Tomorrow is Fine. Free is Fine. What Else Can You Do?

The Verde Group Customer InsightCustomer Insight: How Logistics Raises the Bar on Customer Expectations

Ask any customer shopping online when they want their order delivered, and it’s a good bet they’ll answer ‘tomorrow’.

Thanks to masters of logistics like Amazon and Zappos, customers have come to expect 2-day or even 1-day shipping, sometimes at no cost. They want things NOW and will choose companies based on that expectation. If you can’t deliver, you risk losing customers — even if you have a great product and competitive pricing.

A case in point. Prior to a recent business trip, I needed a new laptop bag. It was Saturday, and I was flying on Wednesday. I found a nice leather case I liked and identified several online retailers who carried it. Whom did I choose? The one who could get it to me by Tuesday and didn’t charge a premium for fast shipping.

Evolving logistics capabilities have impacted the customer experience in other ways. Consumers now want to know ‘where’ their order is every step of the way. And these expectations have spread across industries. If Uber and Dominos can tell you the exact location of their driver, exactly where the driver is, consumers expect that their package delivery company should be able to do the same?

Companies who can meet these constantly rising expectations are being rewarded with increased sales and customer loyalty. Those who can’t may suffer the consequences. Faced with the customer challenge of ‘why drive to the store when I can double-click and two days later it’s at my door?’, Toys ‘R Us had no answers.


Fast and Free Delivery Is Not Enough
With delivery speed and accuracy quickly becoming the norm, how can companies further differentiate the delivery experience? For that, they’ll need to get creative. Going back to my recent laptop bag purchase — supposing the retailer had included a small sample of leather protector in the box? Unfortunately, they didn’t, but adding a small gift or discount coupon can further endear customers to a brand while also providing an opportunity to cross-sell.

Post-delivery follow-up provides another opportunity to differentiate from the competition and add value. This generally takes the form of a post-purchase survey or a request for a product review. Most customers appreciate the touchpoint, and the post-sale interaction typically promotes brand loyalty.

However, when companies master logistics, they can take the Customer Experience to even higher levels. They know exactly when you received the product, how long you’ve had it, and when that product is due for replacement. This mastery of logistics and “big data” gives these companies an edge on their competition – it enables them to be more than a “one and done” with the initial transaction.

 

Where Do We Go From Here?
Customers now expect to get anything and everything to their front door FAST. This has created industries that didn’t exist just a few years ago — think of meal preparation companies such as Hello Fresh and Blue Apron.

The continued growth of online sales and the globalization of supply chains will keep driving logistics innovation. We’re already seeing trials of drones and driverless long-haul trucks. The automatic re-ordering and shipment of products based on a pre-set delivery cycle is certain to disrupt some industries — just ask Gillette, who late last year introduced cheaper razor blades to fend off competitors Dollar Shave Club and Harry’s.

And of course, there’s Amazon, ever the leader in logistics innovation. Amazon continues to surprise consumers with their innovations. In April 2018, they partnered with GM and Volvo to offer product delivery to the trunk of your vehicle rather than your front steps by remotely unlocking your vehicle through the car’s internet connection.   Granted, not all Amazon customers may want to take advantage of this offering, at least initially.  But for those who do (perhaps those with “front porch security concerns”), this is a potentially high value-add service.

Most companies now understand that there is a direct correlation between their logistics ability and their customer loyalty (NPS score). The challenge for these companies will be to develop and deliver innovations to their customers that represent relevant, timely and meaningful improvements.  Understanding which delivery innovations will materially shift customer spend and brand affinity will become a competitive advantage, particularly in those categories where product quality and price are weakly differentiated.

Want to learn more about the link between logistics, innovation and the customer experience? Check out a few of my favorite customer insight articles on the topic:

How Innovations in Logistics Fulfill the Experience Demand

The Amazon Supply Chain: The Most Innovative in the World?

