Ken Tomita, co-founder and CEO of Grovemade, joins the podcast to talk about how his company brings humanity to product by understanding its customers on a personal level; how it leverages the four levels of customer engagement; and how financial institutions can expand beyond the commodity market.
Key Insights and Takeaways
- Never take your assumptions about who your customers are as facts. Credit unions need to respect the depth and uniqueness of each client, and if that means taking the time to meet them individually in person, so be it!
- The purpose of your work is often more intricate than you imagine. By rethinking fundamental objectives, credit unions can go from mere service providers to partners in the goals of their clients.
- The right personal touch can turn customers into converts. People want to be acknowledged, and have their concerns and desires heard by their credit unions. Anything you can do to add humanity and personality to a business relationship can strengthen the commitment from both parties involved.
Read the full transcript:
Cameron: Hello and welcome to another episode of The Remarkable Credit Union Podcast.
Cameron: We created our podcast to help credit union leaders and marketers think outside of the box about marketing, technology, and community impact. Each episode, we bring on expert guests from inside and outside of the industry for conversations about innovation. Our goal, as always, is to challenge our preconceptions about business as usual and provide you with actual takeaways that you can use to grow your membership, increase share of wallet, and magnify the positive impact of your community.
Cameron: Today, I’m very excited to welcome Ken Tomita from Grovemade, and our big question for the day is how do you go beyond customer service to customer engagement throughout the entire process so that you’re creating raving fans who will drive your growth?
Cameron: Ken, as I just learned in our brief pre-call conversation, is also from Portland. We’re actually very similar ages. We’re one year apart. We had some friends who went to our high schools. He attended the Rhode Island School of Design, which is one of if not the most elite design school in the country. And among many other life journeys, he founded his company, Grovemade, in 2009.
Cameron: Ken, thanks for joining us today.
Ken Tomita: Hey, Cameron. It’s been great to chat with you so far. Thanks for having me.
Cameron: All right. You’ve got a great story, Ken. You’re really well-known for a few things throughout the community here, but I’d love to just start with you started Grovemade back in 2009, which is an interesting time to start a business to say the least. I’d love to hear a little bit about what did you start doing and what are you doing today?
Ken Tomita: Sure. I was a furniture maker and the economy was turning down and I didn’t have a whole lot of work. I was bored. I figured, “Hey, let’s do something new.”
Ken Tomita: I had a friend who lived across the street from my workshop, Joe Mansfield, who was already dabbling into eCommerce, which I had put no thought into. We ended up partnering to launch a bamboo iPhone case and just roll with that. We had no other business plan. Back in the day, you could get lucky and get on a blog and have an overnight business. It doesn’t happen anymore, but back then, there was fewer blogs and each article got tremendous reach.
Ken Tomita: We got on Gizmodo with our product and bam! Overnight, we had a business.
Cameron: What are you guys doing today? How did that change over time?
Ken Tomita: It’s completely changed. We got up to $2.5 million or so in a couple of years with just iPhone cases, but the market completely saturated out. We were the first in the world to laser engrave art onto wood iPhone cases, and now you can get them at the mall for $15. That’s the nature of the world; ideas are cheap.
Ken Tomita: We had to completely pivot our company in 2014 to become a product innovation company, rather than about laser engraved art on iPhone cases. Now, we’re a totally different company, near our size we used to be. iPhone cases is 8% or something like that of our revenue.
Cameron: One of the things I know that you’re well-known for is your customer discovery or customer engagement process. You kind of contrast that with customer service, which is, obviously, a pretty generic term that anyone in business thinks about. Can you tell us a little bit about what does that mean? How is that different than customer service and what’s the journey you guys went through?
Ken Tomita: Sure. So 2016, we really started to struggle and we were trying all kinds of things to fix the companies. One of the things lasted, which was, “Hey, maybe we should talk to our customers a little bit more.”
Ken Tomita: Up to that point, we had 70,000 customers and I had probably met less than 50 of them. Probably much less because we were all online. Up to that point, Joe and I were basically scaled up solopreneurs. We were designing stuff that we wanted for ourselves and we had tremendous success with that in the beginning, but it was time to grow up a little bit and actually reach out to our customers and see what they actually want.
Ken Tomita: We want on a pretty extensive journey to bring those customers into our circle and I don’t know how much detail you want on that, Cameron.
Cameron: I think we’d love to hear about it because I guess one of the things that stands out to me about your story is how you were selling something that used to be unique and now it’s just a total commodity. I think credit unions, I think almost every organization in the world feels the pressure of commoditization and feeling like we don’t have anything unique. I think you’re still using the same manufacturing techniques that, what, hundreds of thousands or millions of other entities are doing? And how you’ve managed to change your business model based on the customer, not some kind of unique patent or something like that.
