User Adoption to Drive Retention: Whose Responsibility Is It?
How Real-time Data and Analytics Drive Customer Retention ......How Real-time Data and Analytics...
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AN EXL WHITE PAPER
How Real-time Data and Analytics Drive Customer Retention for the LTL Shipping Industry
Donna KintopVice President, Sales Solutions, EXL
Pradeep Vachani Senior Vice President and Global Business Leader – Travel, Transportation & Logistics, EXL
Written by:
The other dynamic in play has been the
increase in 3PLs who have squeezed the
LTL carriers even further by owning the
customer experience and acquisition
process. If you can quote a dollar less, or
call at the right time, customers will quickly
defect to a new provider—then another,
and another, and another.
The fact that trucking is an industry where
other issues are impacting customer churn
compounds this attrition dilemma. Bad
weather, driver shortages, and disrupted
pick-up and delivery schedules all cause
delays. Break bulking, though efficient for
transport, increases the opportunity for
shipment damage every time the cargo is
unloaded, reloaded and sent on its way.
Freight damages can lead to cargo claims,
which if not handled properly cause
further customer dissatisfaction and can
exacerbate customer churn.
All of this is bad news for customer
satisfaction and, ultimately, retention.
Thus, the continual account erosion
further decreases revenue from existing
customers requiring the LTL carrier to
find new customers to replenish this lost
revenue stream.
By implementing a comprehensive,
360-degree retention model that uses
predictive analytics to identify and
manage attrition risks, LTL shippers can
transform this “earn and churn” narrative
for good.
This paper explores how organizations can
put an effective churn reduction program
in place to retain valuable customers,
identify the most prevalent reasons for
attrition, increase revenue, and reduce the
overall cost of sales.
For decades, the LTL (less than truckload) industry has focused time, money and resources on revenue
growth both via new customer acquisition as well as selling more products to existing customers in an
attempt to constantly fill their sales pipeline to counter the continual churn that exists in that industry.
This has largely occurred as a measure to address the value proposition gap that exists where customers
view the LTL industry as a commodity where loyalty from shippers is sometimes in short supply.
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Transitioning to a 360-Degree Customer Retention Program: The Initial StepsIn an acquisition-focused environment,
carriers find out that they’ve lost a customer
long after the fact. Typically, outside
sales teams concentrate their efforts on
the larger, higher-volume customers,
with no time left to call on, much less
build relationships with, the thousands of
transactional customers in their territories—
leaving these at risk.
Even carriers that have an inside
sales organization typically operate in
maintenance mode, with little strategy
or real customer insight guiding agent
interactions. Contacts and interactions
are transaction based, and very generic. If
a customer starts shipping with another
carrier, no one really knows, cares, or can
document the reason why.
Why Customer Retention MattersOver the past few years, companies in nearly every industry have shifted their strategies to customer retention. Modern analytics tools quickly transform a mass of data to actionable insight, so organizations can now gain a deeper understanding of each customer in less time, and recognize patterns that indicate satisfaction, dissatisfaction and need. Company leaders have also recognized that retention programs are also good for business, in terms of profitability, revenue and ROI.
The statistics tell the story: • Acquiring a new customer may cost six to seven times more than retaining an existing customer1
• Increasing customer retention rates by as little as 5% can lead to an increase in profits by as much as 95%.2
• The likelihood of selling to an existing customer is 60%-70%, as compared to 5% to 20% for a new lead.3
A high customer retention rate is also a viable tool for acquiring more business, particularly in an industry like LTL shipping, where loyalty numbers are typically low. Spotlighting that differentiator in a sales pitch could be the factor that closes the deal.
