5 Ways 4PLs Can Attract and Retain New Customers

As third-party logistics (3PL) providers look for innovative, efficient, and cost-saving ways to meet changing customer demands within a complex supply chain, many are moving into fourth-party logistics (4PL) companies.

If you’re a new 4PL, or an existing 3PL thinking about expanding into 4PL logistics services, the decisions you make today to win customers, and the strategies you develop to retain them could give you a competitive edge in a market that’s expected to generate nearly $112 billion within the next 10 years.

What are 4PLs?

4PLs manage the entire supply chain for B2B, B2C, and C2C customers, handling inventory and warehouse management, transportation, shipping and receiving, and other supply chain needs. 4PLs are sometimes also called lead logistics providers (LLPs). 4PLs may manage multiple independently operated 3PLs to meet customers’ geographically dispersed warehousing networks.

Why Does a Customer Need 4PL Services?

A business that uses a 4PL for supply chain management usually does so because it understands these specialized logistics companies can handle every aspect of the supply chain more efficiently, often through automation and technologies these businesses don’t have access to themselves. And, fourth-party logistic businesses can offer these services more cost-effectively than a smaller business handling the supply chain on its own.

When a customer outsources supply chain management to a 4PL, it frees that company up to focus on what they do best—operating and scaling their business.

Who is a 4PL Customer?

Any business of any size—from a small and mid-size business (SMB) to a large-scale enterprise—in any industry may benefit from 4PL services, but especially manufacturers, retailers, healthcare, and ecommerce businesses.

4PL customers generally need outsourced logistics for end-to-end supply chain management. Traditionally, 3PLs handled many of these services, like order fulfillment, inventory management, and warehousing. However, after the coronavirus pandemic up-ended the global supply chain, many 3PLs didn’t have the resources or scope to meet customers’ changing needs, especially in light of supply shortages and stalled or fully halted transportation lines.

Attracting New 4PL Customers

Attracting new 4PL customers is challenging. What works and what doesn’t is often determined through a lot of trial and error. So, before building strategies to reach new customers, we suggest spending some time with department leaders discussing your current capabilities.

• What services can you effectively offer now?
• What’s your plan to scale and expand services, and what will that include?

It may also be helpful to do a competitive analysis to better understand what types of services your competitors offer, who they’re targeting as customers, and which strategies they use to attract new business. Are they effective? Are there gaps your company can fulfill now or as you scale?

Once you understand your 4PL capabilities, both short- and long-term, you can start working toward identifying your target market. Ask:

• Are you targeting a specific type of individual or position within a company, or are you targeting a specific type of company and then will customize your strategies based on those companies’ unique service buyer types?
• Since the 4PL industry is going to be more competitive over time, do you have a specialized area or niche market you want to serve? For example, could your business be more effective if you laser-focused on healthcare or manufacturing? Or would it be better to diversify customer types
• What does your target 4PL market do?
• Where are they?
• What are their pain points and how can your business solve them?

With insight into your target market, take some time to get to know your customers. If you already have 4PL customers, or 3PL customers that can benefit from 4PL supply chain management, ask:

• What do these customers do?
• Which industries are they in?
• Which services are they currently using?
• Which additional services do you have to better meet their supply chain needs?

Asking these types of questions early on is important because the answers will set the foundation for your marketing strategies. This will be key to attracting new 4PL customers.

While tailoring your marketing efforts to your ideal market and customer type, focus on your company’s value proposition. This is what sets you apart from your competitors. Have well-thought-out and mission-focused answers to questions such as:

• What makes your 4PL different from other 4PLs?
• How can your 4PL better meet customer needs versus your competitors?
• How can you more efficiently address their pain points (and save them time and money) compared to a 3PL?
• What capabilities do you have that other 4PLs don’t?

While sales cold-calls and shotgun style marketing can be effective in getting your 4PL brand into the market, there are some other strategies you could employ to reach new customers.

Networking, for example, may be one of the lowest investment, highest return opportunities for you to recruit 4PL business. Attend industry events such as trade shows or other gatherings. Connect with business executives in your ideal market. Get to know them. As you build these relationships, your network should expand, increasing opportunities not just for you to reach potential sales leads but to turn those leads into new customers with as low churn as possible. Also, as you network, you’ll continue to learn more about your target market and their needs, which can help you flex in your customer attraction strategies.

As you’re starting out, also think of innovative ways to get those new customers in your doors:

• Could you offer special deals or promotions for your services?
• Offer introductory pricing models?
• Package services for new customers?
• Offer other incentives for new customers?

And finally, don’t forget about your employees. Everyone who works for you, even those outside of your sales and marketing departments, can be brand ambassadors. Build a customer-focused culture, encouraging your entire company to spread the word about your services. Consider offering incentives for employees who bring in the most new business.

