In this ecommerce world of point, click and deliver, are you accurately monitoring DTC operations metrics to help you meet high expectations from both customers and management?
In our work with clients we find a lot of effort is spent on quick ship options. However we find there are good benefits in looking at every aspect, putting in place updated DTC operations metrics and being sure performance is hitting the mark in all key areas.
Below are selected DTC operations metrics in customer service and fulfillment from six companies offering a wide range of products. These results are representative of what we see in many companies. What are your metrics and results?
| Customer Service Metrics | A | B | C | D | E | F | |||||
| Annual sales (millions) | $75 | $225 | $35 | $110 | $20 | $140 | |||||
| Percentage of online orders | 52% | 63% | 90% | 65% | 86% | 86% | |||||
| Turnaround time for email inquiries (hours) | N/A | 24 | 5 | 10 | 20 | 2 | |||||
| Calls answered in 20 seconds or less | 98% | N/A | 79% | 74% | 70% | 81% | |||||
| Call abandonment rate | 3% | 4% | 5% | 3.3% | 7.3% | 2.5% | |||||
| Fulfillment Metrics | |||||||||||
| Initial order fill rate | 92% | 89% | N/A | 60% | 67% | 82% | |||||
| Orders shipped same day (%) | 91% | 92% | N/A | 20% | 67% | 60% | |||||
| Orders shipped error free (%) | 99.2% | 97% | 99.6% | 99.9% | 95% | 100% | |||||
| Dock-to-stock time (hours) | 5 | 48 | N/A | 48 | 24 | 12 | |||||
| Returns processing (hours) | 3 | 5 | 7 | 2 | 2 | 2 | |||||
| NM = not measured | |||||||||||
| Source: F. Curtis Barry & Company; copyright 2017, all rights reserved. | |||||||||||
Customer Service Metrics
Turnaround time email inquiries: As you look at these results, four companies take longer than one day to answer email inquiries and complaints. Note that Company A does not measure this metric.
A high percentage of inquiries and complaints come as calls to customer service except where ecommerce companies have limited call center capability. Best-in-class companies respond within two hours of receipt.
Calls answered in 20 seconds or less: A good level of service is 80% of calls answered within 20 seconds. Company A is spending money in terms of call center reps and telecom to deliver this high level as well as a 3% call abandonment rate. By contrast, Company B, with sales of $225 million, does not measure it at all.
Call abandonment rate: A good service level is 3% or less.
Fulfillment Metrics
Initial order fill rate: This is the percentage of orders shipped complete within a 24-hour period. It’s an excellent measure of customer service at the order level. If you take in 1,000 orders today and ship 700 of them (all lines and quantities) you have a 70% initial order fill rate.
Company A has a very low rate of new products annually. Therefore, it has SKU sales history to plan forecasts on and has reorder-ability, which is enviable. Company D is a fashion apparel seller with a high percentage of new products, including exclusive designs, and limited ability to reorder in season. We would expect this type of company to have a lower fill rate. Company E uses vendor drop ship for many products.
Orders shipped same day: This is the percentage of orders shipped out the door daily whether complete or not. Companies D, E and F have lower numbers and will require additional fulfillment budget to bump up this metric.
Orders shipped error free: The four companies with error-free rates of 99%+ are using barcode scanning throughout their operation, and voice picking in a couple of cases. Studies consistently show that wrong orders cost $35-$50 each to correct, a figure that can balloon quickly. What isn’t in the calculation is the cost of losing a customer and their lifetime value due to order errors or late shipments.
Dock-to-stock time: This the time from receipt through putaway. Best-in-class is two hours or less. Our recommendation is to try and clear receipts during the same shift if at all possible, which may mean spending more on fulfillment wages. The longer it takes to process, the more dock and receipt staging area is required.
Returns processing: This includes inventory and customer service processes involved with receiving returns back into the facility, opening cartons, inspections and product disposition, preparation of customer paperwork for refund, credits and exchanges. Ideally we like to see returns processing happen in 8-12 hours after receipt.
Moving Forward
What DTC operations metrics have you adopted to gauge the level of customer service you’re providing? Are they in line with their expectations for quick service and delivery? What changes to your data collection and management reporting are necessary?
Curt Barry is Chairman of F. Curtis Barry & Company