Episode 302: Crafting an Exceptional Customer Experience with Gemline CEO, Frank Carpenito

Take us back to something. I want to jump to this topic about customer experience because it's something that you really focus on. Take us back to Q4 2019. Now, you had a company wide meeting to talk about implementing something fairly significant, decided to roll out in 2020, and we all know what happened in 2020. So. But this 2019 company wide initiative around customer experience, what sparked that?

Yeah, you picked one of my favorite topics to talk about. So In February of 19, I came off the board after five years to come inside and run the company. So a few months later I began traveling in the marketplace, meeting with customers of various sizes and got a lot of great feedback about our people and our company. But one thing in particular kind of stuck out to me in that first trip is we heard a lot of you guys are really good at what you do. And what I was not hearing was you guys are the absolute best supplier to do business with. And I sort of concluded coming out of that first couple, those first couple of trips that we were somewhere between good and really good, but we were not yet great. And you know, the competitive nature in me said, we've got an opportunity to be great in this area. Yeah, we need to do something about it because it's meaningful to our customers.

When you decide to do something like that across the entire organization, by the way, kudos to you for doing that, getting feedback from folks and recognizing that you guys were doing a great job. You were actually doing a very good job. But when you decide to roll out something like this across the organization, help us understand for perspective, like what areas does this impact? I think we understand customer service. We get that because we as distributors are talking with your front facing sales team and customer service. But what other departments is at the touch? What did it look like to roll out a company wide customer experience initiative?

Yeah, so, you know, it really impacts every single department in the company. And the reason we believe that is because every one of our employees services an internal and or external customer at some point in their day. And you know, in our opinion, we believe every touch point with a customer, whether it's through our website, placing an order, our credit department, it creates an experience. And those external experience where we're directly touching our distributor partners is the result of many internal customer interactions that enable us to execute. So the way we view it and the way we sort of articulate it to our team is everyone in the company has a customer to serve and we're all expected to deliver an exceptional customer experience, regardless of who that customer is.

Yeah, you. Can you give us an example of the kinds of things done by using a few departments? Like, I know something you mentioned to

me, I thought this was funny.

You said, you know, call it from the call at the switchboard to putting a credit hold on a customer for a $6 invoice. What are some of the other departments or things that this impacted?

Yeah. So I'll give you two really good examples. One may seem more obvious than the other. The first one is supply chain. And I probably don't need to remind everybody that there was a bit of a supply chain crisis that not only hit our industry, but everybody else a couple of years ago. And, you know, most companies were experiencing eight to 12 weeks in overseas shipment delays. And our supply chain took two immediate actions that ended up being incredibly important to us. The first one was that they put all of our shipments on expedited status as opposed to regular status. And what that meant was we were, we were getting priority freight, which we were paying quite a sizable premium for, but it guaranteed our sailing dates out of Asia. And what that enabled us to do was to be very predictable on when we were going to receive goods and when we could commit goods to our customers. The second thing they did is they immediately, when Long beach was getting a lot of bad press with the issues there and pending strikes, etcetera, is they immediately rerouted our entire west coast distribution plan to the east coast where we were getting less port congestion, greater service reliability. And I think the key to those two decisions, which we may or may not have made a few years prior, was the thought process was starting with the customer at the top of the decision tree rather than our internal needs, which may have put us into a. Put us in a place where we would have made some selfish internal decisions. We realized that there was a lot of pain in the market and we needed to figure out how we could best service the customer, even if it meant we were probably going to give some margin up in the short term, at least. The second one was our customer service department. This one probably a little more obvious. And this started around the beginning of Q4, 2020, when suppliers. And I'm going to put all of us in the same bucket, and I think most would agree weren't answering their phones. Distributors were left in limbo trying to service their end customers. And it was really one of the uglier windows of time I think we've probably all seen in the last few years. And we were at a meeting with one of the largest distributors in the industry. And what we heard from them was the biggest obstacle that they were facing was getting people to answer the phone, which would allow them to service their business. So it was sort of all our VP of sales needed to hear. And he immediately put together a plan and he committed that we would get to under a minute in answering every phone call that came into Gemline. Took us about three weeks. We achieved the goal, we sustained it, and we believe during that window of time, it allowed us to create separation from our competitors at a time when the marketplace was in a bit of a service frenzy. And those were two good examples where I think our team didn't even need me pushing or anybody else. They realized that there was something important to our customers that either we weren't delivering on or the industry wasn't delivering on, that we could do something about

all things being equal. Excellent product, excellent representation by folks in the field, excellent marketing. Customer experience is the differentiator. I was just talking to a distributor who is actually done phenomenal work over the years who has seen three years of 20 to 25% growth back to back. And I asked him, I said, what are you focusing on this year coming up? And he said, customer experience. We're breaking everything down. We're looking at every touch point. So this is a topic that's so hot and relevant to us because all things being equal, this is the differentiator. Were there specific metrics you used to determine, like what you were aiming for?

