Behavioral science has been successfully used to tackle everything from speeding up airport security to designing technology that best fits into peoples’ lives. So why not delivery? Doddle has collaborated with behavioral science experts at Ogilvy to produce a report exploring a new perspective on delivery and the results have been fascinating. They indicate that the impact of consumer psychology on decision making is underrated, and that we need to understand and embrace a psychology of logistics (‘psychologistic’) model for delivery.
The report suggests that we need to flip delivery on its head; turning a logistics-obsessed industry to one led by customer experience. Psychologistics is about getting to the heart of what customers really want. In moving a package, we accept that there are lots of rational and logistical steps that need to be taken, but without getting the psychology behind logistics right, we risk undermining the entire experience.
Pick up and drop off (PUDO) is an obvious way to put customers at the heart of delivery, as it removes the stress, uncertainty and complexity from it altogether. To harness those benefits, however, we as an industry need to equalize the status of PUDO and home delivery. On most checkouts, PUDO appears as an afterthought, if at all. Even where it isn’t relatively hidden, there are almost always more options for different kinds of home delivery, which itself can lead to a bias in consumer choice.
To illustrate that point: in an experiment after a meal, a waiter asked diners whether they wanted tea or coffee, and the great majority of people asked for coffee. However, if those same diners saw a menu which included coffee and a list of different blends of tea, the majority chose tea. This experiment suggests that standard economic theory is wrong – people do not have stable preferences and, crucially, offering choice within a category makes the whole category more alluring than if the choice is simply between two categories.
These behavioral insights about choices and the possibilities to influence them have potential to explain how we already make delivery decisions, and even to help us change consumer behavior. If we can be nudged to choose tea when the number of teas on offer is increased, it doesn’t take a psychologist to recognize that the higher number of home delivery options versus PUDO options is affecting the nation’s preferences around how they receive their goods.
Another way to apply behavioral psychology is in studying the effects of delivery on customer experience. The ‘peak-end rule’ described by Nobel Laureate Daniel Kahneman states that our memory of any experience is overwhelmingly shaped by the peak (i.e. the most intense moment) and the conclusion. Parcel delivery is often the peak and always the end of a purchase experience, so it plays a dominant role in determining a customer’s overall impression, and consequently in the likelihood of their repeat business.
At present, while delivery is a matter of importance for retailers, it’s rarely seen as a top priority, which can result in woeful experiences of packages left in the rain and delivery to distant neighbors. Given that happy customers tell an average of 11 others about their experience while unhappy customers tell 15, we know that it’s important to minimize the chance of things going wrong.
Logically, if there’s only a 1% chance of a dress ordered online failing to arrive, the customer should discount the value of the dress by only 1%. In reality, people don’t think this way. The 1% chance of a disastrous outcome plays on our minds much more than conventional logic would suggest. Evolution means we are mostly descended from people who were predisposed to worry about low-probability disasters. Our inherited fearfulness is clear when it comes to delivery. Over a third (34%) of online shoppers don’t trust delivery drivers to deliver successfully, rising to nearly half (47%) of 18-24-year-old shoppers, according to Doddle’s research with YouGov.
Given our instinctive wiring for risk-aversion, we’ll pay 10% extra to avoid the 2% chance of significant uncertainty. A very high standard of delivery thus allows you to command a price-premium, not only in what you charge for delivery but what you charge for goods. We believe that delivery done right could upweight the whole customer experience.
There are many advantages when offering PUDO points as a delivery option. Not only is it significantly cheaper to deliver to a few thousand nodes in a day than to 27.2 million home addresses in the UK, but delivery to a PUDO point can take place much earlier in the morning and much later in the evening than delivery to residential locations. Parking is often easier; the destination is familiar to the driver and obtaining genuine proof of delivery is easy. Failed deliveries, redeliveries, theft and other sources of customer discontent (such as rain-soaked packages) are much less common. The ‘your word against mine’ problem with failed (or ‘fake failed’) deliveries disappears overnight.
From a psychologist’s perspective the case is even stronger. A quarter (24%) of online shoppers are annoyed that home delivery is positioned as the default delivery option, and half of consumers say that in the future they would like to exclusively support retailers that offer a wide range of sustainable delivery options.
In conclusion, we need to address how PUDO appears to consumers. At the moment, it’s portrayed as an afterthought on the checkout pages of websites. The industry needs to consider making PUDO a preference rather than a compromise – shifting to a better kind of delivery that replaces the costs and risks of the last mile.
Doing so would represent a huge positive gain for all parties: shareholders; customers; retail brands and logistics companies; and for the wider health of Britain’s High Streets – 65% of customers make additional purchases in-store when collecting an item ordered online. Packaging could be wholly recycled or reduced, and same-day or early morning delivery becomes easier to offer with routes simplified and deliveries consolidated. What customers buy online will be limited only by what they need, not what they are happy to have delivered. We should listen to what the science tells us.