We all know that on-time delivery is important. But how much do delivery delays actually hurt your business?
Discover how to calculate the ROI, three steps to improve your on-time delivery, and one key change you can make to reduce your late deliveries.
Late Delivery Calculator: See How Much Late Deliveries Cost You
We’ll break down the full math below, but use this calculator to see exactly how much money you’re losing to late deliveries.
Want more on-time deliveries? With Onfleet, your on-time delivery rates can increase to over 98% (that’s our clients’ average on-time delivery percentage!) Try our 14-day free trial to see how it improves your courier delivery operations.
Why is On-Time Delivery (OTD) So Important for Couriers?
On-time delivery means transporting a package from a distributor to a customer within the promised timeline. In a Voxware study, 69% of respondents answered that they were less likely to order from a retailer in the future if their product wasn’t delivered on time.From a business perspective, on-time delivery benefits your reputation, retention, and risk mitigation.
- Reputation - A high on-time delivery rate increases client loyalty and differentiates your courier business from competitors.
- Retention - Distributor clients are significantly more likely to retain a courier that minimizes delays.
- Risk Mitigation - A timely delivery reduces the chances of negative reviews and contractual penalties.
For couriers, on-time delivery is more than just a business metric – it’s a measure of trust. Distributor clients rely on couriers to transport their products. Customers depend on couriers to fulfill their orders on time. When that trust is broken, you can face serious business repercussions – and major financial costs.
How to Calculate On-Time Delivery ROI
Calculating your on-time delivery ROI will make a big difference to your courier business.
How Much You’re Losing Now
To calculate the ROI of on-time delivery, we need to consider two factors:
- Your average late delivery cost
- Your average number of late deliveries per day
If you take the average late delivery cost * late deliveries per day = the amount you’re losing per day to late deliveries. This is a very simple equation, but we suggest calculating this on a very regular basis and per driver, so you can keep track of how efficient each of your drivers are.
Late Cost Examples
Some examples values that may increase due to late deliveries are:
- Extra fuel cost: You use more fuel due to having to re-deliver.
- Extra driver hours: Since they have to re-deliver, you’re paying your drivers to deliver the same delivery more than once.
- Churn: Clients are more likely to cancel (also known as churn) if you regularly deliver late.
- Reduced customer retention: Linked to above, client loyalty decreases if you’re often late.
- Decreased CLTV: Your customer lifetime value (CLTV) goes down as churn increases.
- Higher customer acquisition costs: You have to spend more to replace the clients that you’re losing with higher cancellations. This churn increases your acquisition costs.
How to Calculate Your Percentage of On-Time Deliveries
Figuring out your on-time delivery percentage gives you a clearer picture of your overall operations. A high on-time delivery percentage can even be useful in your marketing materials!Determine your delayed delivery percentage by dividing the number of late deliveries by the total number of deliveries. Then, multiply that result by 100 to get a percentage.
(Number of late deliveries/Total number of deliveries) * 100 = Late Delivery Percentage
Next, subtract your late delivery percentage from 100 to get your on-time delivery percentage.
100 - Late Delivery Percentage = On-Time Delivery Percentage
For example, if your business delivered 15,000 packages last quarter, and 960 were delayed, 3% of those deliveries were late.
(960/15000)*100 = 6.4%
Thus, 93.6% of your packages were delivered on time.
100-6.4= 93.6
These numbers give you valuable information for your operations (and marketing!) efforts.
On-Time Delivery ROI Calculator: See Where You Can Reduce Costs
Try our ROI calculator to discover how much you could be saving on fuel and increasing your driver capacity, and how much your delivery costs could decrease. Using Onfleet, your daily deliveries can increase by up to 45% with the same staff. And our clients have an average on-time delivery rate of over 98%. Check out the software in our demo video. You can also experiment with the software yourself with our 14-day free trial.
How to Improve On-Time Delivery ROI
It’s nearly impossible to track your on-time delivery ROI with pen and paper reliably. Excel spreadsheets are sometimes worse – they make you feel in control of your data, but ultimately cost countless man-hours to maintain.
You need a courier delivery management system to get real-time feedback on routes, delivery status, and customer responses. Intelligent routing alone can reduce costs by as much as 40%. Additional features, such as automated customer status updates, greatly improve time spent on delivery and customer service communication.
Reach out to our team today to see how Onfleet can help take your courier business to the next level.