Yeah, we, I mean, we've always been pretty good at metrics, but there were a couple, more than a couple that we actually highlighted and focused on over the last couple years. You know, one was certainly time to answer a customer phone call or email, because if there's crickets on the other end, all our distributors can assume is that something's not working or something's not happening. So we focused on time to answer a call, time to respond, you know, on time delivery, particularly because there were challenges in the industry. In 2021, we really upped our focus on making sure we were meeting in hand dates and delivering it 98% or greater on an on time basis. Proof turnaround times. We heard loud and clear from a lot of our customers that the first sign of something going wrong in an order is if they're not getting a proof turnaround within a 24 to 48 hour window. So we focused on that, you know, in stock position. We made significant investments in upping our base inventory levels over the last few years. And measured against that, and I think the last one which is something that we've always focused on, but we think it's even more important to our customers is first call resolution. None of us want to have to call three times to resolve a situation or get an. We're really trying to hone in on one call, one email, being able to get our customers the answers they need.

Yeah, I'd be remiss if I didn't ask this, but it's also becoming so crucially important for suppliers and distributors. How does something like EPO integration with commonskey factor into your overall vision for this customer experience?

Yeah, it's actually a huge piece of it and customers I met with this past year have heard me talk a lot about it. So we view the electronic purchase order is really just a kind of a crucial first step to removing the complexity from the order process, you know, and ensuring that clean orders get issued, excuse me, that get issued from the get go as they move through the system. And you know, in talking to a lot of distributors and even other suppliers, I think we both realize that the order complexity and the amount of touches that go into a distributor placing an order and following an order and in supplier processing an order are just enormous and not sustainable over the long term. So internally we're committed to eliminating order complexity. And EPOs really are the starting point for doing it. And you know, as, you know, we, you know, jumped on board with Common sku. You guys were very assertive in moving this initiative forward. And, you know, we just think it's gonna simplify things and allow distributors not to have to constantly check on an order as it moves through the system. And if we do that, we all win.

Yeah. What was the net effect overall with you and your company really doubling down on this customer experience?

Yeah, so it's a question that my board asked when we first put this on the table and. Sure. And they obviously continue to ask. So Since January of 21, we've been servicing our distributor partners at the highest service levels in our history using a number of the metrics that I talked about, you know, and over that same time frame, based on the, the numbers that are reported in the industry, you know, we've been the fastest growing top 10 hard goods supplier. So we really do believe there's a correlation between what we're able to provide in terms of service, reliability, trust and confidence with our customers and the results that we've, you know, had over the past few years.

Now that you had hindsight of experience, how would you encourage other leaders tackling a big initiative like that? Because it is, it sounds so simple on the surface, but it touches every single part of the business.

Yeah. And it's, you know, it's something I learned a number of years ago and I can't say I knew it from day one of my career, but I learned from someone a few years ago. It all really has to start with a willingness to listen to your customer and being able to commit to do what they're asking. Now, of course you can't always commit 100%, but if you don't enter the conversation or you don't approach, how do we solve something? By just listening and asking probing questions and understanding what it is. I don't think you ever get there. And you know, if we've always looked at it, that if we don't put our customers first, it's going to be really hard to succeed. And you know, what's an increasingly competitive and unrelenting marketplace. So for us and for me, in terms of, you know, the hindsight, it's you have to listen to every single customer, regardless of size, regardless of the situation you enter into. That strikes up the conversation because there's probably at least one or two tidbits in every conversation conversation that can help solve the experience issue or opportunity.

I want to touch on CSR and ESG just for a minute because I want to get to what I think is one of the most important topics about traceability, where you're doing some really cool, innovative work there. But with ESG and csr, I have a question around. You mentioned a distinction and that is respect to the terms sustainability responsibility. An example you used was mirror or started using the word responsible because of a lack of clarity around the word sustainability. Where there's ambiguity, there's room for deception. Even if advert inadvertently do half hearted attempts at rushing toward ESG in our industry complete this, are we at risk being inauthentic with as a general industry as a whole? Because this is a topic you're very passionate about.

