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A Direct-to-Consumer Retail Roadmap

February 26, 2020

Key Takeaways

  • Your customers are your best investors. 
  • An emotional connection can trump convenience.
  • Humanity plus data is a winning formula. 

As customer expectations rise, even direct-to-consumer (DTC) brands need to continuously evolve. Kate Nowlan, vice president of experience at DTC apparel company Hylete, weighs in on the future state of customer experience in retail and shares her company’s strategy for staying in touch with the customer.


Judith Aquino: Hi, welcome to the CX pod. I'm Judith Aquino and today we'll be talking about what does it mean to compete on customer experiences if you're a direct-to-consumer business. Joining me to explore that topic is Kate Nolan, VP of customer experience at Hylete, a fitness apparel brand. Welcome to the show, Kate.

Kate Nolan: Thank you for having me. And just to make a quick correction, I'm actually the VP of Hylete experience, but I do manage our brand experience team, which is our customer service team.

JA: Got it. I'll make sure I correct that. And so, given that the customer experience is such a broad area, can you tell me what do you focus on and what's a typical day like for you?

KN: Well so you know, Hylete is a digitally native fitness lifestyle brand and we started back in 2012 with just one pair of shorts. And from the very beginning, the focus has always been on the customers that have helped build the brand. And so, we’ve looked to our community over the past seven years to really help dictate our future. And in doing that, we have created incredible customer experience on a lot of different levels. We have a relatively big customer experience team, so all of our customer service reps, as we call them, brand experience specialists, they actually are all here inhouse at Hylete. So, our entire team is in Solana Beach, California. And I think there's an advantage where we, you know, have an opportunity with, it's all women currently that are actually on that team. But we have an advantage with that team where they can get, you know, questions answered very quickly for customers.

Whether it's, you know, product questions, return questions. We have agents on live chat during business hours, Monday through Sunday, so we're open seven days a week operating our customer service team so that as people shop online, they can always access someone obviously as long as it's during business hours. But you know, so a typical day for Hylete is, you know, we, depending on promotions that we sent out, you know, our customer service team is answering hundreds of emails.

They're getting on live chat every single day answering questions quickly, whether it's sizing questions or somebody just, you know, has to better understand how to do a return or an exchange. Because we're unique in that how we actually raised capital as a business, we look to our community to help us do that through crowd funding. So, we have an incredible amount of what we call invest-omers in our community. And those invest-omers have the opportunity to access our brand experience team at any time as well because they have exclusive deals that they're given. They can also get a significant discount on the products and they tend to be some of our very best and most loyal customers.

JA: Great. And so how does someone become an investor-omer?

KN: So, in the past we've raised through regulation, well, we raised through, crowd funding and that was passed by the Jobs Act during the Obama administration and it allowed, you know, the everyday person that's not an accredited investor to actually invest. And we've done that a couple of different ways. One was through a platform called Start Engine where they actually hosted the fundraising. And then the rest we actually hosted on our own website through our investor portal, which currently is turned off. However, we are on the precipice right now of opening up our reg CF round, which will be hosted through Start Engine and we have an opportunity to raise up to a million and $70,000. So, if people are interested, they could go to our website and click on the investment tab and they'll get more information there. It'll direct them to where they can invest and how they can invest.

JA: And so is there any crossover between being an investor-omer and an influencer?

KN: Yes, that's a great question. And we definitely look to our investor-omers as essentially our, you know, our troops on the ground that are marketing the product because they have a vested interest in it. Although, you know, some, I would say there's probably a handful of investor-omers that are, you know, what we consider part of our actual train team. So those are people that are certified trainers that help us create content and also give us, you know, high resolution images that we can utilize on a lot of different platforms, social media and advertising online. So there is certainly a crossover and we find that, like I mentioned, you know, our investors tend to be our most loyal customers. And so, you know, they really are these, these influencers that are out there that are marketing the product and wearing it every single day because they have an upside to in their investment.

JA: Right. And so, given that there's so much that's been written about how direct to consumer businesses compete on the customer experience can you tell me like what else Hylete is doing to stay focused on the customer and keep the customer at the center of its decisions?

KN: Yeah, that's a great question. I would say there's a couple of different ways that we do that. One is that we have a hundred percent performance guarantee. So we want the community to put our products to the test with their toughest workups. And so with that being said, if they have any issues with the product, we back that. If there's a problem with the manufacturing we're absolutely able to do quick returns and quick, exchanges if it's a sizing issue. We also include free return shipping. And then in addition to that, you know, we have a lot of customers because they're so incredibly dedicated and loyal to the brand and because they feel like they're a part of this bigger community because they are, we call [them] Hyletians.

