Comprehensive Guide to Customer Retention Strategies for Delivery Businesses

Did you know that the current market size of the US couriers and local delivery services is valued at $151.6 billion? Now, considering the increase in the e-commerce business’s rapid growth, the delivery business is also expected to reach great heights.

You can expect increased business competition if you already own such a business. So, having a strong customer base for your business is highly recommended. One of the simple ways to take your delivery business to the next level is through customer retention. 

But how can customer retention help improve your business? Well, you will find all your answers regarding customer retention, its importance, and the practical strategies to enhance it in this article.

Understanding Customer Retention

If a customer repeatedly purchases your product or service, then the business calls this customer retention.

Defining Customer Retention

Technically, this is a metric that businesses use to measure their customer loyalty over time and understand their overall success.

Key Metrics for Measuring Customer Retention

The two metrics that help measure customer retention rate are:

• Monthly customer churn rate: This is a measure of what percentage of customers are leaving you every month.
• Monthly recurring revenue (MRR): This includes all your recurring revenue streams, while the revenue churn rate indicates how much MRR is reducing each month.
• Customer lifetime value (CLTV): CLTV is the total of your customers’ average value multiplied by your average customer lifespan.

Common Challenges in Measurement

Some common challenges while determining customer retention rate are:

• Difficulty tracking customer data 
• Identifying and distinguishing between ‘active’ and ‘passive’ customers
• Determining the suitable time frame that you need to use. 

Customer Retention Rate Formula

The customer retention rate can be calculated using this formula,

Customer retention rate = (Total number of customers at the end of the period – newly customers acquired) / customers at the start of the period.

To boost customer retention, companies implement different strategies to reduce the loss of existing customers over time and improve the customer’s experience. Thus, the customers remain loyal to the business.

Why is Customer Retention Important?

With customers being the heart and soul of making any business run successfully, you must give extra attention to your loyal customers. Customer retention is one of the crucial factors to concentrate on to make more customers and, yes, more money. 

So, why does customer retention, in particular, hold importance?

Benefits of Customer Retention

• Helps increase profits: Some researches show that increasing your customer retention by 5% can, in turn, increase profits by over 25%. Do we say more?
• It’s a cheap option: Did you know that it costs less to retain customers than a new customer acquisition a new one? Give a quick thought to all the different marketing efforts you put in to get new customers. But, if you take care of your existing customers, you can save your effort and money. 
• Referrals: When you provide good customer service, happy customers tend to refer your business to their network. So, you not only retain clients but also get some free promotions. 
• Loyalty: You were expecting this point, right? Retained customers tend to buy often and spend more than new ones. But, you must work hard to build customer loyalty.

Long-Term Impact on Business Growth

A higher customer retention rate is a clear indicator of a healthy business as it reflects a sustainable relationship with customers as customers will keep doing business and refer your name to their acquaintances. 

Case Studies or Examples

Amazon is a great example of how you can retain customers through loyalty programs. 

For instance, Amazon has initiated an Amazon Prime membership program that provides subscribers with a wide range of exclusive deals and discounts and subscriber-only digital and streaming media content. This is why Amazon Prime’s total customer base expanded to over 200 million. 

Here are a few learnings you can take.

• Ensure your loyalty program is customer-oriented to engage your customers and enhance their experience while maintaining your profits, leading to a win-win relationship.
• Utilize data to analyze customers’ expectations and launch a retention program catering to their needs. 

If you want to know how to enhance your customer experience and retain them in detail, the first thing you must do is improve your overall quality of service.

We have come up with some practical and useful customer retention strategies that many global brands use to boost their customer retention. 

But how to enhance your customer experience and retain them? Well, improve your overall quality of service.

We have come up with some practical and useful customer retention strategies that many global brands use to boost their customer retention. 

7 Proven Strategies to Increase Customer Retention in Your Delivery Business

To help you in so, we have put together a few successful customer acquisitions and retention strategies. You can follow these to make new consumers choose you over the competitors in the competitive delivery business.

1. Offer speedy deliveries

In today’s fast-paced world, most customers want same-day deliveries or as fast as possible. As responsible delivery partners, when you let your customers offer as fast a delivery as possible, more precisely, same-day delivery across the country, it will surely boost their sales. 

So, it’s obvious they would likely stick with your delivery service, even if you charge more than your competitors.

Implementing efficient dispatch systems

Deploying efficient dispatch systems helps you automate the coordination of drivers, products, and vehicles to ensure optimal delivery speeds.

2. Allow the customers to choose a delivery time slot

Facilitating customers with faster delivery isn’t enough to make your customer happy. They want the product to get delivered to their address at preferred delivery timings on a fixed date. 

Best Practices for Slot Assignments

For instance, most office goers may want to receive their delivery parcels at their home address on weekends or holidays and at their office address on weekdays during office hours to avoid missed or failed deliveries.

With the assistance of an efficient delivery time management tool, you can enable the online dealers, your consumers, to let their customers choose the delivery date, place, and time according to their convenience and availability.

Giving customers control over when they will receive their deliveries will upsell your business. 

3. Address challenges in customer retention

How about addressing the needs of customers on special occasions?

For instance, on some special occasions, like, wedding seasons, and great sales, many people place an online order at once. In those times, online portals, dealers, distributors, and even retailers could want to deliver a huge number of products within a short time.  

The delivery agencies face a huge workload during those times. If you provide services according to their demands, they will start trusting your efficiency and will become your brand promoter. 

Strategies to Overcome Common Hurdles

The usage of delivery scheduling software will help you mitigate such challenges, though you may need to hire staff to cover all the different delivery times. For that reason, you can take a higher number of charges also. Thus, you can also improve your sales and build the loyalty of your customers.

