From Logistics to Customer Magic: Implementing a CRM Process

Logistics involves delivering the right product, in the right condition, to the right customer, in the right quantity, at the right cost, to the right location, at the right time. Achieving these '7 Rs' is key to excellent customer service. Happy and satisfied customers are the lifeblood of an organization’s longevity and financial success.??

The 80-20 rule seems to hold true for the service component of a product/service package. Service represents about 20 percent of total costs but about 80 percent of customer satisfaction. Therefore, it is important to develop logistics capabilities to high enough degree to generate the positive impact that is desired. And that is why manufacturing companies around the globe are focusing their service efforts and outsourcing the logistics activities to 3PL companies.?

In the ideal world, every customer must receive stellar service, but probably not realistic. So, instead, logistics professionals implement a CRM process that helps them to identify their key customers, put them into tiers, and then tailor customer service levels accordingly.?

Here are 5 steps process to implement CRM in your company: -?

• Categories customers into profitability tiers and classify them into three tiers:

Each customer needs be evaluated in terms of the type of relationship it has with your organization as well as the level of service it demands. Customers who are profitable, are easy to deal with, pay on time with predetermined price, are satisfied with level of service provided are the ones to work hard to keep for the long term, such customers could be put into top tier customers, in the middle are those who are less profitable, are sometimes uncertain or fickle about their desires, are unpredictable in terms of payment schedules and pricing, and are erratic in how much effort they require for servicing their account. At lower are those customers who are not profitable, are very unpredictable in their behavior, and they tend to never be satisfied despite repeated efforts to appease their needs and wants. The goal of most companies today is to convert the top tier of customers and the still-prized second tier into lifetime customers.?

• Determine service levels:

If you work for a 3PL company or with B2B customers, establish a Service Level Agreement (SLA), a contract that outlines specific service levels to measure compliance. Otherwise, determine service levels by:

- Listening to customer feedback

- Benchmarking against competitors

- Adhering to industry standards

Establish a relative service level and define Key Performance Indicators (KPIs) for activities in each stage:

- Pre-transaction

- During the transaction

- Post-transaction

• Identify and implement processes:

The best processes to deliver on customer expectations are identified and implemented. This may require re-engineering some critical processes that impact customer satisfaction.

• Measure performance:

Performance should be measured using specific metrics that are meaningful to the customer, such as dispatch time, delivery time, accuracy, and quality. Implement a customer feedback system and a Corrective Action/Preventive Action (CAPA) system to address any gaps between the required service levels and actual performance.

• Continuously improve:

The final step is to continuously improve your organization’s use of CRM, leveraging the lessons learned throughout the process. Establish a Kaizen system identify areas of waste and inefficiency and implement improvements to eliminate waste and optimize processes.