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• Increase sales revenue • Increase volume of shipments processed through network
• Increase revenue per shipment • Reduce churn to maintain current shippers
• Acquisition of new accounts to expand market-share
• Expand service portfolio within accounts
• Expand channel coverage to capture smaller more transactional shippers
• Increased yield • Lower cost of sale • Lower cost of lead generation • Lower cost of customer acquisition • Target focus areas to expand penetration and maximize yield
• Deeper integration into accounts as part of complete supply chain management
Top Line Impact
Bottom Line Impact
Inside Sales Benefits
So, it follows that the first step in setting
up a comprehensive retention program is
to put a structure in place to support the
initiative: a dynamic, analytics-driven inside
sales organization that is actively focused
on reducing churn.
The idea is to proactively address internal
and external factors that could impact
customer attrition before these actually
become issues, and, if something does
happen, to have the agility to react quickly
enough to prevent impacted customers
from leaving.
It’s important to note that companies
don’t have to build this retention-centric
organization out themselves. If they don’t
have an inside sales organization, they can
engage a 3rd party provider with a strong
analytics infrastructure and trained agents
in place. Not only does this eliminate the
need for capital investment and long ramp-
up times, but, often, these contracts are
heavily performance based and can even
be setup in an outcome based arrangement
where the provider only gets paid when
they generate a shipment. So, the revenue
gains often offset the overall cost.
The Analytics ImpactBy applying dynamic data capture and
analytics across the inside sales landscape,
the operation transforms into an end-to-end
hub for retention, customer satisfaction and
revenue generation.
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Prospecting Account Maintenance
Two Distinct Capabilities – Hunting & Farming
• Lead Generation campaigns – internal or using external sources
• Comprehensive outreach programs/tracking/reporting
• Targeted messaging and defined follow-up plans
• On-the-spot quoting for immediate consideration
• Secure new shippers to grow account base
• Customized calling effort for service initiatives for specialized services
• Customized approach to attract Intrinsic/Transaction accounts or Extrinsic accounts for long-term engagement
• Utilize specialized pricing programs for new customer acquisition
• Negotiate pricing programs for best fit
• Effectively use questioning methodology to build connection and gain understanding of implicit needs.
• Explore implicit needs to strengthen as explicit needs
• Present service and pricing solutions based on identified needs
• Capture shipping requirements and secure transaction
• Provide follow-up – Transit updates, POD
• Act as intermediary for service and process concerns
• Increase transaction levels from current accounts
• Propose services to capture other potential business within the account
• Partner with other channels for extended account coverage
Here are some of the different areas where
analytics makes an impact:
Territory Definition
In most organizations, territories are
defined based on geography, with little
regard to market concentration or ratio of
inside sales personnel to customer. In a
digitally transformed, retention-focused
organization, analytics are used to set up
evenly balanced territories from day one.
Reports pinpoint the customer concentration
in each area, what those customers shipped,
how frequently they shipped, as well as
the associated revenue. Then, using this
information, the territories are defined so that
every customer gets the same, high level of
care. This reduces the chance of customers
abandoning the shipper based on sheer
neglect or lack
of contact.
Call Cadence
LTL shipping is such a commoditized
market that customers often make buying
decisions depending on which provider
calls on the day they have something on
their dock, ready to go.
Instead of leaving the calls to a random
rotation, an analytics-empowered inside
sales operation bases this outreach on
specific customer behavior. Pre-established
algorithms are applied to the data on each
account, generating reports that pinpoint:
1. How often the customer ships
2. What days, time of day and time of
month the customer typically ships
3. Whether the shipments are spread
throughout the month or are more
clustered in concentration patterns during
certain weeks or times of the month
4. Whether the shipping pattern is
seasonal, or consistent throughout
the year
Based on all of these elements, the agents
time their calls so they connect with
customers when they are most likely ready
to ship. Being in front of the customer at
the right time increases the opportunity for
sales, reduces the chance the customer
will get other quotes, and, in doing so, both
decreases the risk of attrition and increases
the likelihood of booking a shipment. It’s
hard to lose a customer when you are
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intelligently calling on them at the right time
when they have a need.
