Your third-party home delivery carrier plays a vital role in your retail business. As often the last impression made upon your customers is at the point of delivery, your carrier must clearly reflect the quality and service your customers have come to expect through their interaction with your brand in the earlier phases of the sale.
Studies show that home delivery costs account for an average 8% of retailer revenue. This is no small number. And for retailers of high end merchandise the home delivery component can literally make or break a sale. As such, this line item requires more than just driving down to the lowest possible cost. It's about extracting the greatest value.
Incentive-based compensation is worth the effort!
When it comes to working with your home delivery carrier, retailers and third-party logistics providers are wise to consider incentive-based relationships. These relationships can be built on a mutually-agreed upon set of objectives around variables like customer satisfaction, completion percentage, damages, etc. For retailers, the benefits of incentive-based contracts are apparent: Enlisting your home delivery carrier as a partner in your success can only benefit your business. For a carrier, the opportunity exists to earn more for their commitment to quality service.
At Diakon Logistics, we’ve said to our retailers that we'll charge an amount that allows for us to be minimally successful. We ask our customers what their primary focus is in terms of delivery. Sometimes that focus is completion percentage. Others will say their only objective is customer satisfaction. Depending on the goal, we’ll devise a clear-cut way of measuring the outcome and we’ll base our compensation on those outcomes. So, in the case of completion percentage, if we exceed the standard we are paid more. If we perform under the standard, we’ll be paid less.
If our results are any indication, incentive-based compensation can be a win-win for the retailer and the third-party home delivery carrier alike. Have you explored this option with your home delivery carrier?