Develop business memory so you can immediately recognize your customer, ask them if they’ve enjoyed their last purchase, and engage based on what they’re currently interested in.
As part of my series about the “How To Create A Fantastic Retail Experience That Keeps Bringing Customers Back For More”, I had the pleasure of interviewing Hadar Paz, CEO and co-founder of Powerfront, an AI-powered customer service solutions provider that helps businesses connect with their customers in a personalized, meaningful way.
In 2014, Hadar envisioned a tool that would allow his clients and their employees to be able to visualize their online customers and connect with them to make their online shopping journey similar to an in-store experience. Thus, INSIDE was conceptualized and has continued to become more sophisticated and intelligent with each release. Today, leading global brands like Gucci, Valentino, Neiman Marcus, and Sephora choose INSIDE for its unique approach to customer engagement and personalization, sentiment analysis, and data visualization.
In an effort to address the rapidly evolving needs of an industry in crisis during the pandemic of 2020, Hadar conceptualized and developed several new solutions, including INSIDE Store App, INSIDE Your Business, and Video Assistant. Ever innovating and evolving, all products are inspired by Hadar’s vision of enabling businesses to flawlessly replicate the in-person experiences online.
Hadar is a former CTO and expert in 3D visualization technology for e-commerce. He is an inspiring and enthusiastic leader, and is truly a thought authority in the luxury retail space. His insights have been published in Forbes, Vogue Business, Glossy, the New York Times, and more.
Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
Powerfront started as a Content Management System, building eCommerce websites for retailers back in 2001. Several years later, I was talking with one of our clients, the CEO of Nike Australia, and mentioned that his website had seen a lot of traffic lately — I checked and there were about 1000 people visiting the site. He didn’t really seem interested, until I asked him what he’d do if there were 1000 people in his downtown store. His eyes lit up, and we both realized how differently he reacted to the “idea” of traffic versus visualizing in-person traffic. I realized that we needed a system that would allow retailers to actually SEE their online traffic in a way that they could fathom. So, I created INSIDE, which uses avatars dressed with data to represent the customers, who move around on a visual representation of a store floor, which completely alters the way retailers perceive their online business. It allows everyone in the company, from the CEO to the online sales agent helping the customer, to humanize their online traffic.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘takeaways’ you learned from that?
When I was younger, 23 years old, I was working as a CTO for a company when I decided to start my own business. I wanted to move from working as the company’s employee to acquiring them as my first client. I was pitching my concept of a future retail system to persuade them that they should take me on as a vendor. I prepared a huge presentation with maybe 100 slides. I started my pitch and, of course, soon everyone was falling asleep. Then, at about 20 slides in, everyone looked at the screen and started laughing and laughing. It’s important to note that English is not my first language. So, I turned around and immediately one word jumped out at me straight away — Instead of writing “warehouse,” I wrote “whorehouse.” It was such a crucial meeting, I was mortified. But I recovered and said, “So, it worked! I just wanted to wake you up.” I don’t think they bought it but I did win my pitch and started my own business. To this day, I have people who help check every email and presentation I write. I don’t trust myself!
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
Closing an initial sale when it comes to a new technology I invent is not my strong suit. I’m not sure why, it’s a mental block. I can’t sell the product until I see someone else do it successfully.
Back when we launched Powerfront’s INSIDE, it was doing great in Australia but it hadn’t really picked up in the US. So, my BDM and I went to an IBM conference to network. We went, talked to people, tried this and that, mingled, and nothing seemed to be working. We weren’t getting anywhere and we were getting discouraged. We decided to go have a drink in the bar.
In the sea of suits, there was a man there wearing a Hawaiian shirt, a hat, and had a cigar. He didn’t look like the typical business person. We started chatting and, because especially at a conference, you’re always on the hunt to network, I thought to myself, “I’m probably giving up some time that I should spend networking and working the crowd.” But I shook it off and we sat outside with him for more than an hour, having a great time talking to this guy I didn’t think was a business person or from a significant company at all.
He turned out to be the Ecommerce Manager of Rooms to Go. He’s the guy who started me off. His name is Mike Austin. Then, I didn’t know who he was or that Rooms to Go was such a big company. He proved to be such an amazing guy, and one of my all-time favorite customers. He believed in me, he said, “This is exactly what i want to do,” when he heard about INSIDE. He wanted to launch straight away, he led the way, and he gave me confidence. The entire company is amazing and they were a great base to help Powerfront gain traction and recognition in the U.S.
Is there a particular book, podcast, or film that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
Steve Jobs, the biography by Walter Isaacson. That book has changed my attitude towards technology, innovation, and business. I used to always serve my team, the people that work with me. I was more concerned with how they felt about the company and about me, than what they do. I believe that was a mistake. When I read the biography, I found Steve Jobs was doing the very opposite. He was only concerned with the cause and not really the people, as bad as it sounds. Of course, he was hated by many people, with the way that he let people feel. That said, he actually achieved something phenomenal. He pushed people to become the best they can, at the cost of his own popularity. That has changed the way I work with people, and the way that my employees look at their job.
