Smart logistics: the key to keeping customers happy
As consumers are offered more choice about when and where to shop, many retailers are recognising the importance of logistics in differentiating themselves and creating competitive advantage. Lewis Marston, CEO, Rocket Consulting looks at the issue of customer experience.
The transformation from high-street retailer to one that can operate successfully in today’s multichannel world is challenging, particularly for those that have relied on adding online fulfilment to legacy retail fulfilment supply chains and technology systems.
Companies with traditional roots compete with retailers at the opposite end of the spectrum; enterprises such as Amazon that, from the beginning, were built to be online only. Their cost-efficient logistics operations allow the customer to balance the speed, convenience and cost of the delivery based on their own personal preferences.
Viewing the logistics function of the supply chain as a key element of the customer experience, and optimising it accordingly, will pay dividends for retailers.
Retailers running their own delivery vehicles can potentially drive up customer service levels because they can dictate the consumer interaction, adding value to both the customer and the brand. However, a dedicated fleet is not practical for many retailers.
Frequently the more workable alternative is to use a third party logistics company, but from the point at which the delivery vehicle leaves the loading bay, the retailer is no longer in full control of its product and brand and loses direct contact with the customer.
Often the first time the retailer becomes aware of any issues encountered with the delivery, delays on route for example, can be when its customer services department receives a call from the consumer. The lack of direct involvement in the process at this point makes it harder to both resolve the problem easily for the customer, and create the positive customer sentiment that can be achieved by face-to-face interactions.
Compare that to a customer services team with instant access to real-time delivery and returns information and business intelligence on buying and service experience history. Issues can be handled before they become full-blown problems. Pro-active and fast customer service can reverse negative experience and outcomes and retain consumers.
THE BRAND EXPERIENCE
In recognition of the power of the ‘feel good factor’ generated by making a purchase in store, many retailers aim to replicate or even extend the high street shopping experience with innovative online experiences.
However, a positive association with the final step of the purchase is often lacking. For example, an item bought in-store is usually presented in attractive packaging, which feeds the reward centre emotions and makes a strong link to the brand. In contrast, most home deliveries arrive in a commoditised brown card box via a courier-branded or privately-owned vehicle. This can negatively affect the consumer’s impression of the brand and is a missed opportunity for the retailer to cement the relationship with the customer on its last contact with them.
At the top end of the scale, branded vehicles and packaging see retailers closing the loop. Add to that a uniformed driver with a remit of customer relationship manager and retailers start to get closer to an in-store purchase experience.
Retailers with outsourced logistics can also make small changes that improve customer service and reinforce their brand and buying experience at the point of delivery. It is critical to choose the right logistics partner and ensure that the technology they use is a significant enabler for customer service in this all-important final step in the retail experience.
For example, state-of-the-art, mobile applications enable the customer signature screen on the handheld device carried by the courier to be branded by the relevant supplier, ensuring visibility for the retailer and making an important subconscious psychological link in the reward feedback of buying. (These applications are the same ones that enable the real-time logistics information that is essential to drive
pro-active customer service.)
If providing feedback is not easy for the customer, retailers risk them not complaining, but taking their business elsewhere with no warning in the future. Internal cultures and policies should facilitate and value customer feedback at the point of delivery and mobile logistics tools should enable it by including one-click feedback as part of accepting a parcel.
Increased returns must be accepted as a consequence of online shopping, particularly in fashion, as people replicate the changing room experience and over-order to ensure they have the size and colour they want. The returns process must mirror this behaviour to be as customer-friendly as possible.
The in-store item exchange experience can be replicated by incorporating the reverse logistics enabled by sophisticated logistics technology into the delivery process. Collections could be included in the delivery route of the retailer’s vehicle, which reduces their cost and improves customer service, for example by reducing the waiting time for deliveries. Alternatively, collections from regular customers could be made at the next delivery.
A good in-store returns experience often results in a customer spending the refund before leaving the shop, and this can be replicated online. But perhaps more importantly, retailers should consider the returns service as a differentiator. If it is difficult, customers will regard it as another barrier to shopping, potentially taking their custom elsewhere.
Retailers consistently look for ways to achieve the potentially opposing goals of providing the best possible customer service while remaining profitable. A new way of working, which uses real time route planning based on the location of each of the deliveries already booked, is starting to emerge in high density areas. Based on the model of ‘slot booking’, customers can be encouraged, perhaps with financial incentives, to select a time that is consecutive to other deliveries in their vicinity. The retailer can then complete two deliveries for the cost of one, with no detriment to the customer experience.
This requires retailers to accept that a step change in technology is required to lead the way. Providing highly optimised logistics and customer service functions is possible with emerging in-memory computing (such as SAP HANA) that allows calculations to be made almost instantly and as part of the buying process. Employing the right technologies opens up new disruptive opportunities to redefine several areas of the retail experience.
As same day delivery services become a reality, the value this offers to customers compared to a small, reliable delivery window is questionable. The 2013 Econsultancy Multichannel Retail Survey reflects this, finding that 31% of people would opt for fixed date delivery, compared to 8% who would prefer same day.
This suggests that retailers would benefit from first achieving smaller accurate delivery windows. Additional flexibility to change these via an easy self-service option could then be built in, with the future seeing disruptive technologies again offering new standards, such as ‘find-me’ delivery services for home/work/café.
The new breed of mobile logistics applications integrate logistics and customer service to enable holistic fulfilment that extends the brand experience to the moment that the customer receives their goods. This allows retailers to retain the positive brand sentiment that they have invested time and resource into generating since the beginning of the consumer shopping experience.