Transforming a Cost Center into a Competitive Advantage
A. G. Lafley, the former chairman, president, and CEO of Procter & Gamble, first coined the term “moment of truth" in 2005 as the moment when customers encounter a brand, product, or service and form or change their impression about that particular brand, product, or service.
From package design to optimizing in-store visibility, all the way through improving the unboxing experience, brand leaders have been investing in a set of moments of truth for decades.
The reason is simple: Certain touchpoints within the shopper experience have a significant impact on the buyer’s propensity to purchase.
A positive experience drives customer loyalty—and when executed well, it contributes to higher customer lifetime value.
Adapting to the E-commerce Landscape
The rise of e-commerce necessitates a reevaluation of these moments of truth. The online journey extends beyond the point of purchase, encompassing order confirmation emails, delivery updates via text messages, packaging, and even potential returns. Each of these elements presents a new opportunity to shape customer perception.
The Overlooked Moment: Shipping
When talking to the vast majority of e-commerce brands today, shipping is treated as a cost center, with the key goal being to lower costs. This is mainly driven by the fact that transportation and logistics are managed and optimized by—you guessed it—transportation and logistics teams that are goaled on cost reduction. This approach overlooks the potential of shipping to positively influence customer lifetime value.
Shipping as a Marketing Channel
A lot has already been written about the importance of e-commerce fulfillment in reducing operational costs. But if we examine a giant like Amazon, which built its business on the premise of offering an enhanced post-purchase experience, we see there’s a much bigger opportunity than cost reduction here. A recent study with Incisiv shows the majority of logistics leaders attribute significant increases in checkout conversion rates, average order value, repurchase rates, customer LTV, and Net Promoter Score to a superior last-mile delivery experience.
By viewing shipping as a marketing channel, brands can leverage it to:
- Increase repurchase rates. Timely delivery updates, transparency, and control over delivery options can build trust and encourage repeat purchases.
- Boost customer lifetime value. A positive shipping experience can cultivate customer loyalty, leading to higher lifetime value.
- Reduce refunds and credits. Clear communication and efficient delivery minimize customer frustration and potential returns.
- Improve Net Promoter Score (NPS). A seamless shipping experience contributes to a positive brand perception, reflected in a higher NPS.
Shipping is no longer just about cost reduction.
It’s a crucial touchpoint in the e-commerce journey, offering a prime opportunity to strengthen customer relationships and brand loyalty. By viewing shipping as a marketing channel and investing in a seamless delivery experience, brands can unlock significant competitive advantages in the evolving landscape of online shopping.