If the shipper offers an incentive program,
with a gift card or discount earned at a
certain monthly threshold, any customer
within 20% of reaching that threshold
receives a call. Oftentimes, a simple,
“You’re $xx away from a discount on your
next shipment or a $xx amount gift card.
Do you have anything I can quote for you
today?” is enough to generate a sale, and
begin to build customer loyalty.
Workload Balancing
Using smart analytics every month,
customers can be segmented into specific
categories: top shippers, regular shippers,
as well as transactional shippers and
churn customers, and scheduled for calls
accordingly. While regular shippers are
contacted based on their individual shipping
patterns; top shippers, who may ship daily,
need more frequent contact and care,
particularly at month end.
By comparing monthly penetration reports
to contact goals, the inside sales area can
reallocate agents to ensure the organization
covers every customer segment at the right
time in the month.
For example, if only 70 percent of the top
shippers have been contacted at a specific
threshold, agent efforts are refocused to
push that number to 100 percent. Using
data to not only identify need, but to
manage inside sales activity, ensures that
no customer is forgotten—and no revenue
opportunity is lost.
Damage Prevention
One of the top reasons customers leave
one provider for another is a bad shipping
experience: a late pick up, late deliveries
or damages. Yet, other than a reactive
response to a damage claim, customers
rarely hear from shippers when something
goes wrong—or to make sure it all went as
planned.
Using real-time data, agents can easily
follow up after a scheduled shipment to
make sure that the cargo was picked up
on time, and that the customer is happy.
If the data shows that the shipment was
damaged, this also triggers a call. The
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faster the agent responds, the better the
opportunity to regain the customer’s trust,
identify the root cause of the damage, and
take steps to prevent the same situation
from happening to that customer again.
Here’s what that scenario looks like in an
analytics driven LTL carrier:
The daily report shows that a particular
account has had a series of shipments
damaged, including one the day before.
The agent reaches out to acknowledge the
damage, and find out the root cause. He or she:
1. Asks how the sender is packaging
shipments, to determine if any education
is needed
2. Finds out if the customer has labeled
boxes as “do not stack” or “fragile
freight” to call attention to the package
3. Identifies if the shipment has been given
the correct classification for its weight and
fragility, so it’s properly handled and billed
4. Asks the customer to send pictures of
the packaging the next time they ship.
This enables the agent to correct any
packaging problems, if these exist,
before subsequent shipments are
damaged. It also helps determine if the
damage is due to the way the shipper
is handling the item, so the appropriate
corrections can be made if this is
the case
The worst thing that can happen after
this contact is a subsequent damaged
shipment. So, the agent also contacts the
shipper’s terminal manager to discuss what
he or she could do on that end to correct
the problem.
In some cases, a “handle with care” note
to the driver on the bill of lading is all that’s
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needed. In other cases, the manager might
find a better shipping route that reduces
the number of times the shipment is loaded
and unloaded before reaching its final
destination.
These efforts accomplish two critical things.
First, they let customers know that the
shipper actually cares about their business,
and is actively working to make their
experience better. As a result, even high-risk
customers end up staying with the shipper,
and often increase spend going forward.
Second, they uncover the root cause of
delays or damages or other issues that
typically cause attrition. By pinpointing and
addressing these with systemic changes,
the shipper can reduce the number of
incidents that occur, ultimately improving
overall customer satisfaction and retention
as well as brand reputation.
Combatting the Most Common Causes of Customer Distress
Understanding exactly why customers
leave is critical to preventing churn.
Using analytics, shippers can identify the
specific parameters that cause distress
to a customer, then match these with the
current customer profiles to prevent a bad
experience before it occurs.
In this instance, the inside sales operation
takes on a consultative role, from helping
the customer more clearly understand the
impact of classification on product handling,
ensuring more accurate quotes, to adjusting
ship dates to reduce the opportunity for
damage. With some customers, that means,
instead of arranging for a Friday pickup,
which requires an offload into a warehouse
for the weekend and a reload the following
Monday; the agent might suggest moving
to a Thursday pickup with a Friday delivery,
with no offloading. For others, it’s helping
novice senders provide the necessary
information to get a more accurate quote.
