Top 7 KPIs Every Delivery Business Needs To Track Monthly
A delivery business is never one thing, it is always about drivers, their schedules, routes, customers, time of delivery, fuel, failed deliveries, or even accidents. How will you know what to prioritize without getting a clearer picture of the situation?
The main point is that through performance tracking and utilizing a delivery management software, business owners can learn more about the current state of their operations. So what are the key performance indicators (KPIs) that every delivery business should track on a monthly basis?
Following are the 7 key indicators all delivery businesses should track and analyze every month in order to improve operations and customer relations.
1. On-Time Delivery Rate
As the name suggests this KPI shows the percentage of successful and punctual deliveries within a month timeframe. If the business made 1,000 deliveries this month and 850 were delivered on time, the on-time delivery rate would be 85%.
The higher the rate is the better the performance — the company knows its routes and capacity well enough. In cases when the score drops, it’ll help the business analyze the new traffic patterns or adjust the delivery window and schedule.
Using a delivery tracking app in real-time can assist the business in pinpointing where or when a particular delivery is stuck.
2. Average Delivery Time
This metric calculates an average time deliveries take from the moment they are dispatched till they reach the destination. It is a useful gauge for assessing business performance from month to month.
If a business notices that its average delivery time grows exponentially, it must reconfigure its logistics to reduce the time spent on the road; e.g., the drivers avoid heavy traffic, take the shortest route and do not have many stops. The software can show how much time the fleet spends driving vs. idling or waiting for customers.
3. First-Attempt Delivery Success Rate
As much as drivers are the face of the delivery service, customers hate calling the company to say the delivery person missed the address. This KPI shows the rate of delivered packages sent to the doorstep compared to the total number of deliveries per month.
The drivers get stuck in the traffic or on the wrong road, the customer is not at home, the delivery instructions were misleading or the GPS was faulty — all add up to failure attempts. As in the first bullet point, every failed delivery attempt adds to the operational costs; therefore, it is critical to keep this number as low as possible.
4. Cost Per Delivery
While it’s easy to count how much revenue the delivery business makes, one should also assess the expenditures needed to run the business smoothly. How much does a single delivery from the company actually cost?
If the business spends ₹5,00,000 this month on drivers’ salaries, cars, software, fuel, etc. and makes 10,000 deliveries, each delivery would cost ₹50.
5. Delivery Failure Rate
It refers to deliveries customers never received — those that failed to arrive, were left at a wrong address, or the package spoiled or got corrupted in the process. This metric shows a bigger picture of all deliveries attempted this month.
The first-attempt success rate focuses on what customers did not receive, while the on-time delivery rate concentrates on late orders. The business analyzes those failed deliveries to see what proportion of incidents were due to an incorrect address — in which case customers should double-check it before confirming the order. Other failures might be attributed to the vehicle, weather and traffic conditions or even driver errors. By prioritizing the most frequent causes of failure, the business will find ways and tools to eliminate them.
6. Driver Productivity
Without them, no business can operate. Drivers are crucial to every delivery company in terms of speed, safety, and customer satisfaction. The company should invest in learning about driver productivity not only to meet expectations but to exceed them.
There is more than one metric to determine the productivity of drivers; for instance, the number of orders completed per driver or the time to deliver per driver per batch.
However, not all businesses can afford to hire more drivers if the need arises. It is better to find a balance and invest in drivers’ training than burnout and underperformance. By using a delivery tracking app, managers can keep up with deliveries’ status and observe the overall productivity of the company’s drivers.
By looking at the driver’s productivity reports within the software, they can better calculate how much or how little each driver delivers per batch, their work schedule, or the time they spend on the road.
7. Customer Satisfaction
While driver productivity keeps the business running, it is the customers’ satisfaction that keeps them coming back. There is quite a list of customer-centric metrics for any company; for instance, number of complaints, positive/negative feedback, retention, referral, and others.
Customer service satisfaction — another metric to measure the success rate of your support team.
The easiest way is to get a customer satisfaction score — ask for feedback about recent deliveries and see how happy or sad customers are with the service. While the on-time delivery rate says how satisfied they should be, the customer satisfaction score reflects their actual feeling towards the company.
If there is a sudden drop, managers should review the drivers’ performances and analyze what exactly the customers are complaining about. A negative comment might imply poor customer service or even defective packages in a logistics company. However, it might also suggest a communication breakdown — the customers are always kept informed about any order changes.
Using the combination of both subjective (customer feedback) and objective (order performance) helps the business track KPIs more accurately and see the customers’ experience clearly.
Turning KPIs Into Insightful Information
It is not enough to have data without insight into what those KPIs mean for the business’s performance. Rather than comparing absolute values, delivery managers should look at the data and analyze changes — those that require improvement, action, or investment. If a month’s on-time delivery rate is lower than the previous one, but the average delivery took more time, the business should reconfigure its operations to reduce costs as much as to improve the efficiency of deliveries.
This is where using the software becomes beneficial. All the crucial metrics are unified into relevant, readable indicators that the business can use to build a better customer experience.
Conclusion
Any delivery business may have unique pain points, but there are some common metrics that apply to every company. These are the key performance indicators to track on a monthly basis — on-time delivery rate, average delivery period, first-attempt delivery success rate, cost per delivery, delivery failure rate, driver productivity and customer satisfaction.
The main idea is to invest more attention into analyzing the changes in these rates from a month to the next and always aim for improvement. Fuel costs, employee productivity, package tracking, and customer experience are some of the factors that influence the overall performance of a delivery company.
Incorporating a delivery-tracking application and a delivery management system makes it easier for the business to understand the strengths and weaknesses of its performance and take corrective action.