In terms of business, another epiphany I had was in regards to the business aspect. I was chasing revenue, I was chasing success for the company, but I had suppressed my passion. The Steve Jobs book showed me that I should go back to the basics — innovation, being unique, and not being afraid of innovating in areas that are unexplored. I started to focus on my own path, completely disregarding the market and worrying about what competitors were doing. I learned very quickly that business success is an outcome of authentic passion for what you do. The minute I stopped chasing money and completely dedicated myself to passion, then money started chasing me.
What do you think makes your company stand out? Can you share a story?
Very interesting question, I can talk about this for hours. Here is a story that resonates with me.
We developed a platform that is so versatile, it shows a customer journey without a predetermined outcome. Meaning, we ourselves don’t know what we can see or learn about customers because it was done in a way in which it mimics the physical world. You can look at the screen and watch what a customer does in real time, and try to understand why they do what they do.
For example, I was looking at a customer visiting the online store of one of the biggest luxury brands in the world. I could see this customer had purchased a product five days prior, and every day they would come back and look at this product. I didn’t understand why they were doing that. Later, in a meeting with the brand, I showed them the scenario and asked them to help me understand why this was happening. Their response was that the customer is longing for the product because they haven’t received it yet. That’s why they were visiting that specific product page every day. We were both amazed that we could actually see this behavior that you’d otherwise never see with any other system. Most computer systems are built with a predetermined outcome, in the form of a report or graph so you can’t see anything other than what the developers want you to see or what you asked to be developed. This is so important to me, to realize that we have created something so unique that gives you a glimpse of customer emotion, and anticipation. Our system shows us that “you don’t know what you don’t know.”
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
To thrive: chase your passion, don’t chase money. Spend your time on something that really helps people. Try to change how people do something. It’s not always necessarily just about solving a problem. Sometimes it’s about doing something in a different, better way, or creating something that’s more enjoyable and efficient. If you’re making things just to make more money, it doesn’t work. Instead, do it from the heart. Financially, if you truly do that and succeed in making that beautiful new thing, money will just chase you. Simple as that.
To prevent burnout: delegate. Work hard, but remember to delegate. Burnout happens when you have too much responsibility. If you learn to delegate, you can work as much as you want. If you’re about to do something that someone else can do, let them do it. Even if it gives you an extra half an hour to gaze at the sky, that could be the half hour that’s going to change everything.
Ok super. Now let’s jump to the main questions of our interview. The so-called “Retail Apocalypse” has been going on for about a decade. The Pandemic only made things much worse for retailers in general. While many retailers are struggling, some retailers, like Lululemon, Kroger, and Costco are quite profitable. Can you share a few lessons that other retailers can learn from the success of profitable retailers?
Then success of these companies is a combination of a good product or a good product selection, the ease of purchasing, and amazing customer service. Those are the three elements that will make a business grow. For example, Amazon is the king of all business. One of the reasons why I shop at Amazon is because it’s damn easy. They made it so easy for their customers, you can find absolutely anything you want or need, you don’t have to waste time looking for things, and you can find it for the best price you can possibly get, and you can buy with one click.
It’s not a big secret why some brands are growing, just have a look at their operations and you’ll see. Great product, or variety of products, that customers actually want so they don’t have to compromise on what they want to buy. And number two, look how easy it is to buy something. That specifically refers to online, and not in-store. Number three, give the customer unbelievable appreciation and recognition, be thankful for what they do with you. So many businesses don’t even answer the phone — or have a phone for that matter. There’s no way to communicate with the business after buying or receiving a product.
Amazon is going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise retail companies and eCommerce companies, for them to be successful in the face of such strong competition?
I think it’s way too late for this. Amazon will just get stronger and stronger and there’s nothing these retailers can do. Only the luxury sector can stand on its own because of the experience Amazon lacks. The only way that Amazon can be stopped is if retailers group together to create a competing platform. I believe Amazon has a monopoly. It has no competition in its methodology and size. There needs to be at least one competitor to Amazon. Retailers have to compete with Amazon at the same concept of retailing. You cannot compete with Amazon with your online store as a retailer. You have to compete with Amazon with another beast that is operating in the same way.
One thing that Amazon can’t do now is manufacture. A retailer can.
A luxury retailer creates aspiration. People want to buy their product because they want to be that person on the billboard. They want to feel closer to the actor used in the ad. Amazon is all about cheap and convenient. You can buy a dress and toilet paper in the same transaction. There is nothing special you have about that experience. In order to compete and attract customers to purchase in their own store, retailers must provide an experience that the shoppers cannot get on Amazon. Imagine buying a dress on Amazon vs. buying a dress in a Gucci store.
Amazon has become what it is because retailers have succumbed to chasing revenue, instead of providing an experience or a cause. Look at the famous example of Toms, who donate a pair of shoes to someone in need for every pair you buy. That is a reason why a customer would go outside of Amazon and buy those shoes from Toms. There’s something there other than just a product. That’s the only other way you can compete.