And really that's our external community as well. And so the feedback that they give us about product goes directly to our actual product team. So if the next iteration of a product, we'll always have the comments that the customers have given taken into consideration as we're making any changes to that actual pattern or design as well as we actually have what we call the Hylete Project. And so Hylete Project is an opportunity for customers to back a product before we actually manufacture it. So for example, we tried to launch a women's tote. We have an extensive line of backpacks and a duffel that are really successful for us and they're highly technical. They're incredible travel bags. They can accommodate, you know, everything from your wet, sweaty clothes to your laptop to your food to stay warm or cold, whichever you prefer.

But we're looking to do a women's tote because we had heard on a lot of our surveys that women were looking for a bag that was specific for them. And so we created a design and we put it up on the website and we were looking for customers to back it. And how they back it is they actually purchase it and they get it at a discounted price once it goes to market. And if we have enough people back it then we actually manufacture it because we know that we'll have success and we'll know that it's actually a product that we've designed, that the community wants to see. Unfortunately, that tote, we didn't design it the way that the community wanted, so we pulled the plug. But we have had a tremendous amount of success with certain products in our line.

Those would be like the modus khaki. So we have a pant that we came out with called modus pants for men and we just came out with one color initially and customers were demanding that we introduced this in a khaki color. And so we were able to do that. And so that's really where our tagline of community-built was derived from because the community is actually driving the customer experience too.

JA: And that's really interesting. It sounds like you have a mini Kickstarter model.

KN: That's absolutely right. In addition to all that, you know, we have some charity programs that we have partnered with. Excuse me. We have a charity program where we partner [with] different charities and that has been really successful in terms of not only driving revenue, building awareness for the communities, the charities specifically.

But it's really been a way for us, you know, for this conscious capitalism movement that I feel is out there where our community wants to be able to give back. So a great way that we do that is we will have T-shirts that have the design or the logo of the charity and 50% of the T-shirt sales will go directly back to that actual charity. That's one way we do it. Another way is we have a foundation which 1% of all the women's products sold at Hylete go back to the foundation, which recognizes young women heading to college for athletics and academics providing a scholarship fund for them.

JA: I'm curious what's your strategy for tying ROI to all of these different customer experience initiatives?

KN: So if the strategy for the return on their investment is, I mean essentially, well, there's a couple of different paths. So when you're talking about invest-omers, right? I mean, the, how it had functioned in the past and how it will function with this next round of crowd funding is that it's a minimum investment of $500 and they receive a 50% off of the retail pricing at Hylete.com As well as some special offers. So they very quickly will see a very fast return on that investment because they're, you know, what they would typically be purchasing over the course of a year. You know, they're, they're essentially getting at 50% off. So they, they usually get that return on the investment within about three to five months, I would say.

Then we have different, other different programs that we found a lot of success in terms of our training team, which is we have over 25,000 certified trainers that are part of the train team. And these are people that really contribute to the content that we put online. So I mean there, some of them are receiving some product for their help in providing content, but most in our community is actually getting the added discount. And so they're just interested in, you know, we help them and they help us. So there's a really strong ROI for that and it's why that, that team actually is continuing to grow. I mean over 25,000 certified trainers is pretty significant to have in a community where we're obviously making athletic apparel.

JA: Right. And are you measuring those conventional metrics like customer effort score or even average handling time at the contact center?

KN: Oh, absolutely. Yeah. I mean those are, those are metrics that we look at, you know, gosh, almost on an hourly basis. Because it's so important to us. You know, we look at ourselves as an emotive lifestyle brand where, you know, and I'll compare this to like let's say a Patagonia where people are proud to wear the shirts that say what that brand is because it represents who they are. And that's very much consistent with how Hyletians, our community, loves to feel too. And so we are this emotive lifestyle brand where people want to wear that product versus this, you know, these preferential brands, which would be like the Amazons of the world that really set they set, you know, the measurements of like speed to delivery, right? So we're always going to be competing against them. Although we may not be as fast to delivery, they're setting that, you know, that barometer of what, what we should be, what customers are expecting.

And you know, with Amazon, you're not going to necessarily walk around wearing a shirt that says Amazon, but you're going to go to them because you know that you can get your household products or whatever you need pretty darn fast, but you're willing to switch if there's somebody that comes in that's going to be faster speed to delivery. So we look to them to see, you know, how can we measure our success based on speed to delivering customer experience. But we know that our customers come to us, are willing to sacrifice maybe speed to delivery slightly because we have this emotion connected to us and they're unwilling to switch brands so quickly as they would.

JA: Speaking of competing with other expectations of other brands, Amazon has been opening its own brick and mortar store. So I was wondering if that's something that your company, your brand would be doing too.

KN: It's definitely part of our long-term strategy and our growth strategy. We do have a small office, well it's not really small. We have 27 employees here in Solana Beach, just sort of tucked back and it's unassuming from the road. But because we're digitally native, we all function in one office, but we do have our address listed. And so we oftentimes have people that are interested in coming to our actual office thinking they're coming to a store. So there's a lot of demand for it that people want to come and see. And part of that strategy going forward is creating experiential retail. So it would be more of an experience. It's not just going to be clothes that are hung up and that's all you come in and see. It's more tying in a lot of these programs that we talked about. So tying in the train team, we also have a highly daily circuit workout that's an app right now that people can download for free, where they can do a 20 minute high intensity interval training workout. So that would be part of those spaces. And that's really looking ahead at back-half of 2020 and 2021.