Yeah. And the answer is, you know, absolutely. You know, especially given the fact that it's an unregulated space.

Right.

You know, decisions and claims are oftentimes based on an individual's interpretation or a company's interpretation. And you know, we all interpret things differently, we all have different lenses and filters. So it may very well vary from person to person or company to company. And I think that becomes the tricky part of this. And you know, the bigger risk is, you know, for a lot of smaller suppliers and distributors who simply just may not have ample resources to getting this right. I think we have to work as an industry to figure out how we ensure that we are getting consistency and we're holding one another accountable. Because the downstream effects, if we end up in a situation where people can't rely on claims, does it doesn't bode well for all of us.

Yeah, it's a, it's a such a crucial warning. And I think with, I think the time of marketing speak has passed us now and this year I think you'll see a huge trend. We're really authentic, authentic proofing and just all kinds of measures put in place.

Agree? Absolutely.

Traceability, this is a such a cool topic. All of those previous questions serve to get to one crucial investment that you and Jim lan are making and not just to counter the ambiguity, but to lead in terms of transparency. Building through trust, through traceability. Can you explain what you mean by traceability? This feels like a first. First in our industry.

Yeah. And this is one, you know, I, we used to all talk transparency for, you know, a long period of time. And transparency has kind of evolved into traceability. So to gemline, and I'm just going to define this what it means to Gemline, Bobby, because everybody may have a slightly different definition. It really means transparent transparency deep into our supply chain to include a few things. First is our suppliers, both our production and the components that go into that, you know, second piece is material validation. We all use a bunch of different materials that come from a bunch of different places. And when you get into the, you know, recycled world, there's a lot of inputs into that recycled product. So material validation, I think is becoming increasingly important. And then the last piece is carbon impact. And, you know, you started to hear a lot more in 2023 around carbon impact and ultimately getting to a point where we can all talk about carbon footprint down to the item level. So that's where we start. And in our case, you know, because we've always been a internal design and build organization, we build everything from scratch. It's always been a part of our supply chain and it's helped us earn trust over the years. And what we're looking for traceability to do is take those who want to go much deeper into our supply chain and have the ability to see transparency at quite a low level, which will give people hopefully confidence, further confidence and trust in everything that's happening.

Let's give, since we largely have an audio audience here, let's give them a picture of what we're talking about. One of the things we're talking about is this new program you created with a company called Aware. According to Ware, they are the world's first hybrid physical tracer and public blockchain chain traceability technology. It works like a virtual passport to authenticate sustainable material throughout the production process from textile to consumer, to guarantee that products are truly made from sustainable materials. Now, from my neophyte understanding, Aware ads tracer particles to the fiber so that when a garment, for example, is produced at the mill, it can then be made into an item like a shirt that a brand like Jimline creates and then decorates and distributes to the end client. And at each time that material changes hands from mill to producer, supplier to end client.

Do I have that correct? That you do. It's traceable? Yeah, you absolutely have it correct. I mean, it's. The tracer is detected at every step in the process, so that it's really, you know, ensuring that the materials are cleanly transferred from supplier to supplier, you know, as our goods get production produced along the way. And particularly like when you're dealing with, you know, fabric and when fabric, you know, goes through the mills and then goes into the factory and then moves throughout, this tracer basically, you know, has, I'm going to call it a camera, but it's not a camera, obviously, but it is attached to the product through its entire life cycle.

That's amazing. How is that tried?

Yeah, it's. It is amazing. And it's, you know, we, we think about what people were talking about during the pandemic about, you know, microchips and the vaccines and following us and knowing everything we were doing. And somebody said to me, well, it kind of sounds like that. I said, no, it's a bit different. You know, it's tracked by a testing protocol that's, you know, not dissimilar from other tests for like, lead and PFAs and things that, you know, folks on this call would be familiar with. And, you know, we perform them on the materials as they move through the process. It detects the tracer and then the information is all captured in the Aware tool and portal. So that's how it sort of gets. Goes through the process and then it's fully captured. And I can talk about the passport, if, if that's helpful in terms of what that means.

Yeah, what is that? If I'm a consumer and I receive this item, then how do I verify its origin? Or what is the passport?

