Customer delivery personas — yes, they’re really a thing, and they can help you drive top- and bottom-line growth.
As we head into the peak holiday season, retailers are bracing for the surge of ecommerce orders and challenges of delivering large product volumes. Last mile delivery has become a costly undertaking for multichannel retailers, with home delivery comprising an estimated 41% of overall supply chain costs and 53% of the total cost of shipping.
With retailers often charging less than what it costs to fulfill orders, final mile delivery can erode profits. According to Capgemini research, retailers recover only $8.08 of the average $10.10 delivery cost per customer order, while the delivery cost for larger items (e.g., refrigerators) runs even higher, taking a greater chunk out of the bottom line.
High Volumes Complicate Home Delivery
The high costs and challenges of last mile delivery — complex routes, inefficient route planning, idling, downtime, and failed deliveries — are compounded by continued ecommerce growth and delivery volume. With 131 billion parcels shipped globally in 2020, the Pitney Bowes 2021 Parcel Shipping Index predicts parcel volume will double in the next five years, with an 11% CAGR from 2021-2026.
Consumer sentiment aligns with this projected growth. In a 2022 study from Descartes examining consumer perceptions of ecommerce buying and home delivery, 48% of respondents said they will make more ecommerce purchases in the future (read: more deliveries), up from 13% pre-pandemic.
Giving Customers What They Want
In the face of increasing order volumes, you need to hone your last mile delivery strategy to manage rising customer expectations for a seamless delivery experience. In fact, retailers who don’t meet these expectations do so at their peril, with the ripple effect of a poor delivery experience taking a bite out of the top and bottom line. This includes the loss of customers due to broken delivery promises as well as increased costs of customer acquisition.
The Descartes study found 21% of consumers who experienced delivery challenges lost trust in the retailer, with nearly a quarter vowing never to purchase from them again, and 16% warning friends and families to avoid them altogether. Similarly, a recent study found an average of 57% consumers across all demographics would go elsewhere if they weren’t happy with their delivery.
When it comes to delivery, today’s sophisticated consumers want to select the delivery option that best suits their needs for each individual purchase. And because purchase decisions are influenced by a retailer’s ability to offer the delivery experience consumers demand, ecommerce retailers reap the rewards of offering choice in the delivery process vs. taking a monolithic approach.
Delivery Segmentation Drives Profits
How do you create a positive delivery experience that offers consumers the choice they crave? How do you then translate your last mile delivery process into repeat purchases, brand loyalty and increased profits? Retailers in the know are focusing on delivery segmentation as a differentiation strategy, crafting customer delivery personas to inform their last mile deliveries.
Similar to the way you segment customers and create buyer personas based on purchasing habits, you can maximize top- and bottom-line performance by building customer delivery personas that reflect the expectations and motivations of your diverse customers. These different delivery personas enable you to better understand your customers, improving service and reducing costs. For example, retailers should consider millennial customers’ concerns about the environment, while catering to boomers’ desire for convenience.
Building Customer Delivery Personas
Last mile delivery benchmark studies have identified five basic customer delivery personas. While no individual persona is better than another, or applicable in all cases, some combination will provide the right balance of speed, precision and cost. They also offer the potential for an incremental revenue stream to significantly reduce, or even offset, the high cost of last mile delivery.
1: Money Talks
For these customers, the cost of delivery is their primary motivator. They are extremely cost-sensitive and will choose the slowest delivery option if it’s cheaper, and are less concerned with what time the delivery arrives.
2: Parcel Mentality
Typical parcel deliveries are fast but not necessarily time definite at the point of purchase. These customers enjoy the fast delivery cycle and are happy to have package left at their doorstep at any point during the day.
3: Convenience Matters
These customers prioritize a precise time window over a fast delivery. They often need their goods on a particular date and time and aren’t able to (or don’t want to) wait all day. This persona is often characterized by the delivery of large format items (i.e., needing furniture to arrive at a specific time during a home renovation).
4: Time Is Their Currency
These customers are time-poor and cash-rich. They want their delivery ASAP and don’t have the time to waste waiting around all day. Most importantly, they are willing to pay for the privilege of having goods delivered quickly and in a tight time frame. Notably, it doesn’t take too many of these types of customers to offset a significant amount of your overall delivery costs. These deliveries are often high-value impulse purchases, replacement items or building materials.
5: Environmental Focus
This emerging delivery persona describes customers seeking eco-friendly options to reduce the environmental footprint of their delivery. In the Descartes consumer sentiment study cited above, 65% said they considered the environment when placing an order. For younger consumers, environmental considerations were even more important, with 85% of 18- to 24-year-olds and 75% of 25-34-year-olds assessing the impact of potential purchases. This persona can be combined with any of the other delivery personas.
Optimizing the Delivery Experience
To thrive in today’s competitive and disrupted marketplace, you need to transform home delivery into a competitive differentiator and revenue generator. Astute multichannel merchants are using delivery personas to underpin their customer delivery strategy and support last mile operations in the pursuit of profitability.
By building them around unique motivational drivers and expectations, you can provide tailored self-select delivery options for customers, promoting a seamless experience and building brand loyalty. Plus, mapping delivery options to the different delivery personas helps you minimize delivery costs and capture incremental revenue, maximizing revenue and boosting margins — a boon as the tidal wave of peak holiday volumes starts to roll in.
Chris Jones is EVP of Industry and Services at Descartes