Improving Your Total Order Cycle Time to Retain More Customers
Total order cycle time is one of the most important customer metrics for any business to monitor, and for good reason: There is a correlation between the order cycle time and so-called “abandoned carts,” or canceled orders. If your goal as a business is to retain customers, then improving your customer experience by cutting your order cycle time is one way of getting there.
What Exactly is Total Order Cycle Time?
Total order cycle time is the average amount of time between an order being placed by a customer and when it is shipped (which does not include shipping time). If your facilities are streamlined and efficient, then your cycle time will be shorter; if your operations are not streamlined, then your cycle time will be longer.
Free Guide: Top Order Fulfillment KPI Indicators
We all know that time is money, but why does total order cycle time matter when it comes to retaining customers? To put it bluntly: Customers are impatient. They don’t like to wait. They want their order delivered yesterday. And if you can’t deliver within what they see as a reasonable timeframe, they’ll go elsewhere.
According to one study looking at e-commerce sites, around seven percent of all abandoned carts were abandoned when estimated delivery time was three days or less. Fifteen percent of abandoned carts were abandoned when the delivery time was four to five days, and another fifteen percent were abandoned when delivery time was estimated at six to seven days. Nearly 40 percent of all abandoned carts were abandoned when estimated delivery time hit eight days.
And if you think you’re in the clear because you don’t offer an estimated delivery time, you’re wrong: 25 percent of abandoned carts were abandoned when no delivery date was given.
The takeaways here are that a.) customers want to know when they are going to receive their order, and b.) they want their order delivered sooner rather than later. By not providing an estimated delivery date, or by having estimates that are too far away, you are giving your customers excuses to go elsewhere to shop, and that’s not good for your business.
How to Improve Your Total Order Cycle Time
Ultimately, your goal in reducing your total order cycle time is to reduce your estimated date of delivery to customers; getting their orders to them sooner makes them more likely to complete an order instead of going elsewhere.
Chances are, you can’t directly save time by shortening your shipping time; this falls on your shipping servicer (USPS, FedEx, UPS), and getting an order to a customer faster would usually require paying a higher fee. But you can shorten the estimated delivery date by shortening the amount of time that the order is handled in your facilities (i.e., the total order cycle time).
To find areas that you can shave time, you, of course, need to analyze all of the processes that go into picking and shipping an order. For example, if you are spending too much time on picking, then you may be able to save time by shifting to automated processes in some of those areas. Conversely, if picking is done relatively quickly, but your outbound orders are held up by non-essential administrative work (paperwork, review, etc.) then you can save time by streamlining those workflows.
Alternatively, your issue might not have to do with workflow or picking at all, but with inventory. One large rush shipment could deplete your stock and hold up all subsequent orders until you’ve had the time to replenish.
Ultimately, your strategy is going to be very specific to you and your operations, based on your strengths and weaknesses. Analyzing your processes is of the utmost importance because the analysis is what will ensure that your plan is going to work in the long term.