Agoraphobia or efficiency? Mysophobia or effectiveness? Blame or celebrate COVID for remote work? Whatever the driver, real or otherwise, more and more people today want to live as much of life as possible from home. Ok, maybe mysophobia is a little extreme – call it an engineer’s attempt at a literary hook. But even if you haven’t locked yourself up in your home, at the very least many of us are looking to squeeze a little more into each day. It logically follows that e-commerce will continue to see more and more growth.
If you are a shipper that has figured out how to service the world through e-commerce, then you are balancing a range of increasing customer expectations coupled with growing competition fighting for a piece of that pie. You may even lose sleep pondering many things, including how to provide an overall value to your customers greater than your competition by balancing your customer expectations with the costs to meet those expectations.
So, how do you do beat your competition and gain more customers? Well, first let me admit that there is no one answer, and if there is, I certainly don’t have it. What I do have are some thoughts collected over decades of working with scores of e-commerce clients; I hope some of those thoughts can be helpful to you.
1. Define
If your objective is to balance your operational costs to meet (and exceed) as many of your customer expectations as possible, then the first step is to define both sides of that equation. Pull together the most creative and most informed members of your team into a brainstorming session.
To quote Simon Sinek, “Start with why.” Why are you doing what you are doing? Why do you have customers and why do they choose you? Identify what your customers expect. Do your customers require next-day, or even same-day, delivery? Many e-commerce shippers make this assumption and further assume that if the customer doesn’t get it, they will shop somewhere else. But have you fact-checked this assumption lately? In many cases (and admittedly more and more) that is true. But ask yourself, for how many of your customers is this true? Of course they would like immediate delivery, but will they choose one of your competitors if it takes two or three days? Or is it more important for the customer to know when to expect delivery, and not so much how fast to expect delivery? Is what the customer really wants is the ability to plan their lives?
Do your customers expect you to offer the lowest price for your products? Which is more important – assuming they have to choose and can’t say “all” – speed of delivery, expected delivery day and time, or lowest price? Speed and cost seem to dominate the conversation, but some other expectations may be product selection, follow-up customer services, perfect order status, or white glove delivery. Understanding what the majority of your customers expect and how they prioritize those expectations is the first step. Make sure to synthesize those expectations into a measurable key performance indicator (KPI). If it’s speed, then track a metric fully within your control like time from order receipt to order ship, as well as customer perceived metrics that are not fully within your control, such as time from order receipt to customer receipt. If the expectation is low cost, well, I’m sure no one needs to be told to track their costs! Make sure there is a measurable KPI assigned to each expectation. Then the final preparation step is to measure your current performance for each KPI so that you have a baseline.
2. Discover
The next step is to look internally at your business and understand how you meet as many of your customers’ expectations as possible. I think it’s important to note that I said, “as many of.” It is possible that you will not need to meet all customer demands. Gather the same team that helped define your customer expectations and turn the conversation inward. A tried and true method for starting the process is to consider your company’s strengths, weaknesses, opportunities, and threats – or as most of you know it, conduct a S.W.O.T. analysis.
3. Differentiate
Again, you may not be able to meet all of your customer demands, so focus on matching your strengths with their demands and try to differentiate yourself from your competition. Psychological studies suggest that most people can only remember a maximum of three to four things in their working memory. Pick one or two strengths that you want to focus on and have your clients remember. Why one or two? Well, my thinking – and perhaps it is just me here – is that when your clients are thinking about the particular product or service you offer, you’d like one or two things about your company to stand out, driving them to choose you. The product or service is the first item, your standout characteristics are the second and third, and we will allow the customer to fill in another one if they have capacity for four. You now have a differentiation strategy.
4. Deliver
Now it’s time to get to work. Time to translate ideas into action. One of my favorite proverbial phrases is that “Ideas without action is just daydreaming.” Another favorite is “Think big, but start small.” If I may be permitted one more, “The journey of a thousand miles begins with the first step.” It’s time to make an action plan with milestones. Create a vision of what your company offering looks like and then create a plan and schedule to get from where you are to that vision. One thing I’ve learned is to think it all the way through, but don’t get too detailed. It’s more important to get started. Any plans past six months will almost certainly change. You will learn a lot along the way, and you need to remain flexible to adapt and change to the evolving conditions around you. But if you keep the vision in mind, you will stay on course. Make sure that you continue to measure results going forward to make ensure that you’re getting the results that you expected. If you’re not, make adjustments.
The four steps to balancing costs to meet customer expectations are: define, discover, differentiate, deliver. Is there anything to the psychological science mentioned earlier? Play along and set a calendar reminder for one month and see if you can remember all four steps. Or better yet, get started on the journey, and your transformation plan will already be there in your working memory.
Most of all, I wish you success in whatever goals or dreams you are chasing.
Matthew Kulp is EVP, Managing Partner, St. Onge Co. Visit www.stonge.com for more information or connect with Matt on LinkedIn.
This article originally appeared in the March/April, 2024 issue of PARCEL.
