Logistics in the UK is one of the hardest processes of the supply chain. The most common challenge is late and missed deliveries. This is experienced both ways by the consumer and retailer. According to research done by PCA Predict missed or late deliveries costs more than 65% of eCommerce stores. This has a negative impact on the retailers’ profit margins since they use their fleet or hired vehicles to make last-mile deliveries.
If you are a business owner and would like to know how late or missed deliveries affect your business and how to tackle these challenges, this article is for you. Read along and be enlightened!
The human cost of late delivery
Delivering critical items such as gifts or medications beyond the agreed date or time results in a frustrated customer who would prefer never to buy from you again. A customer would want a gift delivered on their birthday or need medication for emergency treatment. You can only imagine what late delivery could cost them.
Despite the resources you spend for the best customer experience, full responsibility falls on your shoulders even if late delivery has been caused by your shipping courier. You will end up spending more on shipping costs and your customers will post negative reviews on social media or forums baring potential customers from purchasing your products.
In addition to the human cost, late or missed delivery greatly impact the key metrics of your business.
How are key metrics affected by late delivery?
Decreased Customer Retention Rate.
Customer Retention Rate is a measure that determines the percentage of customers willing to buy from you again. Late delivery negatively impacts the chances of retaining customers due to a negative delivery experience.
Increased Customer Acquisition Cost.
Customer Acquisition Cost is the incurred expense of trying to convince a customer to purchase from you. This includes sales and marketing costs. If you have a high CAC you will charge your customer more for buying your product to make a profit. Therefore, late delivery increases the CAC due to negative customer reviews; making your product expensive and unaffordable.
Deceased Customer Lifetime Value.
The Customer Lifetime Value is a measure of how much a business could make from a customer during their business relationship. As a result, late deliveries lower the customer lifetime value since the customers will choose your competitors for a decent delivery experience.
These negative impacts on your business’s key metrics can be devastating and frustrating. However, the good news is that there are methods you can adopt to avoid or solve them to get your business out of the woods.
How can you solve late delivery problems and rebuild your customer lifetime value?
Manage your customer’s expectations.Make sure that deliveries are made within the agreed time by quickly making plans and necessary changes whenever there is a delay risk. Inform your customer in advance if it is impossible to deliver on the agreed time.
Hold your shipping courier accountable. In the event of late delivery, claim refunds from your shipping courier. However, this will not prevent customer reviews.
Adopt route optimization software.Automating your last-mile logistics enables you to make a route plan before delivering packages. This facilitates faster delivery times.
Inform your customers of their package situation.Ensure that you constantly inform customers of the situation of their packages. Notify them of potential delays and how you are solving the issue.
Compensate your customers on late deliveries made. You can make these compensations by offering the affected customers discounts or coupons on their next purchases. You will retain customers and regain their confidence in your business.In a nutshell, logistics and supply chain can be a tedious and overwhelming business endeavor. As a small business, these challenges can make you feel like quitting due to massive losses made. However, with a few smart moves and adopting the latest technological advancements, you can make your business stay afloat and gain relevancy in the market. Happy