“Is Cheaper Always the Best for your Bottom Line?”
Written by Phil Loynes
“Is Cheaper Always the Best for your Bottom Line?”
In today's global economy, businesses of all sizes are increasingly trying to find savings and cost efficiencies wherever they can. With shipping being one of the biggest costs that a lot of businesses have, the need to find savings within a company’s logistics is very tempting, but is the cheapest option always the most economically rewarding for your business?
The phrase “you get what you pay for” is never more true than when it comes to logistics. If you want a quality service that you can rely on, sometimes the cheapest choice is just not an option.
In a PwC Future of Customer Experience Survey, they found that 32% of customers would stop doing business with a brand that they love after just one bad experience, while just under 50% would stop doing business with a brand that they love after several bad experiences. These statistics for consumer’s relationship with brands that they love would almost certainly be higher for brands that they are trying for the first time.
When it comes to sending your products to customers, unless you are an ultra local business that delivers in your own vehicles, you will need to use a parcel courier, and in that scenario your customer’s experience in receiving the goods is largely out of your hands. If the customer receives the goods on time and in good condition, they will likely be happy but not think much more about it. If the goods are late, lost, or damaged, they will undoubtedly not be happy.
Statistics show that people write more bad reviews than good reviews, and for every bad review, it takes roughly 40 positive reviews to negate the damage.
So what is more important, reliability or price? When it comes to the opinions of your customers, it is the first one.
According to a Citizen’s Advice Bureaux report, 24% of consumers said that their bad experience with a parcel delivery affected their confidence when ordering goods. It is no surprise then that Citizen’s advice also reported that 23% of consumers said that the delivery arriving when it was meant to was the most important factor for them in parcel delivery, while only 15% said that a low shipping price was the most important.
There is a growing trend for consumers to avoid buying products that they would otherwise buy from a company purely because of the courier that would be delivering it to them. The phrase ‘once bitten, twice shy’ doesn’t just apply to your products, it applies to the courier that will be delivering your products as well. Because of this, some companies have taken to either masking the name of the courier that will be delivering their goods, or just not listing their name at all. The problem with this is that consumers are savvy to this and many know that when the courier is not listed specifically it is deliberate, and can cause them to think twice about purchasing.
Aside from the first hurdle of customers deciding to purchase your products, the second thing to consider is how much work will your courier make for your customer service and dispatch teams?
If parcels are not arriving on time, getting lost, or damaged, your customers will be coming to you with more requests for tracking updates, claims for lost or damaged goods, and complaints, which will give your customer service team lots of problems to deal with, and potentially mean you need to hire more people to deal with them. After those problems are resolved, your dispatch team will need to process returns, and send out replacements, both of which cost you valuable time and money.
So the question again has to be asked: is the cheapest option always the most economically beneficial for your business?
In the case of parcel delivery, the answer is often no. Consumers want confidence the goods they ordered will get to them first time, when they expect them, and in good condition. If you can provide that confidence for them in the courier that you choose, you may just find that your bottom line is much healthier, even if your shipping costs are slightly increased.
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If so, we can help.
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