This paper is for Shipping Resellers, 3PLs, and anyone who generates income through margin off of their carrier discounts.
Imagine your business in a year or two, or ten years from now. What will ensure you success in that time period? How do you guarantee the best customer experience, the most efficient use of your resources, and return on your investments?
A “serious” or full-featured Shipping Management System is going to make life easier for you and allow you to focus on selling and caring for your customers. But have you considered that having a full-featured Shipping Management System could make or break your relationship with your carrier and your customers?
Make Your Carrier(s) Love Working With You
Central to your successful business is your partnership with the carrier (or those providing your discounted carrier rates). That’s the foundation on which your business is built, and without it nothing else would matter.
Every time I visit one of our most valued clients, one of their top execs likes to tell the following story to his staff about how our relationship began. This company has worked with us for more than seven years now. The story:
“When we first approached DHL several years ago for a reseller contract, they turned us down. ‘We are not giving out any more reseller accounts,’ they told us. With persistence on our part, they finally relented. There was one caveat: ‘You can have a contract, but only if you work with [now known as Rock Solid Internet Systems Inc].’ They called us immediately and the rest is history.”
I tell this story, not to talk about us, but to emphasize the importance your carrier places on a trusted software platform. (A trusted software partner is another key element that we’ll go into later.) To the carrier or subcarrier, such a platform guarantees:
- Efficient importing of Carrier EDI files
- Better cash-flow for their reseller/3PL, which will expedite payment back to the carrier
- Proper communication and payment of what is owed, including RDI file exports (the remittance files back to the carrier along with payments)
- Proper tools and processes for requesting adjustments (service failure, incorrect fees, etc.) from the carrier
From the carrier’s perspective, the efficiency with which they can do business with a 3PL or reseller determines the bottom line. The more efficient and streamlined, the less pain and resources on the carrier’s side. 3PLs and Resellers are given huge discounts because of the benefit they bring through volume. But without the proper system, the carrier will think twice about the value of having you as a partner.
Additionally, the carrier wants to ensure that the discounts that they give you are going to translate to some serious volume in their system. They know that if you don’t have good software that you will not be able to focus on selling. Good software will allow you to quickly get new customers shipping on your system, easily manage the day-to-day details of your business, and will allow you to focus on what the carrier really cares about: bringing new customers and higher shipping volume to them.
Acquire More Customers by Having the Right Answers
Good customers are hard to come by, and they are equally difficult to retain. Having the right answers for the customer at the time of sale and throughout the life of your relationship will translate to more profit and referrals.
Your customers are shipping experts. They’re in the trenches every day, and the services you provide for them will either make their life better or will cause them to look elsewhere. Cost isn’t the only determining factor for whether you’ll make the sale. Consider the most common customer concerns:
- Can I go to one place to get a quote and generate a label for any of your services?
- Can I ship on terms? Or by credit card? How about prepaid?
- If something goes wrong with my shipment, how quick and easy is it to get a credit?
- Can you integrate with my custom eCommerce system? How about my Amazon or eBay store?
- How quickly can you get a customized proposal to me with rate sheets?
Retain Customers by Providing the Best Platform and Services
Once your customers are integrated into your online shipping platform (we call ours Webship), there are several things that will make them want to stay long-term.
Why does your Cable or Satellite TV provider provide you with a DVR? It’s not just because you want a DVR; it’s because it ties you into their platform long term! It’s a pain to switch providers and give your DVR filled with recorded shows back.
When your customers learn your new online shipping platform, when their address books and shipping history build up, and when they find that they have easy access to your services all in one place (often with multiple carriers’ services), they’ll think twice when your competitors come promising to save them a few bucks.
If your customers know that you can deal quickly and easily with any claim that they might have on their shipments, and possibly even credit them immediately, this will make them prefer you over dealing with the carrier directly. Do you have tools to efficiently do this, while easily being able to request credit from the carrier in the meantime?
Streamline Your Company and Grow Your Bottom Line
A decent Shipping Management System costs money, and the typical startup often wonders if they can afford it, and whether it might just be better to do everything manually, build it yourself, or get the cheapest system out there.
As we have seen with our partners, a shipping reseller or 3PL is never just a one-man show. An international client we dealt with at one time had dozens of staff in his office manually processing paper waybills. His volumes were growing quickly, but his staff was spending hundreds of man-hours doing things that a good software system could have done easily in minutes. Reconciling the data for those shipments was an absolute nightmare.
Can you imagine what this particular client could have done if instead of hiring administrative staff he had hired more salespeople?
