How Real-time Data and Analytics Drive Customer Retention ......How Real-time Data and Analytics...

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

[email protected]

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/



5. https://www.invespcro.com/blog/customer-acquisition-retention/



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How Real-time Data and Analytics Drive Customer Retention ......How Real-time Data and Analytics...

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