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

Transcript

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 Digital 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 Digital, 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 Digital 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.