Why should marketing and sales care about logistics processes?

March 17, 2023
Every successful retailer has marketing, sales, and logistics working together to identify, create, and deliver value to customers. Any miscommunication between the three will cause the entire process to fail.
Marketing, sales and logistics working together
Mircea Stan
This article has been published as an Op-Ed under the signature of Mircea Axente-Stan, CEO of Postis, in the prestigious Polish Logistics Manager Magazine.
If you want to read the original article in Polish, you can
download it as a PDF.

The first issue of the magazine in 2023 can be ordered on their
website, in Polish, along with many other valuable insights from Polish and international experts.

Marketing and sales activities are designed to increase revenue. While the two are closely intertwined, marketing's typical goal is to generate interest in the product and create leads or prospects. Sales activities focus on converting them into actual paying customers.

Marketing will identify market opportunities and customer needs, develop innovative products and offers to meet those needs, and then promote the products to build awareness and the brand. Pricing strategy will follow to maximize long term revenue. From here, sales takes over and interacts with prospects to persuade them to purchase the product. Depending on the type of product or customer profile, the sales cycle may be shorter or longer, with decision-making swinging between emotional and rational arguments.

Behind the scenes and away from the glamour of customer interaction, logistics is the backbone of any company that sells goods. It touches every aspect of the business, from receiving goods from overseas suppliers, getting them on time and in the right mix to meet sales forecasts, packaging them for the domestic market, warehousing them, and shipping them to stores or fulfillment centers. Companies can handle logistics in-house or use third-party logistics providers.

In this article, we will focus on why marketing and sales should work together with logistics to create a personalized customer experience. From a distance, marketing focuses on creative activities backed by detailed analytics. Sales is concerned with human interactions. While logistics focuses on processes that handle and deliver products, the three may not seem to have much in common. However, they have a symbiotic relationship because, in the age of e-commerce and speed, customer relationships and satisfaction are closely tied to logistics - production and shipping must be fast, flexible, efficient, and focused on the end customer's needs.

Why should marketing and logistics work together?

A modern retailer approaches these two disciplines synergistically. Marketing logistics aims to reduce supply chain operating costs through process optimization and help sales teams deliver products at the lowest possible cost. Then come marketing and sales activities that add value and maximize profitability through pricing and promotions, storytelling, and differentiation from other brands. There is a fine line to walk between cost-cutting objectives on the one hand and maintaining quality service and customer satisfaction on the other, and making the right decision requires aggregated data on market context, competition, process performance, customer profiles, satisfaction, and more, analyzed in real time.

With the advent of international trade, the complexity of this information increases significantly and, at a certain level, traditional systems and human operators can no longer cope. This is the moment when logistics must be supported by integrated IT systems, processes must be streamlined, and data must flow seamlessly between logistics, marketing, and sales teams. With well-structured data sets collected over a long enough period of time, advanced machine learning algorithms can be added to process this information and enhance data-driven business decisions.

Marketing and sales departments should work together with the logistics team to overcome all kinds of problems and respond to customer needs and requirements in a timely manner, while generating useful strategies for the companies involved.

When and how can marketing, sales, and logistics work together?

In general, marketing, sales, and logistics should work together at all times, along with the integrated processes that take place before, during, and after each customer interaction. If this collaboration is efficient and based on customer needs and expectations, it will increase the number of successful sales and profitability.

An obvious example of such collaboration is product selection. For all the analysis that marketing does on market trends, customer needs, and product differentiators, if logistics cannot deliver the right features at the right time and the right price, salespeople will have a difficult time positioning their offerings, differentiating themselves, and convincing customers that they offer the best value for the money they are asking.

Another obvious example is stock rotation. Every retailer knows that if sales forecasting is not done correctly, everyone gets hurt. Late deliveries, wrong assortments, or out-of-stocks waste advertising budgets, miss sales opportunities, reduce revenues, and anger customers. When overstocking occurs, warehouses fill up with product, inventory costs skyrocket, efficient fulfillment becomes a near-impossible task, and to avoid write-offs or obsolescence, marketing would have to come up with new, costly campaigns and sell the merchandise at discounted prices.

Some other logistics activities may seem more obscure to marketing and sales teams, but with the accelerating growth of e-commerce, they are becoming critical to sales success. Among them is the importance of delivering online orders and the post-delivery customer experience.