Yeah, so there's a QR coded label that's added to every gem line and Aware item and the consumer has the ability to scan the code using their cell phone and get direct access to what we call the product Passport on the Aware platform. And what it does is it just provides full access to suppliers that produce the item validation in validation information on the materials, you know, used during production. So it has more information than probably the average person will dig through. But for people who really want to understand and follow it and have the confidence of what's happened with this product that they're giving to their employees or their clients, it's all captured in this Passport portal and you can look at it right on your phone.

That's amazing. If I'm the vice president of marketing for a very big reputable brand or any reputable brand and I know this and distributors are saying this and helping them understand this on the front end, what kind of. That gives an incredible amount of confidence to that buyer?

Yeah, absolutely. I mean it's the level of detail that we can provide on these products. And like I said, as companies move closer to using, you know, more recycled materials and the claims around those recycled and sustainable materials, having the ability to trace that through the process will be really critical, I think, for people to have the confidence level that the products are what they say they are.

What excites you most about this particular technology as it bodes well to really transform our business?

Yeah. So, you know, we've already managed our supply chain back to the material and component level and we've done that for a bit where we think and what really excites me around traceability is for the first time we're going to be able to give our distributor partners more information at the item level that they can easily share with their end customers as they're, you know, trying to close a transaction and educate people on what it is they're selling and that that'll benefit the entire value chain from the distributor to the end customer to the recipient slash consumer, you know, who gets the product and if it happens to be re gifted and to that second person who wants to go back and look at how this product made its way from A to Z.

Let's talk a little bit about Frank. You came to your role at Gemline.

That's the boring part, Bobby. That's my favorite part.

You came from the board and you jumped into Jim line to become the CEO and run the operation. What, what was behind that decision? What made you sort of think, you know what, I'm, I'm, I really want to be a part of that on the inside and in their Working. So what's going on there?

Yeah, it's really a pretty neat story. So Jonathan Isaacson, who's our owner, executive chair, who you know, you've known for a number of years, Jonathan has always had a board of advisors, independent advisors that he used to help help him guide the company. And he had a search out for two board members back in 2014. He was looking for really CEO, you know, peer mentors. And two of us joined the board and at the time I had been a CEO for about 10 years and joined the board and I spent five years on the board and you know, unfortunately. Fortunately and unfortunately. I guess when you're on a board, you know, you show up four times a year. Jonathan used to lock us in the conference room for eight hours a day. So you really don't get too deep into the company or to the industry, but you get enough that you learn and understand. I think a lot of things. And for me over that period of time, you know, Jonathan and I were using each other to share best practices in the company I was running. And with Gemline and you know, we got to know each other personally, professionally, how we think. I started to, you know, learn more about the Gemline business and what Jonathan was trying to do with the company. Company. So when he approached the board at like year four and a half that I'd been on there and said, you know, I've made a decision. I want to bring somebody in to run the day to day business and I want to focus on vision, community, doing more in our industry but not run the company day to day. It, it was, I guess a bell went off in my head and I said, you know what, this could be quite interesting. And so fast forward, I called him a week or two after the board meeting and you know, said, hey Jonathan, I was thinking about what you said, said and if you think I potentially would be a good fit, would love to throw my name in the hat. And his response to me was, if you're interested, there won't need, we don't need to have a hat. You and I just need to sit down and make sure it's what you want and what I want and what the company needs. So we spent about the next two to three weeks, two or three coffees and meetings and kind of went through what was important to him and me. And you know, we had an agreement pretty quickly thereafter. And I just, you know, I had tremendous confidence in Jonathan for my time on the board. I like the business. I went from like to love in the business once I get in house.

Right.

And it was a really good fit because it was. It allows him to leverage the things that he enjoys most and does exceptionally well at, and it allows me to enjoy the things that I enjoy most and I think to do reasonably well at.

Yeah. You came from the consumer products industry. What's the biggest difference? Like, what did you come into this industry? And you go, oh, wow, this is. This is really different. This is really unique. What was the most unique about it?

Yeah, this. This is the easiest question. When I was in consumer products, you know, we mainly were selling at Walmart, Target, Amazon, cvs, Walgreens, you know, maybe Kohl's and Nordstrom. And they represented like 80% of our business base. I come into promo and our largest distributor is, you know, less than 5% of the market. So, you know, the. The fragmentation in our marketplace, I think is the biggest difference for me in terms of what I was used to in the retail marketplace I was selling into, you know, versus what we have here.

