November 12, 2024 • 21min
Rapid Response: Cultivate loyalty at every level, with Chewy’s Sumit Singh and former Exos CEO Sarah Robb O’Hagan
Masters of Scale
Key Takeaways
- Customer service and loyalty cost less over the long term compared to constantly acquiring new customers
- Human connection and empathy are critical for building lasting customer relationships, even in an AI-driven world
- Company values must be actively lived and demonstrated throughout the entire employee lifecycle, not just posted on walls
- Building loyalty requires making the ordinary extraordinary through consistent excellent service before adding surprise moments
- Investor loyalty comes from alignment on values and mission while still delivering strong business results
Introduction
This episode features a conversation between host Bob Safian and two guests recorded live at the 2024 Masters of Scale Summit in San Francisco:
- Sumit Singh - CEO of Chewy, the online pet goods retailer that has grown from $1B to $12B in revenue
- Sarah Robb O'Hagan - Former head of Gatorade, Equinox and most recently Exos, with experience building loyal customer bases across multiple brands
The discussion focuses on how to build and maintain loyalty across three key stakeholder groups: customers, employees, and investors.
Topics Discussed
The Human Element in Customer Service (02:01)
Sumit Singh opens by challenging the notion that good customer service needs to be expensive or automated. He argues that human connection is essential for building true loyalty.
- Key metrics at Chewy:
- Phone calls answered in 4 seconds or less (2 rings)
- 24/7 live human customer service
- No IVR (automated phone system)
- Focus on resolution over efficiency metrics like cost-per-contact
- "Good service, good experience costs less over the long term" - Sumit Singh
Scaling Customer Centricity (06:02)
The discussion explores how to maintain high-touch service while growing rapidly.
- Chewy's growth:
- From $1B to $12B in revenue
- Now serves 25% of North American households
- Core philosophy: "You are always right when satisfying a customer"
- Balance between efficiency and personalization
- "Customer service doesn't have to be a cost center" - Sumit Singh
Employee Loyalty and Culture (08:56)
Sarah Robb O'Hagan shares insights on building team loyalty and its connection to customer experience.
- Key elements:
- Clear company values that guide behavior
- Regular monitoring of employee well-being
- Focus on both performance and engagement
- Culture measurement through both client ratings and employee satisfaction
- "We spent tons of time on really reinvigorating the company's values" - Sarah Robb O'Hagan
Making Values Real (17:08)
The conversation explores how to ensure company values are lived rather than just stated.
- Employee lifecycle approach:
- Values-based hiring process
- Regular reinforcement through actions
- Recognition of "mayors" - highly engaged employees
- Leadership example through consistent demonstration of values
- "You have to understand who are the mayors - the people who are so engaged that they are gonna spread the word for you" - Sarah Robb O'Hagan
Investor Loyalty (19:25)
The discussion shifts to building loyalty with investors while maintaining business performance.
- Chewy's financial evolution:
- Revenue growth from $2B to $12B
- EBITDA improvement from -12% to +4%
- Free cash flow from -$100M to +$700M
- Balance between customer care and financial performance
- "It's not okay to do one or the other...we have a responsibility towards customers, team members and shareholders" - Sumit Singh
Surprise and Delight in Action (22:01)
The session concludes with a live demonstration of Chewy's approach to customer delight.
- Unexpected gesture: Hand-drawn portrait of Sarah's dog presented live
- Artist network: Thousands of local artists working with Chewy
- Impact: Immediate emotional connection and joy
Conclusion
The conversation emphasizes several key principles for building lasting loyalty:
- Human connection remains essential even in an increasingly digital world
- Values must be lived throughout the organization, not just stated
- Financial performance and customer care can and must coexist
- Consistency in ordinary moments matters more than occasional dramatic gestures
- True loyalty requires alignment across customers, employees, and investors
The success of companies like Chewy demonstrates that investing in human connection and genuine care can drive both customer loyalty and business results. While AI and automation have their place, the human element remains crucial for building lasting relationships with all stakeholders.
