How to create a unique total customer experience without the namesake of a Google or Amazon.
This age of business is one of hypergrowth, where direct-to-consumer startups like Casper (mattresses), Warby Parker (eyeglasses), and Brandless (housewares and beauty) are disrupting traditional retail business models and bringing products to your front door faster with more convenience. On the surface, furniture may seem unaffected by the direct-to-consumer wave. Selling and delivering furniture has long been a tricky business.
The furniture business involves selling large, heavy products in a showroom that consumers purchase infrequently. The process of delivering furniture is also often complicated, creating a frustrating customer experience. If that were not enough, to win over customers, a brand needs to differentiate itself in every way—from the furniture design and price to value and convenience—in what is already an overcrowded market.
These challenges are what drew four entrepreneurs with backgrounds in software engineering to shake up the furniture business.
Controlling the entire customer experience from end-to-end
Article, a direct-to-consumer business specializing in online furniture, was founded in 2011 by Aamir Baig, Fraser Hall, and brothers Sam and Andy Prochazka. While there are many existing online furniture stores, the Vancouver-based company is betting that simplifying the shopping process (e.g., no showrooms or salespeople) and maintaining direct business control can offer a more rewarding customer experience.
Meanwhile, the furniture market witnessed a significant shift from 2012 to 2014. Furniture spending from consumers over the age of 70 declined from $17.7 billion (about $54 per person in the US) to about $3 billion (about $9 per person in the US), according to Furniture Today. In contrast, the furniture expenditures by millennials could not be more different, rising from $11.1 billion (about $34 per person in the US) to $27 billion (about $82 per person in the US) during the same period. But millennials are not buying sofas and beds the same way baby boomers did.
“Disruption occurs when proven practices no longer produce predictable results,” writes Mark McDonald, Vice President, and Gartner Fellow. McDonald was not necessarily referring to the furniture industry, but it is an appropriate observation. IKEA canceled its plans to open three new stores last year in the US and shifted its resources to online sales. And JCPenney recently decided it would no longer sell furniture in its stores and only sell these items online.
Whereas the Baby Boomer and Gen X generations may purchase a living room set from a department store and keep it for decades, Millennials and Gen Z are less likely to be homeowners—and even less likely to be shopping in department stores. Considering that more consumers are more likely to make big-ticket purchases online or from their phones, it is clear the furniture market is ready for disruption.
Introducing The Remarkably Better Index
Data is one of the keys to reinventing the customer experience, increasing productivity, and transforming their business. At a company founded by four engineers, this approach is especially true. The company’s co-founders were keenly focused on developing a home-grown, systematic method of collecting data, monitoring and reviewing it, and then channeled those insights into decisions across the organization.
“These days, there’s a tremendous opportunity to collect data, and it’s really important to collect the type of data that allows us to make an experience better,” says Article CMO and co-founder Andy Prochazka.” He explains that customer feedback is one of the most influential types of data for the company. Article built a proprietary platform, the Remarkably Better Index (RBI), to process the data in real-time.
Like Net Promoter Scores, the RBI gathers customer survey responses about their experience with Article. The “magic of RBI happens on the classification side,” Prochazka says. This is where the system takes the raw feedback data and then classifies and scores it along different dimensions of the customer experience. The result is a multi-layered scorecard that reveals how the company is performing in the online shopping experience. It also measures how well the consumer views how well communications with the delivery team, the quality of the product, and other areas.
Article uses these consumer insights to guide the development of its products and services. An in-house team designs the furniture, which is later manufactured in Asia. From the customer feedback on its Instagram page that includes the clicks and likes data, the company gives a lot of weight to customer input.
As an example, using customer feedback, it was determined that one of the significant reasons for returns was an inability to fit furniture through elevator doors. So, using that data, the company adjusted the size of its products. This is also why customer service is the largest department in the company (the total employee headcount is about 300 people). “It’s not like we intentionally planned to have the largest group be customer service,” said Prochazka. “It’s just that every time we forecast growth, we look at the forecast for customer needs and that informs increasing our customer service capacity.” Located within the company’s headquarters, the customer care team resides in an open office layout with different departments working side-by-side.
Article sees customer care as a differentiator, unlike many organizations that view it as a cost center. The company avoided using traditional contact center metrics like average handle time or average speed of answer. Customer care associates provide a broad range of information—from delivery status updates to describing the firmness of a sofa—and they may spend as much time as required to help each customer. The goal of Article is to answer the customers’ questions and concerns as simply and clearly as possible without using aggressive sales tactics. What is more unconventional is that the company doesn’t have a customer sales team, and their associates are not required to upsell or cross-sell products.
Navigating the last mile
Article’s mission to revolutionize the customer experience for furniture shopping is paying off. The company was profitable just two years after its launch, and it ranked No. 1 on the Canadian Business Growth 500 list in 2018, with sales skyrocketing 56,581 percent within five years. However, the company is not settling into cruise mode. Article is now competing with other furniture startup companies like Burrow, Maiden Home, and The Inside. The company is also racing against retail giants like Amazon, Walmart, and IKEA to win the last mile of the delivery race.
While IKEA’s customers personally transport the furniture home, they also offer in-store child caretakers and eateries, so shoppers do not feel rushed. If you are worried about your new sofa getting stuck in the doorway, Burrow’s furniture delivers by mail in separate boxes (which are then later assembled by the owner). Other companies like Walmart and Target have acquired or partnered with delivery companies.
Amazon, which controls about 50% of e-commerce sales in the US, is also investigating various ways of solving the last-mile delivery problem, from the use of drones to testing an autonomous delivery service dubbed Scout. Through its retail operations and third-party marketplace, it has also built a massive and complex logistics business.
“Delivery is a big deal in our industry,” Prochazka says. A company’s shipping and delivery services can indeed influence a customer’s relationship with the company. However, for most companies, the delivery process is not handled in-house. Article is meeting this challenge by building its final-mile delivery service—the Article Delivery Team (ADT)—which it recently launched in Los Angeles and New York.
The ADT teams are staffed by full-time delivery personnel, supported by Article’s customer service team. ADT will deliver furniture from one of the company’s four warehouses in the US straight to the customer door. By maintaining control over the delivery process, the company says it can deliver its products and resolve issues faster. During the pilot phase, ADT completed deliveries to customers two days faster than an outsourced delivery partner. Article plans to introduce the ADT service to other North American cities over a period of 18 months.
Overcoming hypergrowth hurdles
Conveying the look and feel of online furniture accurately is another challenge that Article seeks to solve. Some of the company’s competitors have partnered with store owners to create highly-curated showrooms, while others have experimented with pop-up shops. Article has chosen a different path and does not have plans to open a traditional brick-and-mortar store. “The general sentiment is that there’s still a tremendous amount of work to be done online,” Prochazka says, “and we’re hesitant to launch a brick-and-mortar strategy unless we can do it remarkably better than it’s been done in the past.”
Article, however, must balance its passion for finding innovative solutions with the everyday responsibilities of running a business. Directly controlling the customer experience also means handling all the challenges and hurdles that come with each department. It is a constant challenge to recruit and train personnel to manage and coordinate all departments while building long-lasting relationships with customers.
Instead of worrying about what other companies are doing, Prochazka says Article is focused on constantly improving the customer experience. After all, “you can always have a higher quality product. You can always have a better price, and you can always have a faster delivery time,” he says. “The great thing about those three areas of focus is that there’s no end to them.”