Ken Tomita: Mm-hmm (affirmative). Cool.
Ken Tomita: Strategically, what we were doing is trying to expand into other product categories. At first, we were just throwing mud on the wall, seeing what would stick. We were randomly doing stuff, but a high failure rate, as you could imagine. And then we went onto this journey to get closer to our customers.
Ken Tomita: I can explain the multiple steps. It’s a simple story, yet had profound impact on our business.
Ken Tomita: So level one is just looking at the data. That’s pretty easy. Everybody knows how to do that and going through our analytics or your own backend and analyze the data, the demographics.
Ken Tomita: Step two is surveys. What we discovered is there’s different depths in surveys. You can ask quantitative questions, and those are okay, but what really helped was the open-ended ones. We ended up getting a lot more responses than we expected. People love to talk, so they would write in paragraphs and paragraphs of feedback, which was a total surprise.
Ken Tomita: Level three was video interviews. We would take people that answered the surveys and ask them, “Hey, are you willing to chat with us online,” like you and I are doing. We were going to do 20-minute chats. Well, it turns out they turned into 45-minute chats. We’d start talking about life. What do they do for a living? What do they do for fun? We started getting a much better grasp of who they really are that you can’t see in the data.
Ken Tomita: The next level after that was actually to hit the road and go hang out with some of these people in-person. I wanted to go on a road trip anyways, so my girlfriend and I got in her little Fiat and we just hit the road. We went out to Montana, to customers in Montana and one in eastern Oregon. The first guy we talked to, I thought I was going to be there for a couple of hours and I didn’t come back for six hours because he was so interesting. He started showing me everything in his house, these beautiful objects he’s collected over the years that are meaningful to him. I had brought my camera along because I’m a hobbyist photographer. I started taking photos of everything because it was gorgeous.
Ken Tomita: I interviewed him and it kind of naturally, organically turned into this content series that we created on our customers because of that first guy that we interviewed.
Ken Tomita: What this process did is it was kind of a funnel. At the top, you have the data. You have the most reach, but it’s not very specific. The further you go down, all the way to the person you went to see in-person, you’re getting more biased because we’re selecting the core customers. Only engaged people answer surveys, only super engaged people answer, “I want to do a video interview,” and I’m hand-selecting the coolest ones to go visit. Obviously, it’s biased, but being aware of that actually helped us see a clear picture of who are core customers are and then what we call the crew, the people that surround them, and then the core crew crowd concept and the crowd.
Ken Tomita: I think it’s okay that the process is biased is if you’re aware of it because then you’re able to hit depth as well as quantitative breadth.
Ken Tomita: After we did that, we started realizing that, “Wait a minute, maybe the work we do is not what we though it was.” The whole time, I thought the meaning of our company was providing really cool jobs for myself and my team. I thought that was the meaning we did, but we didn’t realize that our customers were also doing that and our products were enabling them to do that because we now create workspace products. That’s our primary product line.
Ken Tomita: It changed our mindset internally about what motivated us. It wasn’t just for us; it was, “Hey, let’s create these amazing products that help other people do meaningful work.” It also inspired us, we’re working so hard on making this stuff that the people that are using it are people that are like us. It really galvanized the team, actually.
Ken Tomita: After that, we started engaging with our customers before we launched products. An example is our desk shelf system, which has been a huge success. We went out and looked at 600 desks. Our lead designer, Shawn, and myself, we went out and in-person, looked at people’s workspaces. We started learning these techniques about you can’t just ask someone what they want. You know that old Henry Ford saying, if he’d go to his customers and ask them, they would have made a faster horse. I do believe that, but you should still go out and look for people’s actual needs. You should interview them, watch them work, try to find their friction points without asking them what they want you to do.
Ken Tomita: It’s probably not a coincidence that, ever since we started doing that and spending real time to hit the road and talk to our customers in-person, our products are much more successful. It’s because our perspective changed from making stuff for ourselves to making stuff that they actually need that fits within what we want to do.
Cameron: And so that’s when you talk about customer service actually being the end of the chain where you’re fixing problems that you could have just done a better job of avoiding by really tailoring that to your audience.
Ken Tomita: Right.
Cameron: That’s great.
Ken Tomita: We call it customer experience and we don’t think of it as just answering the emails when somebody has to return something; we think about the entire journey, including before the product even exists. How can we dial that in so what we’re providing fits what they need?
