Some thoughts on how businesses can achieve a superb end-to-end delivery experience
Your customers are asking for better delivery time windows. Meanwhile, your drivers are complaining about backtracking and inefficient routes. You want to help the customer, but you don’t want to upset your drivers. You want to keep your drivers happy, but you also want to listen to your customers. What do you do?
Let us first agree that a tighter delivery time window is better for the end consumer. We all know about the terrible delivery experience of large existing logistics companies who will tell you that they’ll be there between 9 a.m. and 9 p.m. In the age of technology, this is absolutely absurd.
And guess what? You can do better!
Trade-off between service level and efficiency
Before providing delivery model suggestions, let’s first discuss the trade-off between service level and operational efficiency. A better service level benefits your customers’ delivery experience, while operational efficiency benefits your company’s margins and bottom line.
Let’s illustrate with a few extreme examples:
Small windows of choice
If you want to provide the best possible service to your customers, you allow your customer to pick a very tight time 15-minute window of their choosing. While this is super convenient for your customers, it comes at a huge operational cost.
Imagine three customers on the same street placing choosing time windows two hours apart from one another. Now you have to send a driver back to the same street three times that day! This of course is very costly and will frustrate your drivers.
Very large windows and no choice
The other extreme would be to give your customers no choice at all (or some vague choice such as “within 10 business days”). This is typical for larger businesses that use a third-party logistics company. They rely on the 3PL to schedule deliveries, and have no visibility or say in the timing of it. But even if you deliver yourself, you could still opt for this model.
The benefit would be that you have complete freedom to plan your routes the way you want; you could use route optimization software to generate the most efficient delivery schedule possible and maximize operational efficiency.
Now you can batch those three customers on the same street and deliver to them at the same time, without the need to backtrack. Drivers will be happy as they feel more productive. You will be happy knowing that your fleet is operating as efficiently as can be. Your company will be happy, because it all goes to the bottom line.
The only person in this scenario that isn’t happy is your customer, because they had no say in the matter at all. They couldn’t choose a delivery date, let alone delivery timing. This is what UPS and many big logistics companies still do today. You can most certainly do better!
The recommended middle ground
Between your customers, your drivers, and your profit margins, you can’t please everyone 100%, so what do you do? You find a compromise.
The last scenario — where the consumer had no choice, but the business is running efficiently — can already be improved upon significantly if you allowed them to choose a date of preferred delivery at the very least. In addition, it would be even better to offer a choice between “morning” or “afternoon”. And better yet, let them pick a two-hour time window.
Note that each time you offer a higher service level you give up a little on your operational efficiency.
In the age of Amazon Prime and the on-demand economy, consumers’ expectations have risen significantly; anything larger than a two-hour time window will be considered “bad service” in the market. We recommend that you aim for one-hour time-windows to impress your customers.
So does that mean you give up on operational efficiencies? Not necessarily. Most companies think about time windows in a linear way of letting the consumer pick a time, after which you optimize your routes. There is a way to have your cake and eat it too. Let’s quickly talk about choice and communication first.
Choice and communication
There are two things that your customers actually want: choice and communication. They want to have some choice in the matter and they want to be kept in the loop during the delivery process. These are some of the most important aspects of the end to end delivery experience.
Our recommendation would be to offer both wide and tight options upon checkout, but communicate very tight windows as soon as you’ve optimized your routes (and know that you can actually deliver on-time).
On your checkout page, you should at least let the consumer choose their preferred delivery date. This could be the cheapest delivery option. You might also want to offer one-hour time window options that a subset of customers who are willing to pay for. According to a McKinsey consumer survey, 70% of your customers will opt for cheapest delivery option. This is a good thing, because you can maintain operational efficiency, while offering the premium service for customers who are willing to pay a little extra.
If your cut-off time for order placement is 24 hours before delivery, you can now take all your regular and premium orders with one-hour constraints, upload them to a route optimization software, and optimize your routes across your entire fleet to maintain highly efficient routes.
After optimization, you can communicate a very accurate 20-minute time-windows to all your customers the day before — even to the ones that opted for the cheapest delivery option. Your customers will be pleasantly surprised by such service — especially since this isn’t the norm yet. The fact is this willbecome the norm in the future; so this is your chance to be one of the first and impress your customers!
Additionally, if the ETA changes because your driver is running behind schedule, you can send a notification to your customers to keep them up to date. People actually don’t mind waiting. What they really hate is being kept in the dark.
How are you dealing with increasing demands in your delivery business? Let us know your thoughts in the comments below.