The effect of logistic service quality on customer loyalty
Where logistics meets data, interesting questions arise. In our Data2Move Research Stories, you’ll find out how students have answered them. This time: Casper van der Schenk’s research at Hilti on how logistic service quality affects customer loyalty.
These days, having high-quality services is crucial for maintaining a competitive position as a global supplier on the worldwide stage. Therefore, knowing which aspects of logistic services impact customer loyalty is vital to achieving a competitive advantage.
Where it started
As a supplier in the professional construction industry, Hilti provides a large number of customers with leading-edge tools and services worldwide. As a business-to-business company, customer experience is becoming increasingly crucial for Hilti to stay ahead of the competition. While Hilti aims for overall high logistic service quality (LSQ), they were unaware of which aspects of their logistic service quality directly influence their customer loyalty. Therefore, Casper van der Schenk was set out with the task to map out the different aspects of Hilti’s LSQ and determine the corresponding impact on customer loyalty.
Using data on sales, deliveries, and customers, van der Schenk created a model with which he discovered the direct impact of LSQ on customer loyalty in terms of sales value, order frequency, and product line adoptions. Additionally, he used this model to leverage the importance of Hilti’s on-time in-full (OTIF) delivery KPI on customer loyalty.
Amongst his most important findings, van der Schenk highlights the influence of timeliness and availability issues on customer loyalty. He also shows that improving individual OTIF KPI’s for customers can significantly increase customer loyalty. Moreover, he found that deviating from scheduled delivery dates and splitting orders negatively impacts customer loyalty. As an extra note, he suggests that transparency towards a customer could maintain customer loyalty after a delivery failure.
Conclusion and next steps
Van der Schenk’s main advice to Hilti is to adopt also an individual customer OTIF KPI and to use these KPI’s to ensure and leverage high service levels for their customers, which his model has shown to improve customer loyalty. He concludes:
“Perfect delivery services are hard to obtain. Nevertheless, the knowledge gained by this research can support practitioners to improve their processes on the parts that matter most to their customers.”