Want to win customer loyalty? Focus on the last-mile delivery experience

By Mayank Tewari

Sept. 29, 2022 | Article | 6-minute read


One negative experience is enough to change the way a customer sees and interacts with a retailer. And in today’s digital age, delivery can play a major role. One survey reported 47% of customers said they wouldn’t shop again with a retailer after a bad shipping experience. Another survey found that number to be as high as 85%. Shipping that gets last-mile delivery (LMD) right, however, can present the magic moment for customers in their buying journey, evoking an emotional connection with a brand’s identity—moments crucial to earning lifetime customers.


LMD involves managing every touchpoint in the purchase journey, starting from a product’s movement from inventory and ending in the customer’s hands. Retailers getting LMD right can also expect an increase in customer advocacy, a greater customer willingness to shop and more frequent customer purchasing decisions leading to higher customer lifetime value. How can you not only meet but exceed the LMD expectation for every customer, every time? Artificial intelligence (AI) may help with the answer. 

Using AI to drive last-mile delivery

Our data shows that creating unique customer experiences can drive revenue growths of up to 25% by increasing the average order size. AI can help enable these unique customer experiences, which appear at each touchpoint in the delivery journey. 


From the purchase order to product delivery, there are three key capabilities needed to drive the LMD experience: 

  1. Consistent ordering convenience
  2. Fulfillment responsiveness 
  3. Unboxing excellence

It’s within these capabilities that personalization, with the help of AI, can create experiences that bring the buying experience to the next level. Let’s look at each capability in greater detail below.


1. Consistent ordering convenience

Much of the foundation for a memorable LMD experience is laid before the product is out for delivery. It starts from the moment a customer lands in your digital aisle and puts her desired products in her cart. The ability to explore, create and track an order through an intuitive online interface across digital channels makes for a more convenient and engaging shopping experience. And if a product arrives on a customer’s doorstep and doesn’t meet their needs or expectations, a smart substitution and return option capability not only saves the customer relationship but also provides the opportunity for a substitution upsell by layering in 1:1 personalization using AI that can recommend the right product at the right time specifically based on the customer’s needs.


AI capabilities like these, according to our data, enable more than 15% improvement in retention by effective cross-selling and upselling. Today, AI uses pattern matching algorithms to identify tacit, latent and physically unobserved similarities between customers, products used by these customers and the repeating actions within the customer’s buying history to recommend the next-best product or similar products with the familiar message: “Customers like you who bought this also bought ... ” 


Repeat purchases form a significant percentage of total customer purchase orders, and many customers prefer to automate repeat purchases. A survey revealed that 82% of members continue to shop with a retailer that offers this kind of purchasing, even though the price could be lower elsewhere. An effective subscription program combined with AI is an opportunity to create a unique, personalized and streamlined customer experience over and over again, driving consistent sales. 


2. Fulfillment responsiveness

Digitalization has empowered customers to make purchases whenever and wherever they want. With this convenience drastically raising customer expectations for a faster time to delivery, the onus to shorten the wait to fulfillment is now weighing heavier on retailers than ever before. Retailers not actively thinking of their fulfillment responsiveness risk losing customers. 


AI today enables dynamic and continuous risk assessment on both the customer side and supplier side. Leveraging AI and the supporting technology ecosystem to build an agile yet robust supply chain is crucial to faster fulfillment. Today’s omnichannel retail world sees digitally native retailers using technology to:

  • Offer fulfillment from nearest stores
  • Mobilize specialized delivery partners in near real time by customer use case
  • Create lightweight apps to relay real-time fulfillment status information to customers and drive voluntary delivery cost decisions assisted by embedded AI

Faster delivery services provide a winning edge to a retailer in today’s consumer world of instant gratification, and it pays to do so. Customers are willing to pay more for a reliable and well-timed delivery. One study found 65% of customers were willing to pay for one- to two-day delivery. No wonder the location of fulfillment centers and using brick-and-mortar stores in central city locations as pickup points to minimize delivery time have become winning tactics for retailers today.


3. Unboxing excellence 

A tastefully crafted unboxing experience can create the “wow” moment that connects the customer to the feeling the brand wants to stand for. Packaging aesthetics is the first material experience a brand can create for an anxiously waiting customer, so it’s imperative the experience is a rewarding one. In fact, a report in the Journal of Consumer Psychology found people experience attractive packaging as a reward. Aesthetic packaging, with help from AI-based personalization, could provide an opportunity for new entrants to differentiate and create an early connect with customers. 


Aligning socially aware and responsible brand values to packaging aesthetics is important for frequent purchasers. Today, customers increasingly count sustainability among their deeply held core values, an important consideration for retailers to take into account as consumers are four times more likely to purchase from a brand they believe operates ethically. Brands have already started leveraging their digital and AI capabilities to bring personalized packaging experiences to their most premium customers. Factors like carbon-neutral delivery, sustainable packaging and ethical work environments for delivery partners are driving factors in today’s brand image—and, by extension, customer experience. 

Create a last-mile delivery experience that will keep customers coming back

At a time when retail is rapidly growing more digital and the barrier to entry now depends on tech interplay, it’s imperative to create a personalized customer experience at every interaction. With more than 50% of customers stating their trust in a brand is based on customer experiences, there is much to gain long term by ensuring all the components of that experience meet and exceed expectations. Creating a successful LMD experience for every customer every time is a major factor in gaining that trust and positioning a brand for long-term success.


The ways customers shop, interact and come to trust brands has changed significantly in a short amount of time. The marketplace is only getting more competitive. Brands must leverage their investments in technology and AI to connect with customers by creating personalized customer experiences. Each LMD touchpoint is an opportunity to differentiate their brand, or to create a repeat, lifetime customer. Trust is a valuable asset in retail; companies that are not focused on cultivating it will find themselves lagging behind their peers. Luckily, the path to building this asset can be a lot simpler if you start with the right capabilities. 

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