Cameron: Yep. My next question actually, because it triggered something I was thinking about how in marketing, people talk about campaigns and campaigns is another example of the business love of military analogies. You’re basically going to go out and you’re going to conquer and subjugate people and get them to do what you want them to. I think you have a pretty different perspective, so I’d love if you could just try to sum up your marketing strategy in a few sentences, what they would be.
Ken Tomita: Right. My fast answer is we don’t do any marketing in the traditional way. When we were really struggling, we were throwing money at trying to drive more traffic to our site and more sales, like every technique you can imagine. We made a list of all the techniques that exist and just went through and did them all. They all failed.
Ken Tomita: We’re not a good marketing company. We’re a product innovation company that brings humanity to product. That’s what we’re good at, so we came up with this bizarre strategy to just stop doing marketing. We stopped doing any advertising, basically no top funnel growth or encouraging it besides creating products and paying a PR firm. That was the one thing.
Ken Tomita: What we ended up doing is our strategy became rather than thinking of marketing as how do we get more people to our site or sell more stuff, we shifted the resources internally to R&D and my “marketing guy,” he switched to how can we explain the product better? How can we build better landing pages? Let’s focus on email, sending high-quality content to existing fans. The strategy was hey, instead of trying to get new fans, which we’re not good at anyways, let’s make our products better, let’s engage with our existing fans better so they’ll buy more stuff and then they’ll buy more repeat orders.
Ken Tomita: Here’s an example: our traffic, year over year, is down 25%; revenue’s up 15% because our conversion rates natively are higher. It’s been like that for two years: steady decline in traffic, steady increase in revenue. We’re able to overpower the decline in revenue by focusing on what we’re good at. And it feels more us, you know? I’m coming from an art background and classic, I feel uncomfortable selling and I suck at it. It’s been way more fun for our activities to line up with our core competencies and to see that success is pretty remarkable.
Cameron: That’s great to hear, yeah. I think credit unions, as you know, are built around service as well. That’s the whole idea of a cooperative entity, but I love reframing that of then it’s not really service; it’s the holistic experience and that allows you to really focus on your core competency and what you love to do.
Ken Tomita: Yeah.
Cameron: I’m curious, how do you think about … I know you guys just have some really loyal folks out there, obviously, if they keep coming back and buying more, they love your products, but how else do you go above and beyond or how else do you go about creating that kind of loyalty and depth of relationship with your customers?
Ken Tomita: Sure. One think that actually helped, which is a little bizarre, is we actually try to talk about our customers as a team. If there’s a cool customer, we’ll talk about it in our daily standup huddles. When we connect with them better, we end up providing better products and service to them. That’s another thing.
Ken Tomita: But as far as a tangible thing we do, with larger orders, we have this Polaroid camera. It’s Fuji film like an instant camera, and somebody orders more than 500 products, the shipping person yells, “Picture!” And then whoever wants to just jumps in and we take a selfie with the products they bought and us. I don’t know if that has any impact; we just want to do it, so we do it.
Ken Tomita: One thing that people love is, because we’re direct to consumer only, we don’t have packaging because we don’t have to send it to store and somebody has to look at a box and buy it, so we hand-wrap all of our products. We gift wrap them and then we include a thank you card that’s hand-written. Every customer gets hand-wrapped products and a thank you note that says, “Hey Cameron, thanks for buying a desk shelf. I hope it’s nice in Hawaii or wherever you live. Thanks for supporting us.” If you go to Instagram right now and you search from the Grovemade hashtag, the vast majority of the pictures posted are of the thank you card. I think people want to have a human connection to the products they buy because that’s so rare and they really appreciate that.
Cameron: Great answer. I’m curious if there’s any lessons you’ve learned, maybe the hard way, about marketing or customer service, customer experience that you think would apply to credit unions and the financial service industries? Because as we’ve hit on numerous times, everything is ultimately at the core a commodity and can be [crosstalk 00:15:20] somewhere else. For them, they’ve got fin techs that don’t have branches, serve the entire country, often aren’t following some of the regulations.
Ken Tomita: Yeah, I agree. There’s a lot of things that crossover in any business and I think this customer engagement thing is pretty much universal.
Ken Tomita: The danger is, especially when it’s digital, is to forget who your customers are. It’s almost cliché, but we just start making these assumptions of what they want. That was the turning point for us is thinking about what they want, what they need. The effectiveness of that for our company was profound.
Ken Tomita: That would be my takeaway for somebody in the financial industry is maybe there’s something to be learned if they’re trying to get in the customer’s shoes directly, and just a survey, but go all the way, spend real effort and put being in their shoes and seeing what they need and see where it crosses over with what you can provide.
Cameron: What does it look like when you bring a customer into your daily huddle? Like you said, you do those every morning, obviously, from the name. How do you do that in a meaningful, tangible way?
