Customer satisfaction in any business, especially e-commerce, relies heavily on the quality of your internal processes. You should take steps to ensure that every aspect of your supply chain is optimized—receiving orders, processing, picking, packing, inventory management, shipping and deliveries.
The order fulfillment process spans from the time a customer places an order, to when that same customer receives the goods on their doorstep. If you fall short in any of the steps along the way, you will face the risk of losing customers who are unsatisfied with your businesses. Fine tuning your order fulfillment processes starts with building key metrics—which can help you understand what is happening at every stage of your operations so you can meet customer demand and expectations, optimize your solutions, and ultimately, boost your customer satisfaction.
Setting Your Goals
The first step to improving customer service is to start rigorously tracking key data points to act as a barometer to measure your success. A few important fulfillment data points include: customer order cycles, receiving speed, fulfillment accuracy, inventory accuracy, and the total cost of the entire fulfillment process.
Once you have tracked these over a few weeks (or months, depending on your shipping numbers) you can more easily set up some key performance indicators (KPIs) for various aspects of order fulfillment. These indicators are like benchmarks that you want to hit within a certain time frame.
Below are some important order fulfillment metrics to track, in order to increase customer satisfaction.
Receiving Speed
Speed and accuracy are terms you will hear repeatedly when it comes to order fulfillment. These two metrics are the cornerstone of order fulfillment. Speed in receiving refers to how quickly inventory is received and shelved. The quicker inventory is received and stored for picking, the sooner it is available for sale. But that is only half of the equation – It is also important to note that receiving inventory accurately, with the proper labels and correct counts, ensures the start of an efficient order fulfillment process.
Fulfillment Accuracy
You should always strive for an accuracy rate of 100 percent, but that is not always possible. Errors like mislabeled SKUs, picking the wrong SKU from product lines, packing incorrect quantities, stockouts, and more, can reduce the accuracy rate. Every incorrectly filled order increases the risk of customer dissatisfaction, as customers will be frustrated when they receive the wrong items, or they arrive late. By monitoring fulfillment accuracy rates regularly, you will be able to quickly discern places you’ll need to make the process smoother. Product fulfillment accuracy is measured by the total number of accurately filled orders, divided by the total number of orders shipped during an established time period.
Fulfillment and Order Processing Speed
Customer demands are higher than they have ever been. Due to the Amazon Effect many online shoppers expect two-day shipping as the norm; now that Amazon is moving to same-day shipping the expectation has risen even higher. If you miss cut-off times for carrier pickups, it will add an extra day for delivery. While you cannot always control shipping times, you can control the speed of order processing and how communication of the estimated delivery date.
Average Delivery Lead Time
This measures the time it typically takes to get an order to a customer. A core metric, this is sometimes split out over different product lines, skus or categories, especially when size, weight or custom order requirements will require longer for a longer lead time.
Transportation Cost Per Package
Also known as shipping cost per order, this metric shows how much it costs your business to deliver each package to the customer. Keeping this metric as low as possible is critical, as it increases your profitability. Lower costs for transportation means higher savings, which can be used to provide lower prices for your customers, which can obviously raise customer satisfaction. Transportation cost per package is measured by the total transportation cost during a period, divided by the total number of completed deliveries during the period.
Inventory Accuracy
Your recorded inventory should reflect your physical inventory. This can often be difficult to track with orders being constantly shipped and received, especially during peak seasons. If you don’t have the most accurate and up to date inventory count it can lead to back orders when a customer orders an item that shows it is in stock, only to find it is unavailable. Having an accurate inventory management system can be an important factor in aiding your efforts to increase you fulfillment speed while also keeping an accurate inventory count. It can help cut down the amount of time it takes for an order to go from an online shopping cart to your fulfillment center and then is shipped out to the customer.
Order Tracking
Customers expect to have information on expected delivery dates and shipment updates as soon as they order a product from your online store. This information puts customers at ease, so if you can provide tracking information as soon as possible with timely updates that can go a long way in improving your customer satisfaction.
Returns Management
Part of having a successful fulfillment strategy is ensuring successful product returns if a customer has an issue with a product. A proper returns system can create loyal customers, while a poor returns process can cost you repeat business. Ensuring a smooth returns management process for customers is your second chance to prove yourself to them and win them back. You can choose to offer free returns, however it is important to consider how that would effect your profit margins and if that is worth it in the long run.
Customer Retention Rate
Another measure of the quality of your overall order experience, retention measures the percentage of customers who come back to place another order, compared to the total number in a given period.
Customer Satisfaction Level
There are many ways to measure how happy customers are. You can offer short post-order surveys or longer form questionnaires that can help measure customer satisfaction more in depth. You can also offer an option for a customer to review their purchases and order experience to provide visible feedback to other customer. Satisfaction is always an important performance indicator and will often encompass a set of metrics, based on the elements that you set to define your order experience for a customer.
Bottom Line
It can be time consuming and overwhelming to measure and track the many factors that go into order fulfillment. Getting help from a third-party logistics provider (3PL) might be worth the investment, for peace of mind and help with efficiency. An experienced 3PL will help optimize your order fulfillment processes which will inevitably lead to boosts in customer experience, satisfaction, and ultimately loyalty. If managed the right way, you and your 3PL provider can provide customers with convenience and a positive shopping experience that will have them satisfied and coming back repeatedly.
If you are seeking fulfillment-related support we’d love to hear from you. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support. Send us a note to connect about how we can help your company grow.
Tags: KPIs & Metrics
