Last-Minute Readiness

By Debra Wilson Ellis

More customers order in the holiday season's 11th hour; be ready to fulfill.

Customers take a leap of faith when they place last-minute holiday orders. Different reasons drive them to place orders at the 11th hour. And however they come, their orders are more than a transaction; they're symbols of their relationships with your company, and they're depending on you to deliver.

Successfully fulfilling last-minute orders solidifies your relationship with customers. It says, loud and clear, that they can trust you to deliver at their most vulnerable time. Consequently, failing to deliver during this time jeopardizes your long-term relationship. Last holiday season, Foresee Results tracked online shopper customer satisfaction weekly. It found that as the season progressed, customer satisfaction declined. The week before Christmas, the aggregate satisfaction score fell 0.5 percent to 77.4 percent.

Service Affects Business

Customers dissatisfied with any shopping experience are less likely to purchase again or recommend the company to others. Customers who've had an unpleasant holiday shopping experience may even aggressively lobby against the company. There are few second chances granted when failure to deliver occurs during the holiday season. While everyone knows this intuitively, the effects rarely are quantified.

Gauge Past Behavior

To see how service affects your business, take a sampling of customers who placed last-minute orders a few years ago. Divide them into two groups by whether they received their order before or after the holiday. Calculate the lifetime value for each group and compare the two. To compare holiday buyers to others, conduct the same analysis on customers who placed orders during the off season. Divide them into two groups by whether their orders shipped immediately or not. The results will provide you with a good reason to gear up for the holidays.

Customers increasingly are challenging the clock with last-minute purchases. Sometimes your marketing efforts drive last-minute purchases, but the trend is occurring even in companies that don't encourage it.

For instance, customers have been shopping later in the season for the past few years with jewelry and home décor cataloger Ross-Simons. "We don't promote last-minute sales, but we make it a feature," says Ross-Simons spokesperson Dante Bellini. "If you order by a certain date, we guarantee that you will receive the gift by the holiday."

Plan All Year

The Ross-Simons team prepares for holiday shopping by planning 365 days per year. Those involved in the plan adjust staffing and processing to match historical order volume and current expectations. "Know your customer, know your market, and plan appropriately," Bellini advises.

The American Girl doll catalog and eToys Direct are very familiar with the last-minute holiday challenge. Sixty percent to 65 percent of American Girl's annual sales take place during the fourth quarter. eToys Direct, the parent company of eToys.com, KBtoys.com and My Twinn, conducts 80 percent of its sales during the holiday season. And because both companies serve children, that only increases the importance of delivering on time. "An adult can understand if a sweater arrives late, but it's a different situation if Santa Claus' gift is late. We think of ourselves as being in the Santa Claus business," says American Girl spokesperson Julie Parks.

Last year, on Saturday, Dec. 17, I placed online orders with American Girl and KBtoys.com, desperately needing delivery by Christmas. Each company provided a unique shopping experience, and the outcome was a satisfied customer and two happy children. The basic requirements for a perfect ordering process were met: The items I wanted were available, expedited shipping was reasonably priced, and delivery guaranteed. This was enough to ensure I was satisfied.

But these companies didn't stop there. They created a memorable experience and reduced the stress of last-minute shopping. American Girl wowed me with its fast order turnaround. A confirmation e-mail stated, "Your in-stock order items should arrive in approximately 3-4 business days," and provided a link to check my order status. True to its word, American Girl shipped the order on Monday, and it arrived on Wednesday. Parks noted that the company shipped 77 percent of all orders within 24 hours, exceeding its goal of 70 percent.

American Girl receives most of its holiday orders during the three weeks following Thanksgiving. The biggest fulfillment challenge is to correctly manage order flow during that time. If it isn't done well, this creates a backlog situation and makes it tougher to meet order turnaround goals during the last week. So to help manage inventory and order flow, American Girl tries to entice customers to order early. Because buying trends can change quickly, this enables the cataloger to minimize the number of disappointed customers if a hot product is unavailable.

Even so, American Girl's customers are ordering later in the season, most notably with an increase in orders during the second week after Thanksgiving. Planning for this time starts early in the year and is cross-functional. It includes the marketing, forecasting, inventory management, customer service, fulfillment, retail, IT and human resources teams. Members of these teams meet regularly during the year. During the fourth quarter, these meetings become a daily affair to talk about any challenges or glitches. This helps in the successful management of incoming orders.

During peak season, American Girl increases its employee headcount from 1,500 to approximately 3,200. About 60 percent of the seasonal employees return year after year, reducing training requirements and recruiting costs.

Benefits, such as shopping discounts, incentives and shift schedules that accommodate parents' needs, keep them coming back.

Communicate Frequently

KBtoys.com wowed me with its communication, which started with its online help desk that clearly defined the type of shipping required to guarantee delivery. The updated version, "due to extreme weather in the East," created a sense of urgency without saying, "buy now."

A timely confirmation e-mail included a link to check order status. The top of the order status page had two notes that reassured me that my order was coming, while discouraging me from calling to check on it.

The first one began, "Reminder: You're looking at the most up-to-date order information available. These are the same data our Customer Care representatives use to track your order." What a nice way to say, "Don't call us." KB made me part of its team and gave me the most current information.

The second one said if I ordered by the deadline, my order would arrive on or before Dec. 24, even if the company had to upgrade the shipping method. The item arrived when promised without upgrading.

"We work to improve processes, automation and order control," says eToys Direct spokesperson Sheliah Gilliland. "We refine our help section to make it easy for people to find answers for their questions."

Since the seasonality of its business is extreme, KB starts holiday planning for the next holiday during the current one. KB ups its staff size from 100 full-time employees in the main fulfillment center to approximately 2,000 during the holiday rush.

All Hands On Deck

The company's planning team includes everyone from marketing to operations. During the off season, the team conducts extensive load testing to enable its systems and processes to handle several times the traffic anticipated on peak days. Traditionally, sales started tapering off around Dec. 16 and 17. The past two years, however, KB experienced higher than forecasted sales for those days and an overall increase in last-minute shoppers, due in part to a concerted effort to increase last-minute sales through assorted marketing strategies. The plan is always adjusted to match fulfillment resource allocation so customers will be served well.

Increased last-minute shopping creates an opportunity for companies to create a strong bond with customers. Offer the right product, deliver it quickly and communicate well throughout the process. You should answer questions before they're asked. For example, the ability to track shipments is great, but there's a time delay before tracking numbers are received in carriers' systems. Inform customers that there may be a system delay while the package is in transit. This prevents them from seeing the carrier error message and questioning your accuracy.

Five Holiday Planning Tips

1. Start planning early in the year. Everything will be in place before the first seasonal order hits. The best plans are flexible

and adjusted to match order and product flow dynamics.

2. Develop reliable monitoring systems, so you know immediately when your plan needs adjustment. Keep the monitoring processes simple, and watch them carefully.

3. Communicate frequently with all departments to keep

potential problems from derailing the plan. Most glitches are resolved quickly when everyone works together.

4. Test systems and processes to ensure they can handle peak loads. Double or triple your anticipated volume during testing so runaway sellers don't shut down your operation.

5. Communicate well with your customers throughout the order process. If there's a problem, notify them immediately so they have time to make other arrangements.

Debra Wilson Ellis is president of Wilson & Ellis Consulting. Reach her at (828) 626-3756.