Ken Tomita: Sure, we don’t do them every morning, but what we like doing is reading the emails, the good ones that come in. The customer service lead used to read them all, but now we rotate in our daily standup huddle and somebody will read a funny email, a really positive email from a customer. Some of them are really … What do you call it? Eloquent or some of them are really humorous, but it’s a big morale boost for our team to know that what we’re doing is more than just making stuff.
Cameron: Almost reminds me of how Jeff Bezos, I don’t know if he still does it, but at Amazon was famous for always having an empty chair in every meeting and that chair represented the customer.
Ken Tomita: Exactly, exactly. This was nowhere on our radar first five years. We never talked about the customer.
Cameron: Yep. It’s so easy to think that you know your customer. At the end of the day, it seems like almost no one does. What do you wish your financial institution was doing to better serve you or help you become a more loyal customer or member?
Ken Tomita: Sure. I think, as a business owner, the little tiny things matter to me a lot, the friction. I don’t want to be spending time doing banking stuff, right? Most creative people don’t and CEOs probably don’t. The innovations and making the processes faster for me to do, I love those. Like mobile deposits, wow! I don’t have to drive to the bank? I’m so stoked.
Ken Tomita: But there’s still a lot of friction points where I’m like, “Why does this have to take so long?” or “There’s so many clicks to do this.” Those things, if you whittle them down, to save time, that makes me happy because those things need to be done, but hopefully in as little time as possible. You know?
Cameron: Yeah, that’s great. Let’s do our final take then. Ken, is there anything else you’d like to reiterate or add just to leave our audience with that we didn’t get to today?
Ken Tomita: Sure. I’ve been struggling with banking for a while, and I didn’t really have to think about it much before, but there’s a couple of banks I’ve been working with lately and I’ve really noticed a profound difference between them. They’re not all the same. One I call good, one I call evil. They’re really different in their approach; one is mission-drive, one is not; one treats me like crap, one treats me really well.
Ken Tomita: I think financial institutions are different from each other. I don’t think they’re a commodity anymore based on my recent personal experience.
Cameron: All right, awesome. Ken, thank you so much for joining us today. It’s been a real pleasure.
Ken Tomita: Thanks, Cameron.
Cameron: All right, folks, another great episode. I really enjoyed having Ken on. I hope you enjoyed the conversation as much as I did. I want to close with some of my key takeaways.
Cameron: The first one was I loved how Ken talked about how they went from selling commodity iPhone cases to, as that market evaporated, really rethinking how they operate. And just his whole definition of customer experience and how level one is looking at the data, which everyone hopefully knows how to do as he said; level two is surveys, and for there, the data was fine but it was really the open-ended questions that led to insights that allowed them to make meaningful changes for their customers; level there was video interviews and just getting into things that you just can’t see in the data; and then level four was going on the road. I always love that. I think for every business, especially for credit unions, getting out from behind your desk is so important.
Cameron: He had an interesting little framing there of how that’s not going to be a perfectly representative sample, but it’s going to help you to really figure out who’s your core, and then who’s your broader crew, and who’s the broadest crowd that you guys served.
Cameron: I loved how Ken said, “We don’t do any marketing,” and it made me wonder what if, for all of us, if we said we didn’t do any marketing, how would that reframe our thinking? I thought it was intriguing as well how he said, “Now we’ve changed a whole way of what motivates us. We’re all about bringing humanity to product.” I think the financial sector’s just a great example of how bringing humanity to banking is such a powerful and compelling thing that people want and I think are really craving in this day and age.
Cameron: I also thought it was really fascinating, beyond just sort of philosophical statements, how Ken said that for two years running now, they’ve actually decreased the top of the funnel. They have less traffic coming to their website, but they’re also growing their business. I think that’s a really powerful and specific example of how sometimes we focus on how can we reach more people. So much emphasis in the credit union is about expanding charters and if we can just reach more people, we’ll grow, but that actually, there’s an alternative perspective which is if we can just find and know and really serve a specific demographic or psychographic, that can be a really powerful path to success as well.
Cameron: And then the last thing that really stood out to me was this idea of how do we really talk about our customers, our members, all the time as a team? And bringing them into the daily huddle and having someone read an email or some other kind of feedback that you got so that we’re, collectively, always engaging with them and rotating that as well so it’s not just member services representatives or it’s not just marketers, but that everyone in the organization is sitting there and on an ongoing basis, they’re reading, their stepping into the shoes of the people that you’re serving and trying to serve.
Cameron: All right. As always, I hope you guys have the best of luck in making your credit union remarkable.