the time when it was financially struggling and there was tons of new employees coming on board and You were given a shopping list of stuff that you had to buy that were PepsiCo products, and people hated it. Like Because they're like they're forcing me to do something as opposed to I passionately believe I want to.

So I think there's a huge correlation. Like when a team is so fired up about the culture you've built at Chewy that they're going to have those moments that they want to delight the customer. It's massive. business I'm in now, Exos, we are um a human performance coaching company. We coach people just like you and It's interesting, going through the last, you know, years of the pandemic, everyone, as we all know, has been suffering with burnout and all these sorts of things. And We spend as much time like tracking how well our coaches are rated by their client as we do

How are they feel how's their well being? Are they feeling like they are up for the job today? Because if they're feeling awesome and they're feeling great about the company, they are going to in turn want to deliver a really great. clients almost like therapists, right? But there's almost only so much influence you can get like you're not in that room. Right. So how do you Make sure that they're having the right engagement and that that relationship works the right way. Like we spent a lot of time early in the pandemic, like many companies I'm sure where Yeah, we had to go through a really tough experience of furloughs and layoffs and then new people joining the company. And so we spent tons of time on really reinvigorating the company's values because if we are all really clear that we're living by the values.

then there's a much better shot when they're in the room with the client that they are going to deliver on that. um expectation. And you know, some of our values aren't for everyone. One of our values is actually we savor the struggle. Like part of being at Exos is that it's going to be hard and your client is going to have a hard day. And do you Feel comfortable that that's part of the culture where you gotta push'em. Yeah, exactly. Which means you've got to push yourself. Yeah. And not everybody wants to push themselves all the time. It'll be easy to do if you can lean in and have these tenets of saying, yes, we stand for the customer when you're when you're ten million dollars a brand. When you're twelve billion dollars and serving twenty five million customers.

to be able to do it in a manner that has been scale, sustained, hardened. where you're not present there, but your agent or your team member, whether it's the corporate team member or the fulfillment team member or the customer care, is leading with brand forwardness is kind of the challenge that we have to get to. So how do you scale customer centricity? Uh is is is the is the bottom line. And the core message, which is which is kind of uh plus one to what Sarah just said is W the the the philosophy that we have to lead with is to Say to our team members

You are always right when satisfying a customer. That line Conveys so much. Because it empowers them, it frees them off. retribution or judgment, it empowers them to make decisions that are right for the company, for the customer. And decisions that are right for the customer have to be right for the company and there for the shareholder.

I wanna double click on a phrase submit used a bit earlier, the extraordinary in the ordinary. I love this phrase. This to me is the key to scaling brand loyalty. You know, between scale deficiency at one end and high touch surprise and delight at the other. It's making what might be humdrum moments into something special. They can really distinguish a business.

After the break, Sarah unpacks how to build team loyalty through the employee life cycle. And Smit shares how he thinks about investor loyalty. Stay with us. Wi Newsroom is known for award winning reporting on how technology shapes our world.

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Before the break, we heard Chewie Summit Singh and Exosist Sarah RoboHagen talk about the human side of building customer loyalty. Now we dig into team loyalty, investor loyalty, and how to bring your business's values to life. Plus, Smith gives us a live demonstration of a license customer joy. Let's jump back in. I mean I I guess I feel like a lot of

Companies. They all have values. Enron had values, you know? But but like how how do you make sure as a leader That those values are actually being lived. Are there things you have to do yourself? Yeah. It's actually like even you can do it in every part of the employee life cycle. Like I actually think about the employee life cycle just like I do a customer life cycle. By the way, like I'm so dating myself, Bob, but like when I was in college, we learned about the innovation adoption curve. Remember how there was like

The people up front who get a new idea first and then the laggards at the end. Employee culture is the same thing. So you have to understand whether it's within your brand or in your culture. Who are the mayors, you know, the people who are so engaged that they are gonna spread the word for you. And so they are so important in value, do they live the values, do they show the values? But We in the entire employee life cycle when we're hiring someone like I will sit and go through our values and say give me examples from your life.

Where this value came to life and talk me through it and talk to me about how you perceive this plays out at Exos. So you're actually truly like making it a living document, not just something on the wall. Yeah, you ha you have to bring it. I identify the people who are true evangelists within you know those you try to hire for. But then you have to really lead by example as a leader. You have to put your money where your mouth is. I'll give you an example. We when you call us.

