While companies traditionally have focused the bulk of their direct marketing resources on front-end initiatives, many are realizing the benefits of upgrading to advanced back-end fulfillment services to enhance customer loyalty, response rates and return on investment.
A company can gain a competitive edge by ensuring that it has the best possible fulfillment programs. Slow delivery times, high shipping costs and botched customer orders can cost a company its most valued customers, no matter how good its products.
Companies recognize that they can’t afford to lose customers. They’re searching for new ways to generate recurring revenue and increase the lifetime value of their existing customers. According to recent reports by Gartner, the cost of keeping an existing customer is only 20 percent that of finding a new one.
Therefore, a company routinely should evaluate its fulfillment programs as well as the level of service offered by its outsourced fulfillment partners. Here are some general criteria to consider:
Time to market. The time required for products to be delivered to customers is critical. A company should work closely with its outsourced partners to determine which turnaround times best fit its products and customers as well as the company’s own objectives.
For example, there may be a benefit in offering overnight delivery for premium or luxury products. However, less-costly fulfillment options might be more beneficial for the delivery of catalogs or low-cost items. In addition, a company’s outsourced partner should consider ordering products from the company’s competitors to develop a comparison of turnaround times and service and provide the company with the best possible recommendations.
Inventory-management technology. A company ought to determine whether it should partner with a fulfillment-service provider that offers a basic system that simply calculates orders vs. receipts or one that offers an advanced warehouse-management system that provides more accurate, detailed reports. Items of higher value typically require more aggressive cycle-count programs, while paper and items of lower commercial cost typically don’t.
Online tracking. Because so many customers enjoy tracking their shipments, more companies are working with outsourced partners that offer this service option. Online tracking is beneficial for the delivery of many products, such as computers, because it lets customers monitor the assembly and delivery of their computers via the Internet.
Order processing.Customers enjoy the flexibility of choosing to place orders via fax, telephone or the Internet. Select outsourced partners that offer the broadest range of options for your customers.
Inventory rules. For timely, accurate delivery of shipments, companies should ensure that their outsourced partners have implemented the right rules for the management and delivery of their inventory. Companies that require highly complex inventory rules, such as controlling order volumes or processing credit-card payments, should ensure that their outsourced-service providers have systems that can handle and enforce those rules. Their front-end order-entry applications should capture as much customer data as possible to ensure that products are delivered in the manner that satisfies the customers.
Before selecting an outsourced fulfillment provider, conduct a thorough audit of prospective firms based on criteria that include industry experience and references. Clearly define goals and expectations, set deadlines for achieving specific goals and appoint one employee to serve as the company’s liaison with its outsourced provider.
As the marketplace grows cluttered with more competitors, companies must ensure that they have the best possible fulfillment programs to maximize customer satisfaction.