It’s All About the Buyer

While strategies suggested above are a great starting point to find new customers, there is another area you don’t want to overlook—getting to know your company’s unique buyer personas. Exactly who that is and what they do will likely vary from industry to industry and even business to business, so ask:

• Who makes purchasing decisions for my target customers?
• What is their role within their company?
• What are some common demographics (age, gender, location)?
• How do these buyers choose new services?
• Where do they find out about new products and services?
• How do they make their initial list of new service providers? (i.e. watch videos, take part in demos, social media, advertisements, peer recommendations)?
• Who do they talk to and whose opinions do they value?
• What’s most important to these buyers when they’re vetting new services?
• What influences their 4PL purchasing decisions (for example, budget, brand recognition, what their peers use, etc.)?
• What can your 4PL offer to meet their needs?
• How can you reach your target buyer persona?

If you are a 4PL provider, it is important to understand the profile of the person who makes buyer decisions. By understanding their needs and challenges, you can better position yourself to win their business. And while there is no one-size-fits-all buyer persona for 4PLs, you may find some commonalities:

• Buyer is generally an executive with logistics and supply chain management responsibilities.
• Buyer understands company’s supply chain needs and challenges and is looking for solutions to solve them.
• Buyer has knowledge about the 3PL and 4PL markets, including insight into your competitors and what they offer.
• Buyer will want solutions to resolve pain points more effectively than the company can on its own—and at a cost-savings.
• Buyer will be budget-focused, looking for a flexible 4PL that can adapt to changing needs and scale with them.
• Buyer will be a subject matter expert (SME) in their specific field and will expect the 4PL to be an SME that can proactively offer effective supply chain solutions.

Retaining 4PL Customers

Once you’ve successfully attracted new customers, you’re not at the finish line. Just because a company picked your 4PL doesn’t mean they’ll stick with you. That’s why you can’t lose sight of a longer-term goal: customer retention.

4PL customer retention will be challenging, considering the average churn rate for manufacturing and logistics is 35% and 40% respectively. That means you have the potential to lose up to nearly half of the new customers you recruit. So, how can you keep them happy? How can you retain 4PL customers? Here are a few suggestions:

Focus on the benefits. Your customers likely selected your 4PL because your solutions address their pain points. Many of those challenges will continue to exist throughout your customer lifecycle, so never lose focus on the benefits you bring to them:

• Increased efficiencies
• Single point-of-contact for entire supply chain
• More visibility into end-to-end supply chain
• Use of supply chain technologies and automation
• Cost-savings

And, don’t just tell your customers about these benefits in a generalized or untenable manner. Show them with data, analytics, and reports that connect your supply chain management initiatives with their business goals. For example, Extensiv’s 3PL Warehouse Manager has 60 out-of-the box reports to provide data and insight into how well you’re managing stock status, small parcel transactions, freight summaries, and more. The software also includes an Outbound Productivity dashboard that will give you and your customers near real-time data and analytics. Need even more insight? Add-ons like the Labor Analytics dashboard can help you demonstrate to your customers how well you’re meeting productivity goals and conduct cost evaluations.

Engage with your customers. If you haven’t already, now is the time to adopt a customer relationship management (CRM) tool to collect data about your customers so you can personalize interactions with them. By understanding your customer needs and how they interact with your company, you can ensure you’re offering the correct type of communications at the right intervals and across the appropriate delivery channels about the services they need to address their business challenges.

Continuously provide exceptional customer service. One of the most frustrating parts of working with a new vendor or adopting a new technology is the inability to connect when you have questions or need immediate help. Keep your customers happy by ensuring your customer service teams are available and provide top-quality service. Whether they’re engaging with your customers via telephone, email, chats, social media, or in-person, make sure your team is supported with the information they need to answer inquiries effectively and empower them to be proactive in resolving customer issues. Your customer service may be the most critical piece of keeping your customers happy, thereby reducing your churn rate, and increasing customer retention and your bottom line.

Make being a customer a valuable experience. While your services in themselves should set a quality baseline for your customer experiences, consider initiatives that make your customers feel their continued partnership with you has value. Proactively seek ways to enhance your current offerings with value-added services that go beyond traditional order fulfillment and inventory management, including supply chain customizations. You could also consider building customized packages with special pricing for customers who sign longer-term contracts or routinely renew with you, or create customer loyalty programs that discount some of your services.

Be an SME. Companies outsource their supply chain to 4PLs because they don’t have the time, skilled personnel, or resources to do it themselves. As such, they’re looking to you to be an expert in all things logistics and supply-chain related. Demonstrate to your customers you are a subject matter expert by staying up-to-date on industry trends, changes, new regulatory or compliance issues, and share this information regularly so they don’t have to do the research themselves. You could also use the information to incentivize your customers to opt-in to additional services as needed.

Conclusion

Attracting and retaining new 4PL customers is the key to success for your logistics company. So always be proactive and look for solutions to supply chain challenges before they negatively impact your customers. Be willing to adapt as customer needs change. Poise your 4PL to scale alongside evolving customer needs, and continuously offer trusted, reliable services that make your customers want to stay with you on every step of their supply chain journey by leveraging the right network management technology, like Extensiv Network Manager.

For 3PLs looking to expand into 4PL territory, read our Guide for Creating & Executing a 4PL Network, and visit Extensiv’s Fulfillment Marketplace to find other like-minded 3PLs available to partner in a 4PL network.