Lori Childers is Vice President, Client Solutions at The Verde Group

To Change or Not to Change? That is the Question

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Consumers are creatures of habit, often seeking out their favorite restaurant, hotel or store, because they know they’ll have a positive experience. These positive experiences make them loyal — whether it’s a perfectly grilled steak, a service associate who helps you find that perfect gift, or the ease of pre-selecting your hotel room in advance of check-in.

However, if a consumer’s go-to business never changes, the experience might seem stale. Once-loyal customers might consider switching.

This point was driven home when I watched the movie Chef, about a chef who wants to transform the time-tested menu to impress a food critic. The owner disagrees, saying, “Look, if you bought Stones tickets and Jagger didn’t play Satisfaction, how would you feel? Would you be happy?”

The chef sticks with his 1990s-style menu and gets scorched by a terrible review from the food critic.

The Business Dilemma

So the question is: when is it time to change and when should you keep things the same? Can you do a little of both?

The same dilemma is faced by many businesses. To change or not to change? When is the right time? When sales decline? When complaints increase? When stock prices fall?

If you act too quickly, customers may be upset. If you wait too long, customers—and their money—could walk out the door. But how do you know when the timing is right to introduce change? And, should it be a completely new product/servicing offering or just a modification?

Many companies come to mind when thinking about waiting too long to change. Consider Motorola which, according to Forbes, once had nearly 50% of the cell-phone handset market. In 1995, they passed up chances to enter the digital market early, sticking with more primitive analog designs, because it felt sure that analog’s 43 million customers couldn’t be wrong. Within four years, Motorola’s market share had slumped to 17%.

In deciding whether it’s time for change, companies need to understand a multitude of factors but key inputs to this decision are:

  • Knowing where they are in the product life cycle curve
  • Understanding the current state (baseline)

Product Life Cycle

Lori BlogTheodore Levitts classic Product Life Cycle has been around since 1965. Understanding which stage a product is in provides information about expected future sales growth, and the kinds of strategies that should be implemented to protect sales. The product life cycle of many modern products is shrinking, as Tom Spencer found, while the operating life for many of these products is lengthening.

As explained in Using Market Research in Product Development, many companies recognize the importance of offering something new. For this reason, they allocate substantial sums to research and development to help them determine when it’s time for a change. Most companies spend between 2% and 5% of sales on R&D.

However, as stated by Paul Hague in the third edition of Market Research, not all products/services necessarily completely die and need to be replaced with something new. There are often opportunities for modifications and improvements which can result in a rejuvenation of the product life cycle. In fact, per B2B International, 90% of new product research is focused on product additions and modifications rather than on new concepts.

Product improvements by their nature are less drastic and are much more easily accepted than conceptually new products. As with our restaurant example, an entirely new menu was perhaps unnecessary but rather, some innovations and changes to existing items while keeping some old favorites breathing new life into the restaurant while still keeping the brand intact.

Baseline Measurement

In parallel with a product life cycle assessment, organizations should have a baseline measurement of areas of satisfaction and dissatisfaction. As my colleague Jon Skinner wrote , by knowing what issues upset customers the most (causing dissatisfaction and disloyalty) and by understanding what makes loyal customers return and recommend a business, organizations have better insight into whether it is time to pursue the introduction of something new (where “new” is adding/changing/or removing a product/servicing offering). It is important to remember that the issues that upset customers the most aren’t necessarily the most prevalent problems but rather, the ones that have the biggest impact on customer loyalty.

However, a baseline is not enough. Businesses need to take regular temperature checks and compare their results to the baseline. More formal, data-driven Voice of the Customer (VOC) research will reveal even more about customer experiences and expectations. This could include short surveys after every interaction, more detailed monthly, quarterly or annual surveys and staying on top of ongoing social media chatter.

By using an experienced research partner for product life cycle assessments, baseline studies, and temperatures checks against the baseline, businesses can make informed decisions about when it’s time to change, what should change, and what must stay the same.

Being true to your brand or what sets you apart from the competition is great. But when you risk driving your customer to choose another business, it’s time to change.

Don’t lose your customers because they’re tired of the same old menu. Know when it’s time for change and get ahead of the curve!

Lori Childers
Vice President, Client Solutions

To learn more about Lori Childers