Home delivery specialist Yodel has gone through some well-publicised growing pains since its creation from the merger of HDNL and the day domestic side of DHL in 2010.Despite halving its losses, it still posted a £67m deficit at the end of June 2012 and had suffered capacity issues during the 2011 Christmas peak as it struggled to cope with the influx of volumes. It was clear that the company needed someone to take the helm and help turn the company around and Yodel believes new chief executive Neil Lloyd is just the man for the job.
With his background in business turnarounds and leading companies with large field teams including Servo (part of Phoenix Group, NHS Professionals) and facilities company ISS, Lloyd is new to the parcels market. But he is surrounded by people who know it well, including Yodel executive chairman Dick Stead, and Lloyd tells MT he is hoping to bring something different to the business, starting with improving the customer experience.
After heading up numerous retail operations, customers are key to Lloyd’s agenda, which will see Yodel’s focus shift from delivery targets to improving the service it offers its customers.
“Certainly the way our major retailers are looking to measure us now is all about customer experience. [It’s] not necessarily ‘99% of your parcels got delivered’, it’s how our clients’ customers feel about it,” he says.
Lloyd is confident that Yodel is beginning to have a firm understanding of what it is good at and where the majority of its business should lie - in the online retail sector. He says it is not interested in branching out into larger or irregular parcels, which its network is currently not well set up to do.
“One of the things we’ve done is look at profitable areas and the characteristics of a profitable carrier. One of them is that we absolutely understand our operating model and the constraints on it,” he says. “Profitable carriers plan their traffic so that they only get the [volumes] that are optimal for them to pursue. I think that’s one of the things that we need to do.”
Think local
Yodel is beginning to do this by putting individual service centres in charge of sales to local businesses. Lloyd says the carrier has introduced a system where service centres are responsible for their own volumes and filling their own gaps, judging them on their own KPIs and profit and loss accounts.
“We’ re also asking them to optimise what their channel strategy is because, to be frank, they’re the guys who know best in terms of planning for their service centre,” says Lloyd.
The carrier is also looking to take advantage of the online retail boom with the launch of a website aimed at C2C sellers, which can be booked online. Lloyd says the website is going through its soft launch stage and that it should be up and running by August 2013.
“There are a billion parcels annually being sent across the B2B and B2C markets, but there [are] also another 400 million that go across Post Office counters from online market places such as eBay and Amazon and just C2C parcels,”Lloyd says. “So now we have a proposition in terms of our own retail website as well as our joint venture, CollectPlus.”
But Lloyd’s biggest challenge of all will come during the 2013 Christmas peak, which many carriers are already forecasting will be the busiest yet as online retailing continues to grow. Last year, Yodel’s peak volume during its busiest week was 4.25 million parcels, which it was able to deliver successfully and Lloyd tells MT that it is planning to maintain a similar capacity this year. He hopes to have a good idea of the volumes it will be able to handle during the December peak early in the summer and urges retailers to sign up as soon as possible, as it will have a “drop dead” cut-off date for securing capacity.
Peak opportunity
“Personally I don’t think peak is a profit opportunity,” he says. “It’s part of our proposition, so if we want volume all year round we’ve got to be able to handle peak capacity. That’s how it plays for the retailers.”
“We’re not going to give somebody capacity just for the peak. The pain we go through to deliver that is to secure your volume through the rest of the year,” he adds pointedly.
Although pleased with the way Yodel performed during last year’s peak, when it delivered 14 million parcels in December, Lloyd saysthe carrier began planning for this December the week after Christmas 2012.
“Given that we had a pretty good peak last year, and that’s where our current sales growth is coming off the back of, we’re confident that we will have a successful peak again,” he says. “We’ve already begun our peak planning process [where we] approach clients, get their forecast, and then there’s a bit of to-ing and fro-ing in terms of what that peak capacity needs to be. But, given that we’ve not got significantly larger than we were this time last year, I think we can anticipate that peak will be much the same.”
Lloyd tells MT that Yodel is also continuing with getting its network of service centres to the number it needs. It will continue to close and open new service centres during the year, but he says the final number will remain the same as it is currently, at around the 55 mark nationwide.
But a pressing issue that Yodel and most other firms in the sector are seeing is the issue of B2C parcel rates. In a market where consumers want the lowest price for delivery as possible, but yet still demand a premium service, Yodel is looking to drive high value sales rather than high volume, which is where its service centre-based sales initiative comes in.
Lloyd says: “Sales are going very well for us and we’re focusing on value instead of just volume, so looking at areas of the market where we can get higher prices.”
Headway
Despite only being at the carrier for 12 weeks at the time of our interview, Lloyd has already made headway with some of his plans to improve the overall customer experience. Yodel has recently launched its Customer Experience Academy, which will see an initial 1,000 drivers and service centre staff trained in providing the best possible ‘doorstep experience’. It also plans to extend the training to its self-employed couriers, owner-drivers and agency partners, who will be able to take a ‘lite’ version of the course.
Lloyd has also initiated a crackdown on erroneous scanning by drivers and service centre staff, which in turn affects customer tracking data and often leads to complaints. To help combat this, Yodel has launched a system which flags up if the scanning does not correlate with the geocode of the parcel and he says the carrier will have a “no-tolerance” approach to incorrect scans.
“From a customer’s perspective, if a parcel doesn’t turn up that’s one thing, but if a parcel doesn’t turn up and the information you’re seeing online conflicts with your experience, then you’re not disappointed, you’re incandescent,” Lloyd says.
It is also cracking down on failed deliveries and improving the level of information it gives customers when a card is left at their address.
Leave safe
Although Yodel does offer a ‘leave in a safe place or with a neighbour’ service, Lloyd says end customers get frustrated when the carrier is unable to leave parcels because the retailer has requested a signed-for service.
Lloyd says: “There are not enough explanations on the cards to say ‘we couldn’t leave it because we needed proof of delivery’. People are calmer when they know the actual reason that a parcel hasn’t been left with a neighbour while they were out and that will prevent a call going through to the contact centre.”
On the flipside he adds that Yodel often receives complaints when retailers specify a ‘leave safe’ service, when the customer expected to take receipt of it personally. He says customers instead blame the carrier when the parcel is left.
“The customer doesn’t necessarily know that the retailer has specified it as a ‘leave safe’ parcel so if they are not in we will leave the parcel as instructed. The retailer is prepared to take any extra loss on the chin as trade off for a cheaper service and almost guaranteed success on the first delivery attempt. However from a customer perspective that isn’t necessarily that great.”
While Lloyd has big plans for Yodel and has already made headway with its turnaround plan, he knows that the parcels market is not easy.
“I think that carriers have a way to go in terms of catching up with the internet. We’ve got the brand new world of the internet and [customers] have this perception that [it’s] easy, but hidden behind you are the crash on the M6, the traffic jam on the M25,a dropped parcel and all those things that happen in the real world,” he says. “It can be irrational, completely without logic and that’s the game.”
