If you’re in the business of shipping parcels, you already know that the last mile is often the most important part of the customer experience. After all, it’s the final stage of the journey and the point at which your customers finally receive their much-anticipated packages. As such, it’s crucial to ensure that your last-mile delivery operations are running smoothly and efficiently. But how can you tell if your last-mile delivery is up to scratch? By tracking key performance indicators (KPIs), of course!
In this guide, we’ll look at five important last-mile delivery KPIs that every retailer and brand should track. By monitoring these KPIs closely, you’ll be able to report back to the business on value and make any necessary adjustments to ensure that your last-mile delivery efficiency is running as smoothly as possible. We’ll cover:
- What are last-mile delivery KPIs?
- Why are last-mile delivery KPIs important?
- What last-mile delivery metrics should you track?
What are last-mile delivery KPIs?
Last-mile delivery KPIs are metrics that help you measure and improve the performance of your last-mile delivery operations. By tracking the right KPIs, you can identify areas of improvement, reduce contact-per-order ratio, and save time on returns to keep customers happy with your service.
Why are last-mile delivery KPIs important?
There are several reasons why last-mile delivery KPIs are so important. Firstly, they help you identify challenges and gauge whether your operation is running efficiently. Secondly, they help you identify areas in the supply chain where you can improve your service. Finally, they help ensure your customers are satisfied with your deliveries.
What last-mile delivery metrics should you track?
There are a few different metrics you should track when measuring your last-mile delivery operation. These include (but are not limited to):
1. Delivery time and first-time delivery success
2. Customer satisfaction
3. WISMO enquiries
4. Retailer and customer costs
5. Delivery vehicle capacity
We’ll discuss each of these metrics in more detail below.
1. Delivery time
One of the most important things to track when it comes to your last-mile delivery operations is delivery time. More specifically, you’ll want to compare the estimated delivery time with the actual delivery time to see if there are any discrepancies. This is called “delivery success rate” or “promise met”. If there is a significant, regular difference between the two, this indicates that something needs to be fixed. This also helps you keep an eye on “first-time delivery success” (how many parcels were delivered on the first attempt).
Perhaps you’re making unrealistic delivery promises at the checkout, or perhaps the carrier is taking a longer amount of time than expected to make each stop. Customers don’t usually want to be tied to delivery windows that are large or vague. This is where carriers who offer specific delivery windows can be more valuable.
Whatever the case may be, it’s important to identify problem areas and take steps to correct them, and improve the accuracy of delivery time.
2. Customer satisfaction
Of the biggest challenges of last-mile delivery, this is possibly the most important metric. Customer satisfaction measures how satisfied customers are with the final leg of the delivery process. This is often the most visible and direct interaction they have with the carrier. Prioritising customer satisfaction in the last-mile delivery can enhance customer loyalty, strengthen brand reputation, gain a competitive advantage and drive revenue growth.
The better the customer experience – from estimated delivery times to the delivery experience – the more likely they are to order again. A good experience can actually reduce WISMO queries and customer contacts per order, and save time on returns. This emphasises the importance of focusing on the overall customer experience and meeting or exceeding customer expectations.
3. WISMO enquiries
WISMO stands for “Where is my order?” and is used as an umbrella term to describe delivery tracking customer enquiries a retailer must deal with. One of the common enquiries retailers see is customers looking for an update on their order status, which takes up valuable customer service time.
It’s important to measure WISMO requests and keep them as low as possible, because managing these requests can be costly to your business. You can overcome this by setting clear expectations when a customer makes a purchase, and by sharing parcel updates using branded communications through our Track software.
4. Delivery costs
Of course, one of the most important KPIs for any business is profitability, and deliveries are no different. When it comes to calculating profitability for your last-mile deliveries, there are lots of costs to consider. This includes costs to your business, such as carriers, WISMO, salaries, and office or warehouse spaces.
In addition, there will inevitably be costs for your customers too. This could include delivery and return fees, which, when too high, can cause customers to look elsewhere for a similar product.
Once you have a good handle on costs associated with delivery, you can start working on ways to minimise them so that your business can become more profitable.
5. Vehicle and package capacity
Finally, another important KPI for last-mile deliveries is capacity utilisation (how much space packages take up in delivery vehicles). Put simply, the more space your package takes up, the more you’ll likely pay to ship it. It’s in your best interests to ensure you efficiently use the space for the parcel you’re shipping or else you could be paying to “ship empty air”.
If you find that there’s lots of empty space, this is an indication that you could improve efficiency by optimising your fulfilment. This can also be applied to carriers if vehicle capacity isn’t utilised properly, which can lead to greater costs associated with multiple journeys or vehicles that have lots of empty space. This is inefficient for the brand, the carrier and the environment.
Overall, last-mile delivery KPIs are metrics that help businesses measure and improve their performance along the last leg of the journey – from the fulfilment or distribution centre all the way until it reaches the customer’s doorstep. By tracking things like delivery time, stage, distance, cost and vehicle capacity with Sorted, logistics managers can optimise their operations for efficiency and customer satisfaction.