We have seen many different business models for shipping companies that we have worked with. Some are franchise-based, some “agent”-based, some centralized with dozens of sales reps. Some companies have centralized collections, and some require their franchises or agents to do the collections. Along with these, your software will need to adapt to fit the needs of those using it. Will you send your agents a bill for the carrier cost of the shipment plus revenue, or will you do the collections for them and cut a check back to them based on margin collected? As volume increases, and things like carrier adjustments come into play, the complexity of calculating these invoices or payables multiplies. Is it really worth the time of you and your staff dealing with the minutia of these details? If your Shipping Management Software already comprehends your business model, it will save you countless hours and headaches with such tasks.
Dealing with Yearly Rate Increases
Many of our clients used to spend up to two months (often starting November and going into mid-January!) dealing with their yearly rate increases from the carrier.
As your rates from the carrier increase from year to year, your rates to your customer will necessarily increase. Dealing with the rate increases can be very time consuming and a huge headache if you don’t have the right tools. As you grow to hundreds or thousands of customers, dealing with these rate increases can become an almost insurmountable task if not done right.
While the carrier may not always increase their retail rates, your negotiated rates will almost always increase year’s end. If you base your rates off of the carrier’s retail rates, you may find that you make less and less margin every year on your customers. That’s why you may want to set your customers’ prices based on a markup or margin from your own rates.
Pricing by Markup or Margin
We have found that the best way to deal with these increases is to set your customer’s cost based on your own cost. That way you can guarantee yourself a similar margin year over year. At the end of each year when you receive new rates from the carrier, simply load the new cost sheets into the system, and the rates for your customers that are set on a Percent Markup or Percent Margin will automatically be changed.
Other Rate Options
Of course, you may want the flexibility of tweaking your customer’s rates based on weight or zone. If your customer needs a killer rate on International Express Zone C shipping, can you give them a deep discount there without necessarily giving them equally-deep discounts on other zones where they do not ship as frequently? And can you base these rates off of your costs to make it easier to manage their rates year over year? Powerful rating tools like this can allow you to be ultra-competitive where you need to be, and to make up your margins elsewhere.
You may need to support the importing of custom rate sheets or rating by % off of retail rates. The more options the better, of course, as it may make the difference between getting a sale or losing it.
I won’t spend too much time elaborating on the many other ways that a serious software will save you money. But I’ll list a few more below.
Good, “Serious” Shipping Management Systems will save you time and money by:
- Automatically importing carrier EDI files and arranging them into customer invoices
- Giving you ways to audit your shipments from the carrier to make sure that they are giving you the proper discounts
- Allowing you to quickly “mass edit” shipments, or quickly fix problems with the shipments from the carrier. For example, if the carrier leaves the zone off of 600 shipments, can you fix this in one step, or are you forced to – edit each shipment manually?
- Allowing you the option of send invoices by e-mail, attach statements
- Customize how you pay your sales reps (salary, % of margin?, % of revenue?, varied based on the service?, based on the actual amount paid (rather than theoretical margin)) and easily generate Sales Rep Commissions reports on a regular basis.
- Giving you visibility into your status with the carrier. How much do we owe? How is the carrier doing in responding to our requests for credits for lost/damaged shipments or incorrect charges?
- Providing you a customizable dashboard in which you can see how your business is doing today, this month, this quarter, this year – and whatever it is that you care most about
Allowing you to report and graph:
- How are our volumes and margins across various carriers and services?
- Where are we making the most/least margin? What services are our customers using the most?
- How many setups and activations (first time shippers) do we have this week?
- Who are our top sales reps?
- Who are our top agents/franchises?
- Which customers have stopped shipping with us?
- How much are our sales reps/agents/franchises doing in sales, and what have we paid them this month?
Quickbooks isn’t going to comprehend the complexities of your shipping business, and will obviously fail at all levels of communicating with the carrier. Software that understands your business model and can set up business rules customized to how you want to operate will give you power.
Finally, consider the following:
- Web-based back-end management software will allow you to access your company from anywhere in the world, and get real-time insights into what is going on with your business.
- Make sure your web-based solution is scalable and has built-in redundancies for your data. You’ll need this as your company grows, and to ensure that your data is secure in the case of a disaster.
Choose a True Software “Partner”
I’ve saved the best for last. Choose a Shipping Management System from a company that you can trust, and that acts as a partner that understands your industry and business model, and not simply a software provider. Choose a partner that is passionate about helping you grow your business.
At Rock Solid Internet Shipping, we pride ourselves on our good relationships with the carriers. So when it comes to dealing with new services or electronic communication with the carrier, we are ahead of the curve. Since we have multiple clients dealing with these carriers, we make sure that we are ready for new changes from the carriers–most times at no additional cost to our clients.
Why should we care? Our services are transaction-based, making things affordable for both small and large customers. But this model is also structured to incentivize us to help our clients grow. As the client grows, we do, too. Win-win.
For a shipping company, the software they choose to run their business on will play a key role in the development and success of their company long-term. Most companies will never change their shipping platform, so don’t underestimate the importance of finding a software partner that is the right fit for you.