3PLs shift software focus to shipper management

3PLs shift software focus to shipper management

3PL Tech.

This shift has really just begun, as 3PLs grapple with the idea of reorienting their systems toward a customer-centric approach. Photo credit: Shutterstock.com.

While third-party logistics (3PL) providers have tended to concentrate technology investments in operational or back-office systems, they are shifting their attention to customer relationship management (CRM) software.

With 3PLs traditionally overlooking CRM, the increased attention is bound to benefit shippers. For one, it means freight forwarders and brokers are funneling their technology investments toward systems that better address how they serve their customers. Second, modern CRM systems designed around the needs of logistics companies enable 3PLs to better integrate sales efforts with operational tools, such as transportation management systems (TMSs). And third, a CRM-based approach theoretically should reduce the resources dedicated to data entry and the associated errors with rekeying data.

This shift has really just begun, as 3PLs grapple with the idea of reorienting their systems toward a customer-centric approach. Non-asset-based logistics companies have always seen their role as serving the customer, but the manner in which they targeted new customers and retained existing ones was generally handled in a manual, ad hoc manner, several 3PLs and CRM software providers told JOC.com.

It’s probably too soon to say that a significant part of the industry is using CRM as a backbone system — that’s still the territory of incumbent enterprise software companies such as WiseTech Global, BluJay Solutions, MercuryGate, and Descartes.

But the ubiquity of software-as-a-service (SaaS) CRM solutions — most notably Salesforce — has presaged the emergence of logistics-specific tools that help brokers sharpen their sales pipelines and better serve existing customers. This new class of logistics CRM tools uses the cloud to connect an entire 3PL more seamlessly, whether on an annual global ocean freight tender or a single trucking transaction.

Better relationship views

It’s also designed to tether the events happening in a TMS more closely to the way a sales representative interacts with a customer. For instance, a sales representative at a forwarder today might walk into a conversation with a shipper armed with little information about that shipper’s past experience with the forwarder. Or, if there is information, it might be collected in an ad hoc way, with scraps of email conversations or spreadsheets detailing volume.

But a CRM integrated with operational functions allows that sales representative to have a detailed view of the company’s history with that customer. That means all the successes and failures are viewable within a single workflow in real time.

“Every single piece of information I need about my shipper is in the CRM,” said Andrew Silver, CEO of Chicago-based domestic freight brokerage MoLo Solutions, which uses logistics CRM software provider Revenova. “Whether I’m pursuing them or active with them, all that data lives in that one browser spot. Salesforce is a phenomenal CRM, but if I have that and XYZ TMS, I don’t know how they marry.”

The biggest challenges Silver sees in the brokerage world is personnel “handicapped by operating on numerous platforms. There’s Excel over here, CRM over here, TMS over here, and they don’t mesh well. That’s costing them time and opportunities,” he said. “It’s got to be that while I’m on the phone with someone, I can take that information and execute a decision in a matter of seconds. I would attribute a lot of our growth to that.”

Traditionally, forwarders and brokers have purchased CRM systems as separate tools, or as basic add-ons from another system they might be using, including TMS or backbone brokerage or forwarding systems.

Brokers say those tools are little more than contact and email management systems. Many TMSs have such CRM extensions, but the efficacy of those tools is often marginal.

“If it’s only handling contacts and accounts, then it’s masked as a CRM, but it’s not really a CRM,” said Ricardo Gonzalez, vice president and chief technology officer for Miami-based GLT Logistics, a domestic broker and 3PL.

GLT used two such CRM add-ons with previous TMS providers before moving to Revenoa a year ago. “We used those CRM for opportunities, but it was totally disconnected to the operational system. If we agreed on a quote in the CRM, we had to input it manually in the TMS. It didn’t return data back to the CRM. You can’t have a true CRM if it’s not connected to your other systems.”

Systems connected

For instance, Gonzalez said a customer can update internal fields without GLT having to touch the system. Salespeople can pull data in the field without having to touch the portal. “And that triggers marketing — it’s like the machine helping you make decisions by connecting the dots within the same system,” he said.       

Perhaps no company has pushed the idea of strategic CRM into the consciousness of the logistics industry more than Winmore (the company recently rebranded from its initial name, Lanetix). Winmore provides logistics-specific CRM tools for brokers and forwarders, including a bid and tender management application designed to link global teams through a collaborative environment as opposed to discrete one-to-one email interactions.

