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Loyalty; The First Great Gift We Can Bestow

Posted on | December 16, 2009 | No Comments

By Robert Passikoff

Given the season, today’s blog begins with a passage from the Bible, Acts 20:35: “It is more blessed to give than to receive.” Retailers, marketers, and economists all agree that the more giving this season, the more quickly the economy will emerge from its doldrums. But in between the “giving” and the “receiving” rests the delivery service. Or, more appropriately, in between the two toils the delivery service.

UPS and FedEx, the nation’s two largest private delivery companies, are starting what’s billed to be the busiest shipping week of the year. FedEx is prepped to process 7,000 packages an hour. They’re projecting that on the year’s busiest shipping day they’ll deliver 13 million packages. UPS expects to deliver 22 million packages, and the United States Post Office expects to deliver about 830 million pieces of mail.

If you think that all these deliveries are a harbinger of a better economy, you’d be right. While not precisely a leading-indicator of retail profitability, it is an unobtrusive measure – a novel means to supplement, if not replace, conventional research techniques, especially basic survey research. More packages being shipped indicate more things being bought. More sales means more profits for retailers, although to be perfectly fair, one would need to factor in the double-digit growth in flat rate packages and on-line shipping services into the equation. But “Q.E.D., quod erat demonstrandum,” as the college professors would say.

When you rely on predictive and not historic loyalty metrics, you have a leading indicator of real, in-the-marketplace consumer behavior—one that correlates extraordinarily highly with profitability. And as we’ve already predicted what giving-and-receiving is going to look like this holiday season, here, direct from our Customer Loyalty Engagement Index, are the leading-indicator rankings of the three major delivery services themselves, accurate portents of profitability:

1. FedEx
2. UPS
3. US Postal Service

It used to be a longer list but last November Deutsche Post closed all of its DHL Express service centers in the US, citing heavy losses and fierce competition from the remaining three. And it isn’t all buy and ship. UPS announced that their third Quarter profit fell by 43%, as shipments declined nearly 6%.

Of course, there is one service that has the system down perfectly and apparently profitably – as rumor has it, delivering packages all over the world in one night, and never requiring a signature.

While Santa has the backroom covered with his brilliant reindeer transportation system, and has never known an image problem, it’s his ability to create loyalty, generation after generation, that needs no research to verify. That’s one question even a child can answer.

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