And you've bought food or medication from us, we will say, don't worry about returning it. Food doesn't work out sometime, or even worse when your pet's, let's say, passed away. When your food doesn't work out, we say, you know what, go donate it to the shelter. Mm. So what we're doing there is putting right our values off Surprising and delighting you. Right.

It is also economically b beneficial sometimes to do these things. But for the most part We're we're building this connection. We're totally catching you off guard where you're going, Wait. I can donate this to a shelter and you'll do you'll refund my money back? Yes. That's awesome. And you'll talk about that.

Yeah. You know, same thing. We have a three hundred and sixty five day return policy. And you know, no questions asked. It's the most generous refund follow re refund and return policy in the industry. And yes, we could reap tens of millions of dollars and flow it to the bottom line if we just Matched.

what an Amazon policy is, but we don't. Mm-hmm. I know we don't have too much too much more time, but I'm curious for both of you. How you think about building loyalty among investors. I mean as you're uh you know, it it's is it the s do you think about it the same way, same kind of priority as Customers and team members, you know, s some people say you get the investors you deserve. You know? And I'm just curious how how you think about that. Yeah, I mean it's funny. I was actually having this exact conversation. I used to be on the board of Strava with um one of the founders and and he actually teaches a business school case study on this. And the students always assume that the answer is to go for the best financial deal. And he always says, actually it was about values. And it was about when you say you get the investors that you want.

That it is in the end about do you truly believe in the same mission? Do you truly believe in the same values? Because you are going to be in this relationship for a long, long, long time. billion, two billion in revenue. in two thousand and seventeen to twelve billion this year. Profitability has gone from negative twelve percent. Yeah, but uh

to positive four percent. Free cash flow has gone from negative hundred million dollars to positive seven hundred million dollars, and we have no debt. And so w why I cite these facts is because it's not Okay to do one or the other. Yes. You know, we will get the investors that we deserve.

At the same time Іно, вийти адрес. Виспонсити това. team members and shareholders. And in this particular case You know, shareholders have come to understand that leaned in customer care, personalized customer care.

is a a strength of ours that builds loyalty, that fuels the repeat purchase cycle for a brand like ours, that drives the top line and creates incremental opportunity or efficiency to drop that revenue to the bottom line. Yeah. And so and and so we've done both, right? Had we been a twelve company that was still negative twelve percent on profit or negative two hundred or burning two hundred million dollars of cash a year it's gotta work it's gotta work it's gotta work and so that's your responsibility as a leader to to make it work. Yeah I mean I I I think also you know if you engender the right Uh loyalty from investors too. Listen, those numbers you cite are great. Your stock price has not always gone exactly in that straight line, though. You know, it moves around and your investors move in and out and it it's it's really hard to keep those balance and keep your patience through all of it.

Totally. But to me you've talked about surprise and delight moments through here, but I I understand you have a a surprise for Sarah. I do. Yes. Okay.

Oh my god! Unexpected moments creating joy. Yeah. Eddie. And that is that is not a photo, that is a hand drawn portrait by a local artist.

Thousands of who work with the Chewy brand. Who pick up pictures. From social media profiles or pet profiles. And we're handsome. We drop the food either the light. Oh my God, thank you. Congratulations. Thank you, thank you, guys. Thanks so much. Thank you.

You cannot fake the kind of joy that Sara expresses when Summit presents her with a portrait of her dog. Just like you can't fake good customer service, which I guess is Smith's point when he talks about AI agents falling short compared with humans. Now, do I think AI agents will become increasingly ubiquitous in customer service? Yeah, I think it's inevitable, but that doesn't mean human agents go away. Those companies that decide to invest in people and prioritize engagement like Chewy has, I think they're gonna continue to stand out.

Sarah talks about bringing values to life and it is so much easier said than done. But ultimately, it's the hard things that matter. After all, isn't that what loyalty is really all about? I'm Bob Safian. Thanks for listening.

Rapid response is a wait what original. I'm Bob Safian. Our executive producer is Eve Tro. Our producer is Alex Morris. Assistant producer is Masha Maku Tonina. Mixing and Mastering by Aaron Bastanelli. Theme music by Ryan Holiday.

My head of podcast is Letal Malad. For more, visit rapidresponsshow.com.