Winmore chief marketing officer John Golob said multipurpose CRM platforms have traditionally pushed information to customers in the form of email blasts, whereas global forwarders actually need to pull in shippers by using data and analytics to prepare tender responses that are more likely to drive gross margin in the right lane.

“An outbound email-based engine doesn’t work in logistics,” he said. “What we’re positioning is an inbound engine, focusing on customer-shipper acquisition to increase RFP [requests for proposals] and tender win rates, not tell you who opened your emails.”

Golob emphasized the role cloud-hosted applications play in this process in that the distributed nature of cloud computing allows teams across regions — whether domestic for a broker or globally for a forwarder — to enter or access relevant data around a customer when trying to land a new customer or expand business with an existing one.

“It’s the inherent visibility of information, and having cloud access is especially important,” he said, adding that the “rising tide of APIs [application programming interfaces]” with key forwarding software providers WiseTech Global, MercuryGate, and Descartes only helps. Logistics CRMs often need to integrate with those backbone systems that forwarders have already invested in.

The collaborative nature of modern logistics CRM is also key, Golob said, because it ensures teams within the same forwarder but with different agendas get on the same page prior to submitting a tender to a customer. For instance, a tender to a large global shipper might require input from the forwarder’s bid desk, commercial, pricing, legal, product, and procurement teams.

The CRM, in effect, gives them “a digital watercooler,” Golob said, with different channels for each tender to contextualize the information.

A common communication standard for global forwarding sales teams these days is Whatsapp, the Facebook-owned instant messaging mobile app. For companies concerned about safety of their proprietary information, however, that’s not the smartest stopgap, Golob said.

A slow transition likely

There’s hardly a stampede yet for these tools, nor is there the plethora of providers like in the fragmented TMS segment, but it’s not unreasonable to expect the number of logistics CRM providers to grow.

First Freight, a recent entrant, is targeting midsize forwarders with a low-cost per-user, monthly subscription approach that pushes APIs in lieu of expensive systems integrations. The founders of Los Angeles-based First Freight came from a sales background and want to build an evolutionary update to cloud-based Salesforce.

“Salesforce is too generic in logistics. People won’t click it,” said Todd Collins, First Freight’s executive vice president of sales and marketing. The Salesforce distribution model — reseller networks that charge for sector-specific customizations — doesn’t work economically for small to midsize forwarders working on tight margins, he added.

“We saw the opportunity to build something different and industry-specific,” Collins said. “It unifies the sales process globally for these forwarders. Even a single sales guy needs a tool to help them understand what deals they are pursuing at what companies. It provides a capture of the basic sales data and then shares that data with management. So, everyone can participate in a deal in real time.”

It’s important to note that many forwarders are using Excel to manage these pipelines and tenders, but as Golob said, “Excel is built for data, not workflows.”

The question going forward is how the benefits of logistics CRM trickle down to shippers. For one, the ability to link CRM tools to operational tools — whether natively or via APIs — should enhance the ability of a forwarder or broker to serve its customers. Those providers would come armed with better information about the shipper in all interactions, from initial sales efforts to transactional interactions once onboarded.

Second, all the CRM users and developers JOC.com spoke with agreed that connecting CRM to operational systems theoretically would reduce data entry. For instance, data entered into a CRM portal — whether by the customer or 3PL — could be applied directly to tender or shipment execution systems. Or data entered into a TMS could flow back to the CRM to allow sales representatives to capitalize on the data typically only visible to the forwarder’s operations people.

Silver said the use of a CRM-oriented TMS simply allows his employees to be available to shippers more often. “A lot of TMSs built for brokers are really just built for asset-based companies, with add-on broker features. The things we liked about this system is the CRM doubles as your operating platform. I can do other things and book loads.”

As Gonzalez said, when the CRM is unconnected to the TMS, those data need to be re-entered.

“It’s a misconception of what a true CRM is and how it’s evolved,” he said. “Any system will handle a contact and an account, but how you handle those relationships within the other parts of the business and how you visualize it is more important. The types of decisions we take for shippers are going to be quicker, better, more optimized, with better rates.”

In fact, Gonzalez thinks the term CRM is outdated. “It’s taking operations and how it relates to other departments. You can make meaningful decisions for the customer — you can analyze it holistically. Get them better pricing or consolidations opportunities because every area of the company is connected in the same place.”  

Contact Eric Johnson at eric.johnson@ihsmarkit.com and follow him on Twitter: @LogTechEric.




Great article Eric, thanks for the great info and insights! Well done.