E-commerce is growing so fast because customers find it easy to shop from the comfort of their own homes. It's efficient, it's fast, shoppers have lots of choices, it's easy to compare prices, and they have peer reviews to help them make decisions. For retailers, going online offers the opportunity to create new sales channels, expand their territorial reach, and be available where and when the shopper wants to buy. Along with opportunities, all these new variables bring a new level of complexity, as each customer is different from the next and expects a personal touch as interactions take place in their most private space: their smartphone. And things get even crazier as retailers strive to create integrated experiences in an omnichannel environment.

The sales journey begins before the shopper even knows what they want to buy. It may begin with an email in the inbox or a conversation with a friend. It continues with a click to the e-shop. It depends on how the products are displayed and what information is provided. And if all goes well, it goes to the shopping cart. In most cases, when they reach this stage, they buy. And everyone is happy. Marketing monitors the click-through rate and the conversion funnel. Sales reports on customer order growth. Logistics analyzes remaining inventory and submits orders for replenishment. Simple, right?

WELL, IT ISN'T. Because the path to purchase does not end in the shopping cart. Or it might end there, but unsuccessfully, if the options offered do not fit the customer's lifestyle.

Every customer is different and expects a personalized experience, so they need not only different payment options or value-added services, but also delivery alternatives. It could be the price they are willing to pay for delivery. It could be the location, with some preferring parcel lockers rather than waiting for the courier at home. It could be the time, with some willing to pay a premium for express delivery and others preferring to schedule a specific date and time. So at this stage, the customer experience relies heavily on the delivery partners that the logistics guys have contracted. With the right mix of delivery options, shopping cart abandonment could be reduced by 30%, which would make marketing and sales very happy.

However, the sales journey usually continues with delivery and post-delivery. Even if the order is paid for, the customer still has the option of refusing delivery or returning the product within 30 days. That's the worst-case scenario, because it incurs the highest costs for delivery, return shipping, restocking, and eventually reselling the product at a discounted price. A few months ago, we calculated the average cost of returns for Postis customers. It depends on the product, but the average across categories was around 10-15 euros. For each returned package. So reducing the returns rate would not only increase sales, but also reduce operating costs.

Customer satisfaction during the delivery and post-delivery phases depends on logistics. Retailers need to know the status of their deliveries in real time and provide full transparency and predictability to their customers. If problems arise, they need to be proactive, informing the customer and providing immediate solutions.

Customer perceptions of the overall experience can be captured immediately after the order is delivered. This information would not be time-sensitive and would be used by logistics, marketing, and sales as a whole to optimize the end-to-end journey, including offers, communications, delivery options, and overall performance. This is the foundation for a modern, agile, data-driven organization with integrated processes built around each customer.

How to create personal experiences through an integrated approach

When you talk about personalized sales experiences, you are talking about adopting customer-centric processes. Customer-centricity requires that every business decision be made with the customer's needs, preferences, and uniqueness in mind. Data must be systematically collected, continuously analyzed, and used to make real-time decisions. All processes, from logistics to marketing, sales, and customer support, must be integrated to enable mass customization. This takes time and resources, but is achievable with the right systems and tools.

Open IT platforms, delivered as software, provide the infrastructure needed for such an endeavor. Existing IT systems (WMS, TMS, OMS, ERP, CRM, e-shops, you name it) can be easily integrated. Logistics ecosystems can be streamlined, outsourced, or redesigned, with countless options already integrated and available. New customer journeys can be tested and deployed. All of this happens at no significant cost because the platform is built from the requirements of and with the input of hundreds of other retailers. And deployment time is dramatically reduced, with new deployments sometimes happening within hours.

At Postis, we provide such solutions for the integrated management, automation and optimization of last-mile delivery. We integrate more than 200 delivery options available across Europe for every type of product, destination and customer journey. We streamline processes and orchestrate order, delivery, performance and customer satisfaction data across all systems used by retailers. We use advanced machine learning algorithms and AI to enable automated, real-time decision making. And we enable optimal and personalized customer experiences, regardless of the size and complexity of the product catalog they sell.

With our help, companies can increase productivity, improve flexibility and agility, reduce time to market, streamline operations, optimize costs, diversify delivery options, enhance customer experience and relationships, scale their business, adapt their business model, or rapidly enter new markets. And be ready for the challenges and opportunities of the unexpected world we live in.

In conclusion

My strongest advice to any company that sells goods and wants to succeed in the modern retail environment is to strengthen the links and synergies between its marketing, sales and logistics teams. Integrated, open IT platforms will make this possible. Data will become the fuel that ignites their success. And customers will be at the center of their integrated processes.

Photo by Hannah Busing on Unsplash

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