October 6, 2021
When it comes to brands that build fiercely loyal buyers, the 118-year-old Harley Davidson motorcycle company remains a prime example. Harley buyers aren’t a customer base; they’re a community. They tattoo the logo on their bodies. They don’t just reject potential substitutions by rival companies such as Honda—they outright deride them. For these buyers, the purchase isn’t about features and benefits, or even cost. They’ve integrated the brand into their lifestyle and, for domestic American buyers, even the idea of the USA itself.
But you don’t have to promote cool tattoos or attend Sturgis to build brand loyalty among buyers. In fact, one thing you can do that many organizations overlook is digitize your supply chain. Because whether your business is plastics, pharmaceuticals, consumer goods or petrochemicals—a digital supply chain can turn buyers into advocates whose purchase decisions are fueled by more than mere transactional details. We’re not talking about a loyalty program in the marketing sense—which can be nice, but is merely a tool. We’re talking about building true loyalty; strengthening the way buyers feel about your products, service and brand over time.
So how, specifically, does taking your supply chain digital help build loyalty among customers? Here are five proven ways we’ve seen it work for hundreds of Elemica clients over the last few decades:
1. Getting the order right.
Before you turn customers into passionate evangelists of your brand, they must first learn to trust you as an organization. As an average acceptable benchmark, 1 percent of all orders are entered incorrectly. But that tiny percentage can have a big impact when it’s your biggest customer you’ve let down. Rather than manually entering orders into an Enterprise Resource Planning (ERP) system, digital supply chains enable automation of sales orders—minimizing the risk of human error and building trust more effectively.
2. Ensuring quality every time.
Loyalty demands quality. And QA/QC activity is detailed work, from checking that raw materials and manufacturing inputs meet specification to reviewing Certificates of Analysis and assessing batch quality. Supply chain digitization can integrate with suppliers, customers and your enterprise to bring more assurance to every part of the quality process. This could include digitally confirming materials specification prior to shipment, enabling workers on the factory floor to double check documentation or dozens of other safeguards.
3. Staying transparent throughout the purchase.
When a customer asks: “What’s going on with my order?” you need to have a solid answer if you want true loyalty. Digital interconnectivity enables superior visibility across the supply chain, so you—and your customers—always know what’s going on. You’ll be able to give accurate, timely insight into manufacturing, inventory and fulfillment status—as well as accessing track-and-trace capabilities for real-time location of orders out for delivery. Ensuring a strong customer experience means never having to tell your customer “I don’t know.”
4. Communicating issues proactively.
Just as with any other relationship, honesty and good communication go a long way. From a delivery driver who’s encountered inclement weather to the notice of a component manufacturer that they’ve issued a product recall, supply chain connectivity enables you to see issues more quickly, communicate problems to customers as soon as possible and offer more solutions for potential workarounds. Customers would rather have the bad news up front and know you’re working hard on a fix than run into a wall of voicemail and excuses.
5. Creating digital teamwork.
When you’re digitally connected to trading partners, you’re all in this together. You’re not just two companies doing business but parts of a dynamic and digitally connected network that helps everyone. An example? Being there for buyers to proactively help prevent stockouts. Digital connectivity can enable Vendor Managed Inventory (VMI) programs whereby you automatically restock products once they reach predetermined levels. Nothing helps build loyalty like preventing headaches for your buyer.
So what is the exact mathematical impact that a digital supply chain can have on your average customer churn rate? A one-size-fits-all answer is difficult because the number varies widely by both enterprise and industry. Each individual company has its own particular automation level for the functions surrounding customer loyalty—order entry, QA/QC, shipping, etc. So the impact of automating each would have a distinct effect.
Still, research bears out that investing in supply chain automation is worth the effort. The average business-to-business rate of customer churn is said to be around 6.22 percent, with business-to-consumer churn averaging around 8.11 percent. That’s a lot of business at stake when considering the overall lifetime value of a customer. Though this too varies a bit by industry and organization, 65 percent of most companies’ business comes from existing customers. So keeping customers happy is financially important. And according to Accenture, 57 percent of consumers spend more on brands to which they are loyal.
The road to fierce customer loyalty is long and fraught with many hazards along the way. Put in the extra work. Build strong loyalty on a concrete foundation of supply chain performance and customer trust through supply chain automation. Digitize. Connect. Optimize. Or you risk competitors leaving you in the dust.