Why Customer Service is Key for a Great 3PL Partnership

“80% of your company’s future revenue will come from just 20% of your existing customers”

Source: Forbes

Customer service can often be overlooked for certain goods and services. In the world of logistics, third-party logistics (3PL) providers simply cannot ignore its importance. The purpose of a 3PL provider is to essentially take the chaos out of the supply chain process. A company hires 3PLs to outsource their logistics operations for part, or all, of their supply chain management functions.

Often times, there are dedicated staff members that handle the logistics processes involved in moving a company’s goods from origin to destination. These people deal with shippers directly, in both shipping and receiving; most importantly, they coordinate with suppliers. John Rodenheffer, Vice President of Zipline Logistics, stresses the importance of a “Golden Rule” in customer service for 3PLs. He defines the Golden Rule of Customer Service as having staff that treats others the way they want to be treated, from the customer to the contracted drivers:

“It’s a 3PL that pays carriers on time instead of delaying payment to maximize cash flow, and is aware of the need for financial flexibility in difficult situations. Golden Rule customer service means honest and transparent communication with people who not only admit when there is a mistake, but head off potential problems with proactive solutions.”
Source: John Rodenheffer, Inbound Logistics

When 3PL representatives communicate with suppliers, minding the golden rule is especially important, as it influences how smoothly a transaction can go.

The Importance of Proper Guidelines, Good Communication, and Training

For those running or managing a 3PL company, it is crucial to have a standard of practice when it comes to having internal staff communicate with suppliers. Communication and transparency go hand-in-hand for companies when assessing a 3PLs ability to provide good customer service. Miscommunication is one major factor that can lead to upset customers. Poor customer service for 3PLs can lead to an increase in poor communication (i.e. a broken telephone phenomenon) resulting in missing follow-ups on deliveries and lead times. Training with a focus on customer service can lead to a better overall quality of performance as well as better consistency for the company’s image and brand.

With proper training and enough experience, the best customer service representatives, when given the autonomy, have the capability of providing optimized decisions for their clients and customers to ensure the lowest total cost. 3PL providers should have a solutions-based focus for their staff. Part of good customer service is being able to know the best practices for when problems should arise. Problems can appear at any time, in the form of train derailments or equipment breakdowns, etc. Customer service representatives have to be able to work diligently with suppliers to ensure that shipment tracking is constantly updated (and accommodated for!).

These initiatives do not go ignored; the probability of selling to an existing customer is 60-70%. The probability of selling to a new prospect is 5-20%. Having excellent customer service with staff facilitates continued business and can lead to future referrals, and it is no surprise that word-of-mouth referrals are still the most effective way to reach new customers.

There are many third-party logistics providers, and all of them have certain specialties or unique selling propositions. Be it chemical or medical supply shipments, refrigerated, cross-border or special class goods like alcohol, all of them should keep one thing in mind: Customer service representatives that deal directly with your clients’ supply chain should be at the top of their game. Remember, almost 70% of the identifiable reasons why customers left typical companies had nothing to do with the product. The prevailing reason for switching was poor quality of service.