The agents also take time to talk to
customers to find out what is more
important to them, and use that information
to further personalize contact going
forward.
All of these efforts help companies hold
and grow the accounts they have, instead
of continually having to backfill due to
attrition.
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The Predictive Churn Model in Action
Churn Data Mart
Data Management
Customer Data
Shipments, SNAP, Revenue, Sales Activity, Potential
Service Level Data
On Time Service, Damage, Short, Time Critical
Resolution Data
Escalations, Disputes, Rerates, W&I Corrections
• Identification of high churn risk customers using the model
• Identify key drivers of churn in Inside Sales channel
• Proactively address issues and reach out to customers to reduce churn
Model Impact
LIFT CURVE
*Graph is Illustrative
Lift_train
Lift_test
120
100
80
60
40
20
01 7 13 19 25 31 37 43 49 55 61 67 73 79 85 91 97
Logistic Regression Model
Predictive Churn Modeling
Decision Tree
Bivariate Analysis
Logistic Regression
Oversampling
Outcome 1
Outcome 2
Outcome 3
Outcome 4
Outcome 5
Outcome 6
Outcome 7
1
2
A
C
B
Decision Uncertainly (external event)
Customer ID Customer Name Territory Churn Risk
1234 GOODLITE PRODUCTS TA High
5678 LONG RANGE EXPRESS TQ Medium
9101 MRS MAXWELLS TR Low
Implementation / Process Integration
x1
x2
x3
y
Acquiring new customers via an Analytics-driven Inside Sales EnvironmentIn addition to churn reduction with existing
customers, the benefits of an analytics-
empowered, digitally transformed inside
sales organization extends beyond keeping
existing clients actively purchasing services.
Instead of blindly smiling and dialing
through a list of unqualified trade show
leads, analytics shift cold calling from a
numbers game to a calculated strategy,
enabling agents to acquire more profitable
customers in less time.
The process starts with pulling data on the
company’s best customers, what they’re
shipping and where they are located.
The compiled data is used to create a
comprehensive profile of the organization’s
target customer. This profile is run through
a database of prospective customers to
cull a calling list of “lookalike” prospects for
agents to contact.
Each call has a higher probability to result
in sale, not only because the prospects fit
the existing customer demographic, but
because the agent can speak directly to
what’s important to this group, instead of
launching into a generic pitch.
In addition, analytics can equip agents to
more effectively convert dormant accounts
back to active status. Again, by fully utilizing
the existing data, agents can determine
why each customer left and address those
concerns directly, as well as offer reasons
for that customer to try the shipper again,
based on what’s important to that individual
sender.
From Commodity to Differentiated BrandWith a comprehensive retention strategy,
LTL shipping companies can gain the
actionable insight they need to retain
transactional customers, grow revenue
within that customer base, and proactively
address the most common reasons
for attrition. Additionally they can use
smart analytics to drive new customer
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acquisition in a manner that increases sales
conversion.
By taking a holistic, data-driven approach
to reducing churn, organizations have the
opportunity to improve operations and
outcomes while realizing the financial
gains that come from having a loyal, more
consistent customer base. With the right
program and strategic approach, LTL
shippers can transform from commodity to
valued customer brand—gaining a strategic
advantage in a competitive industry by
keeping, growing and building on the
business they already have.
References
1. https://www.huify.com/blog/acquisition-vs-retention-customer-lifetime-value
2. https://www.invespcro.com/blog/customer-acquisition-retention/
3. https://www.huify.com/blog/acquisition-vs-retention-customer-lifetime-value
4. https://www.huify.com/blog/acquisition-vs-retention-customer-lifetime-value
5. https://www.invespcro.com/blog/customer-acquisition-retention/
6. https://www.huify.com/blog/acquisition-vs-retention-customer-lifetime-value
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