4. Update consumers about the delivery status

There’s nothing worse than making customers wait for deliveries without telling them the expected time of arrival. Most customers would like to get regular tracking updates on delivery status. So, your customers will also demand unique tracking numbers with which they can provide an update on the delivery status to the receivers.

Most online shopping portals generally mention the expected time of arrival and provide real-time updates via email, WhatsApp, or SMS on where the delivery packages are while in transit with a map view facility.

So, your customer will expect the same, or even better, service from you. It’s a strong aspect that you can work on to retain customers and attract new ones. 

Automation tools for real-time updates

Using advanced routing software, like Upper, you can provide a custom notifications feature. 

The delivery customer notification system will notify the receivers by pushing notifications when the item is shipped, picked up from the warehouse, loaded onto the truck near the customer’s location, and about to be delivered.

5. Cost-effective delivery pricing strategies

We all keep looking for better services or products at affordable prices. It’s common customer behavior. Faster and cheaper delivery is the goal that attracts new customers and keeps the existing ones happy. So, this is another best customer retention strategy.

As an intermediate or beginner delivery business owner, you may not come with the lowest price. But make sure to fix your delivery charges by comparing your costs with those of your competitors. Nothing could be better if you provided services at a cheaper rate.

If you charge a higher price, make sure the customer can afford it and that the quality of your service justifies the extra cost. Customers who have previously trusted you will not be swayed by price or other availability. 

Loyal consumers would rather pay you more for the quality delivery services they love and recommend to others.

Examples and Tips for Pricing Models

• Cost-based pricing: In this model, you add a markup to the total cost of manufacturing or acquiring a product to stay profitable. 

Example: Walmart, the global retail giant, negotiates with different suppliers to get the most feasible prices and marks them to ensure adequate savings. This is why it is a go-to option for shoppers seeking products at budget-friendly prices.

• Competitor-based pricing: This involves setting your price at par with your competitors’ prices for similar products or services.

Example: Tech companies like Samsung and Apple track each other’s prices to set competitive pricing and win customers.

• Value-based pricing: It involves setting your product’s price as per the perceived value to your target customers.

Example: Tesla follows this model as people trust this brand and manufacture cars that can be relied upon for sustainability and innovation. 

6. 24/7 Customer Support

Customer satisfaction is one of the most crucial customer retention metrics. With excellent customer service, you can also offer something special and unique for new customers. 

By doing so, you can make them more inclined to repeat purchases and make referrals for your business. Other ways to provide great customer service are below.

Listen to your customers: In case the percentage of repeat customers is dropping because of boredom or any other issues, then do this.

Channels and Tools for Effective Support

Handle the tough situations in a better way: Suppose a customer is complaining about the delivery delay or receiving damaged products. In this case, you can apologize at first for not meeting the expected delivery delay, tell them about the issues, thank them for their patience and try to solve it at this moment.

You can suggest them for replacement free of cost, take a full refund, or do something else to resolve the issue and make it an acceptable solution. Once their problems get resolved, after a while, you can ask for feedback on the refund or return process.

Collect customer feedback: Negative feedback and customer complaints will help you identify the areas that require improvement. So, if possible, come with 24*7 customer care support to let the customer lodge their complaints or say about your services.

7. Strategies to Retain Existing Customers

Loyalty and Customer Feedback

Some useful tips you can follow to keep loyal customers from defecting to competitors and to keep customers who are leaving.

• Collect feedback with customer surveys.
• Apologize when you make mistakes.
• Adopt customer service tools.
• Keep the customer updated about your new offerings.
• Empower customers with convenience and options for personalization.

Upper Solutions for Better Customer Retention

When it comes to managing a huge number of deliveries, many things can go wrong. Making a single mistake means you are sending your customers into the hands of your competitors. 

You will identify the mistakes and try hard to solve the consumer pain points, but your competitors are already present with certain exciting offerings to capture new customers and also nurture customer interactions and relationships.

One of the major issues faced by delivery business owners is delivering the goods on time to their customers. They earn many unhappy customers because of this.

Late deliveries happen because the delivery drivers spend ample time figuring out the best route. High traffic, long routes, and last-minute changes in route schedules also contribute to late deliveries.

When you use route optimization software such as Upper Route Planner, you can save time and money on gas bills.

Features of Upper Route Optimization Software

With Upper, you can plan optimized routes in seconds. It offers customer-preferred delivery windows to meet customer expectations.

Also, you can reverse the entire route planned and get a new route immediately using this software.

Since it provides accurate driving directions and delivery instructions to drivers, you can send an automatic notification to remind customers about the estimated time of arrival and delivery status.

Customer Testimonials and Success Stories

Wishlist faced challenges with manual route planning, delays, and inefficiencies.

Challenges included missed stops and high operational costs. Since implementing Upper’s route optimization software, it managed to reduce fuel costs by 20%, achieve 100% on-time deliveries, and provide real-time tracking updates to customers, increasing their retention.

So, let Upper help you improve customer retention for your delivery business. Try out the free 7 days trial here.

Conclusion

“What are the best ways to turn first-time customers into repeat customers?” is the most tricky question all business owners from all industries are struggling with.

It’s not a matter of rectifying mistakes or implementing new strategies to gain new customers. It’s more about enhancing your brand value and keeping your customers happy and engaged so that they keep returning to your business. 

Also, they will recommend your service via word of mouth and even benefit from referral programs. So, give more attention to your customer retention programs and get more retained customers for your business.