Frameworks
4 min read
Fire Your Customers: A Framework for 3PLs
Sait Cham
A framework to help you elevate your service and happiness by focusing on the clients you serve best.
A topic that doesn't get enough airtime in the 3PL industry is firing bad-fit customers. When building our 3PL business, we developed a terrible habit of trying to take on every customer profile — whether it was a good fit or not. 3PLs often get a bad rap for shoddy service, but most aren't actually bad — they just don't optimise to avoid poor brand/3PL fit.
With the industry as competitive as it is, most of us feel we can't afford to turn customers away. We convince ourselves "we'll make it work" — but we should really be asking two questions:
Are we actually set up to deliver the best experience to this brand?
Is it worth the headache?
We've all been there: brands we don't serve well, brands who squeeze us for every penny while expecting the most bespoke service, those who take up warehouse space but barely move a box, or the plain rude ones we put up with because they push high volume. But it doesn't have to be this way.
The Lesson We Eventually Learned
At Hutch, it took us a while, but we eventually learned it was all about onboarding the right brands and politely letting go of the ones that just aren't working out. In the long run, it's better for us and it's better for them.
Tool 1: The ICP Scorecard (Ideal Customer Profile)
The first step is figuring out whether a lead is a good fit before you take them on. We created a simple model called the ICP Scorecard, a quick way for our sales team to size up a lead based on hard and fast rules. After an initial discovery call, the team plugged in what they'd learned and it spat out a score out of 50.
We had a range of criteria, each weighted differently based on importance. Volume, for example, is key, so it impacted the score much more than parcel profile (large letter vs small parcel).
The brands we loved: low SKU, high volume, a great orders-to-storage ratio and not too much stock sitting in the warehouse.
The clients we tried to avoid: high SKU, high returns and low volume.
It's not absolute and served as a guide, but it's pretty accurate and worked well for us.
Tool 2: The Client Walkthrough
Sometimes a customer comes in as an ideal fit but becomes a bad fit over time. Here's how we mitigated against that.
We scheduled a quarterly session called the Client Walkthrough. The whole team, warehouse managers, account managers and more, would huddle up and review each client. We used a similar rating system to the ICP Scorecard, but at this stage we were also asking questions like: How is this client to work with? How easy is their stock to pack? And volume, of course, remained the main factor.
We slotted each client into one of four categories: perfect fit, good fit, bad fit or awful fit.
Bad fits were put on review, we'd tell them to increase their volumes, or we'd ship their stock back (with enough notice to find a new 3PL). Awful fits: we'd start figuring out how to part ways, politely.
The whole team had a say in the process. We also added a twist: everyone was entitled to one "fuck you", essentially a veto, letting anyone give a client another shot if they believed there was potential (as long as the client wasn't deeply unprofitable). This usually came out when someone had a hunch a client was about to see an uptick in volume or had another good reason to keep them around.
Why It's Worth Doing
While the system isn't perfect, it's a solid starting point to ensure you're working with clients you genuinely enjoy dealing with, and doing a great job for.
It also sends a clear message to your customers: we chose you, just like you chose us.
Get the Template
If you want to use the template complete with all the formulas, send an email to sait@getpimento.com.