JA: It's really interesting how retailers are trying all sorts of different ways of tying digital and physical experiences together.

KN: Absolutely. You know, it's, it's something that has intrigued me and my background has been in that space previously owned a women's athletic apparel brand that Hylete acquired in 2018 and I came on board with their team, I was able to magnify the experience I had before. And so part of that was these popups and experiential spaces and you know, we see a lot of customers obviously demanding that and we try to try to mimic a lot of that online in terms of, you know, they have the accessibility to talk to anybody at any point on our brand experience team. They can get on live chat and they can have a conversation to understand a product better. We have, you know, a perfect shorts page that you can go on there and you can actually figure out which shorts are best for you And we also have a quiz that will allow you to help you understand which actual shorts are the perfect one for you. So we're trying to create these experiences that you would maybe have in person. But you know, obviously, you know, when you talk about, you know, online it's, it's so much faster and easier for us to deliver it that way at this point.

JA: And are you finding that customers will readily share, I mean, I know you have the, you already have a good structure for collecting customer feedback, but I'm wondering if as more and more companies start requesting feedback and people are inundated with survey requests, is there a need to find other ways of collecting insights maybe by getting better at passively collecting analytics?

KN: Yeah, I mean, we're so data-driven here that we absolutely look at it from a lot of different angles. So, you know, although one way is surveys to your point, maybe some people are feeling, you know, survey exhausted in some capacity because a lot of brands are doing that to collect data. We have the opportunity, you know, and how we've always built the brand has really been on making sure we invest strongly in our technology and our backend systems so that we could collect the data as we grew and really understand who our customer is, understand their behaviors, understand how often they purchase, understand what they purchase. And so that has really, you know, been obviously key in us, you know, driving it forward and having that ultimate customer experience for them because it's almost as if, you know, before they even think that they want a new short, we deliver an email to them that is that short that they've been craving because we've watched their behaviors all along the way.

JA: Right. And with customer experience trends, what do you think shows promise and I'm thinking of all the buzz that's around AI and the even blockchain or also AR.

KN: Yeah, I mean I think, you know, I absolutely think AI is something that's interesting to us. And one way that we look at that too is, you know, we do have that highly daily circuit app, which is like I mentioned that 20-minute high intensity interval training workout that anyone can [access] at this point. But the future of that app is really trying to link Hylete.com with that experience because we want to go to version 2.0 and how that looks is it will facilitate the train team, for example, to be able to disseminate workouts to their clients through that app. And there'll be green points towards purchase every time they actually participate. So there's a real link there between the two of them. So it's the lifestyle that we know our community is living, how do we support that better outside of just creating the products that they love to wear.

And so yeah, I mean, AI is a huge part of that for us as we look forward.

JA: And it sounds like having employees or agents who are true brand advocates is key.

KN: Exactly. And that's really how we've actually grown the team here internally. It's been primarily people reaching out to us saying, you know, I love what you do. I've been wearing your products for years. Is there an opportunity for me to be part of this brand? And it's really because they're living that lifestyle that you know, that and they're living the lifestyle of the rest of the community. And so we've had very big success with our hires and with our retention because it's authentic and who that person is that's attracted to the brand really lives that lives our brand. And so, you know, we have, we have certainly have tools that we use from an HR standpoint.

That, you know, I find really helpful in that hiring process. We use predictive index, which is an incredible tool for us to understand, you know, what motivates each individual, what are their strengths? And we can create profiles within that actual system for different jobs, for different domains as we call them here. So we can create a profile for what that customer service agent will look like. And we make sure that anyone that is coming on board, no matter how passionate they are, that they actually fit with that profile. Both from a retention standpoint for us, but also from for a happiness standpoint for them, they're not getting themselves into something that wouldn't be the right fit long term.

JA: Right. So a close attention to the human touch and being data-driven seems to be the secret.

KN: It is. It's absolutely the secret. And I would say, you know, when I talk to people and they say, "Oh, do you understand, you know how many units you sold yesterday?"

It's like I can actually look at a report right now and tell you how many units we've sold in the last minute. I mean we are, we are so up to date with our metrics because we are so data-driven and it's really been the key to our success as well as honestly the product. I mean the product is sort of the easy part. Once people get their hands on the product and they wear it, they're hooked and you know, outside of that, then it's for, you know, our job to keep them engaged. And it's been really helpful with all the data that we've collected to do that.

JA: Right. Well, Kate, thank you so much for all the insights you shared with me.

KN: You are so welcome. I'm happy to talk to you. Thanks for having me.