This might be intuitive, but I think it’s helpful to specifically articulate it. In your words, can you share a few reasons why great customer service and a great customer experience is essential for success in business in general and for retail in particular?
I believe that we buy from people — not from product. Therefore a bad experience with customer service taints the whole need to buy from that company ever again. Most of the time, we make decisions not to buy a product because we’ve been treated wrongly by a retailer, not because we don’t like the product.
If we walk into a store and are greeted by a person that recognizes us from the last time we purchased there, who asks us if we’re enjoying the last purchase, that will create an awesome experience and make us want to buy more immediately without even looking at a product.
We have all had times either in a store, or online, when we’ve had a very poor experience as a customer or user. If the importance of a good customer experience is so intuitive, and apparent, where is the disconnect? How is it that so many companies do not make this a priority?
Throughout my career, I’ve worked with many retailers who see customer service as a pure “cost” center. They don’t see the upside of good customer service, in terms of up-selling, or even just selling. These retailers are trying to reduce costs where possible and will either understaff their contact centre or outsource to a cheaper workforce located in another country. These outsourced centers are less suitable for dealing with customers and are disconnected from a cultural standpoint.
I see customer service as a profit center that can fund larger teams using the uplift in sales. At Powerfront, many times we have helped our customers discover the lift of sales in customer service, especially when we help them to smartly, proactively engage with their customers based on data. In these cases, we’ve seen our customers expand the size of their customer service team. Lately, using the app that we’ve developed, our customers are even using their sales associates in-stores to join the online customer service team and further improve their experience, which is resulting in more revenue.
What are the most common mistakes you have seen CEOs & founders make when they start a retail business? What can be done to avoid those errors?
Starting a retail business that sells multi-brands instead of manufacturing their own products is a big mistake, and the chances of success are minimal because of the Amazons of this world. I’ve seen a number of those failing as they cannot compete on price and variety. When the margin is so small, it’s not business-viable.
For those manufacturing their own items, I think the best way to succeed is either to be unique, or develop a story and become a luxury brand. Otherwise, manufacturing a low-ticket item is again very hard to establish when you have Amazon taking most of the revenue in this space.
Can you share with us a story from your experience about a customer who was “Wowed” by the experience you provided?
Without mentioning a name, one of the leading fashion brands in the world invited me to present at their headquarters in Milan. Fifteen minutes into the presentation, when I explained that all we want is to create a platform that will allow a better connection with an online customer, they were already sold.
I think all our competitors are focused on the act of engagement, rather than the customer journey. A number of times, presenting to luxury brands I’ve seen a great reaction.
Another great reaction we received from one of the world’s most iconic brands is when I demonstrated how we change our avatar’s faces according to the customer’s sentiment. Sometimes we forget that our platform is the first one that allows the retailer to actually see the online store in a way that they’re used to seeing a physical store. Now, with our technology, we are showing online customers’ sentiment by reflecting it on their avatar’s face, and it’s just mind-blowing.
Did that Wow! experience have any long term ripple effects? Can you share the story?
Absolutely. We’ve seen one luxury giant in particular embracing our methodology, attracting a lot of interest from the other brands in the group, which caused a group decision to deploy the platform throughout all brands, in all countries, worldwide. This, and other similar success stories, propel Powerfront to be a global provider in all regions, without even planning that.
Ok super. Here is the main question of our interview. Based on your experience and success, what are the five most important things one should know in order to create a fantastic retail experience that keeps bringing customers back for more? Please share a story or an example for each.
- Think of shopping as entertainment. Provide your customers with exciting content daily.
- Customers buy from people. Empower your sales associates with tools that connect them personally to their customers.
- Develop business memory so you can immediately recognize your customer, ask them if they’ve enjoyed their last purchase, and engage based on what they’re currently interested in.
- Embrace or develop a story of passion behind buying your amazing product, other than function.
- When engaging with customers, use your data to understand the caliber of the customer and where they are in the journey, so instead of insulting the customer, you connect with them even more for future business.
Thank you for all of that. We are nearly done. Here is our final ‘meaty’ question. You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
Buy second-hand. Or, if you want to invent something new, there should be a tax. For example, if you want to go and manufacture a box, you have to pay 10% to the government to help clean up the world. We’re making too much new stuff. I love buying second-hand, I just bought a desk and a coffee table. The new stuff we make becomes trash very quickly. We throw so much stuff away. I imagine how someone worked on it and handcrafted it and put their time and attention into it. It hurts me to toss things, especially if someone could still use it. But there’s no system for sharing. If there’s a call for technology to help with this, maybe I’ll do it. Another thing I plan on doing in the future is to start an organization to help single mothers. In Los Angeles, if you have children there’s a six month waiting period to get services and housing. I’d like to come up with a solution for those in that interim period. I was raised by a single mother so that’s important to me.
How can our readers further follow your work?
This was very inspiring. Thank you so much for the time you spent with this!