Transform Customer Delivery Step 4: Optimize & Adapt

In the previous posts of this series we discussed some ways to transform the customer delivery experience: reduce customer effort, make it personal, and be proactive.  All three of these steps can be accomplished by taking data that is readily available to retailers and acting on it to enhance the post-purchase experience. The last step is the toughest one to address.  In order to fully transform customer delivery, retailers must be able to optimize the delivery experience for each customer and adapt to changes in real time.  This means connecting external carrier networks with disparate technologies and offerings to customer expectations.  

Smiling man holding package and tablet outdoorsMerchants encounter huge obstacles on a day-to-day basis as they attempt to deliver shipments to customers.  As we’ve discussed previously, customer expectations are growing. According to a study conducted by HRC Advisory, 80% of retailers are unprepared for the supply chain changes needed to meet these demands. Shoppers expect shippers to personalize the experience and demand options like guaranteed delivery dates and the flexibility to choose from a variety of delivery service offerings. To be able to truly optimize these decisions, retailers must first develop a complex network of local, regional and national carriers that are capable of fulfilling customers’ shipping desires.

Once a diverse network is in place, the key to optimizing is all about data.  Key metrics like on-time percentage, damage ratios, regions served and cost are the building blocks to a carrier performance profile.  Evaluating these metrics is critical, as they can vary widely – average on-time performance varies up to 94% depending on the lane of transport.  

Retailers can dig further by looking at the data to determine whether a shipment should go to less-than-truckload (LTL), parcel, or some combination of the two.  Do certain carriers have higher on-time percentages in specific regional areas? Retailers can choose to use those carriers for deliveries in that region only, or to transfer packages once in a regional market.  What about packages that can be delivered via multiple modes, such as a kayak that is very light but nearly 6 feet long. Is it more efficient to send it via freight or via parcel? Additionally, retailers should optimize for each customer and order. For example, a repeat shopper with a higher lifetime value or a first time shopper with a large cart size may receive preferential pricing for various delivery options when compared to another customer.

So what does this type of optimization look like to a shopper? Bob is a contractor purchasing a bathtub for a home he’s currently renovating. At checkout he’s able to see multiple delivery options, including expedited shipping, free standard shipping, room of choice delivery, and pick-up from store. Each delivery option shows the real estimated delivery date and cost. Bob needs the bathtub ASAP as his client is moving into the home in less than 10 days. At checkout he’s able to see that the free standard shipping option can’t get the product to him for at least 12 days, but the store pick-up option can be completed in 5 days. Bob is a repeat customer and is offered expedited shipping to the store at a discounted rate.

In order to make sure the demands of customers like Bob are continually met, merchants must regularly monitor and score carrier performance data for any unexpected changes.  A carrier who has consistently had high on-time performance percentages may have a sudden drop-off.  Retailers need to dig further into that drop-off.  Was it just a weather-related delay that resolved itself after a few days, or is it a more systemic issue that isn’t going away?  Another carrier might have an increase in damage to products shipped.  What has changed about the carrier’s processes or maybe the retailer’s packaging materials that might be causing damage?  Reviewing carrier performance data and adapting to changes will allow retailers to react to shipping issues in real time.

Optimizing the carrier experience and adapting to changes is definitely the biggest challenge in transforming customer delivery. Retailers have zero control over carriers, and carriers have a huge impact on customer perceptions of a brand.  By gathering data on carrier performance and matching it to customer preferences, retailers can take steps to ensure each customer’s carrier experience is the best it can be.