Yeah. Who or what has influenced you the most in your journey as a leader? It's a big question, and I'm sorry to make it so big, but, yeah,

you know, you asked me to think about this question, and it was probably the hardest one for me to think about. And so I would sum it up saying it's probably my two biggest influencers have been my first and last bosses. You know, at 21 years old, I went to work for Procter and Gamble, and my first boss taught me the fundamentals and discipline I would need to start my career and excel over my career. And those fundamentals and discipline were everything from how I should dress, how I should conduct myself, what time I should show up for meetings, and how to be successful in the marketplace, managing up in the organization and external with a customer base. And a lot of the fundamentals that I learned back then really stuck with me kind of fast forward, you know, for the last five years, and I really could say 10 years in terms of how long Jonathan and I have been working together. You know, I've had the privilege to work with him, who I would say is one of the most knowledgeable leaders and visionaries in our industry. And I can say that from personal experience as well as from what others have said to me. And he has been able to teach me the promotional products industry at lightning speed. And. And then the good thing about it, and I always tell my team, this is rather than me step in a pothole and make a really dumb decision, I'll go to him on topics that I'm just not as knowledgeable about in my five years in the industry. So I think it's my first and last bosses and there have been a lot of people and experiences along the way. And you know, you always have the horror stories you learn the most from. And I, I didn't include any of those in the discussion, but I would say Jonathan and my first boss at

P and G. On any given day, you'll have a myriad of fires to put out and a mission to accomplish as you survey the work ahead. And since we're recording this at the beginning of the year, I've kind of two questions. What are you enjoying about your work right now at this moment in time? And then what do you look forward to the most in 2024?

Sure. In terms of what I enjoy the most, and this may sound a little bit canned, Bobby, but it's really not. I have the privilege of leading a very talented and committed senior leadership team and a super dedicated and customer centered group, customer centric group of associates in our company. And I always tell people, you know, I have one of the easier jobs here and they think I'm joking and I'm really not. That I have such a talent pool around me and an organization that will knock down walls for me and for our customers. I think my job is one of the easier ones. I think the second part of that is that, you know, I work for a company with an amazing culture that emphasizes community, continuous improvement, collaboration and respect. And you know, that's evident across our organization. We've got so, so many stories about 30, 35, 40 year veterans in the organization. It's just a really neat place to work and that's why I get excited. The people that I work with and the culture that I get to spend my waking hours in, I would totally agree.

That's not can because Jonathan shared with me a picture. It was an employee picture with 13 employees in it and they're between 13 employees. There were three to 400 years of experience, experience at Gymline. So community and culture really is a big, a big deal there. Yeah.

We have two employees who retiring today that, you know, combined or over 60 years. And we've just had a number of sort of celebrations and things with them over the last couple of weeks. And we'll have better pictures for you in the next week or two.

That's amazing. That's amazing. Last question. We have just one minute left. Frank. Folks love to know the answer to this question. Any book, podcast, anything recent you've read you'd recommend. That's been the most salient and impactful to you.

Yeah. In fact, Jonathan gave me one a couple of weeks ago to look at and it took me about a week and a half until I was on vacation have a chance to to do so. But I listened to a podcast titled the Daily Hard Fork. It was an interview with Sam Altman, who you probably know as the founder and former CEO of Open AI and all kinds of controversy around him and his departure. But it further reinforced to me, if I didn't need it already, that AI is the future. But what it did really emphasize is that the future is already here at our fingertips. And you know, AI is important to all of us right now. But I listened to that podcast and I finished it and I said, you know what, this is going to be a race and not everyone's going to finish the race standing. Now, I don't think it's a three or six month race. It's going to be a longer race, but it is going to be a race. And for those that get further faster with how to apply AI in the business effectively and beneficially are going to win and I think win pretty big.

Frank, I have really enjoyed spending time with you here today and really enjoy getting to know you. Thank you for helping lead this industry. I know you're passionate about some really core issues and I look forward to you and what Jim lan are doing in the upcoming year.

Well, thanks Bobby. I really appreciate you taking the time to chat with me. And we've got a great industry with a lot of great people and great distributor partners and good supplier competitors and it's always exciting talking about things that either I'm passionate about or many of us are passionate about. So thank you as well.

Thank you, my friend.