Flexport’s recent developments, including the departure of Dave Clark, layoffs, decreased revenue, and strategic shifts, have raised concerns about the company’s future. This situation aligns with our earlier prediction that some digital freight forwarders might face challenges. If you’d like to explore our analysis further, you can find our article here. However, we are currently observing two concerning trends on social networks. Some individuals may wrongly assume that every logistics tech company is worthless or even a scam, a perception that we firmly believe is inaccurate. Additionally, due to Flexport’s substantial investments in marketing-related activities, there may be a growing misconception that marketing and public relations are detrimental to the broader logistics community, including trucking, freight forwarding, third-party logistics providers, and other LSPs. It’s important to emphasize that this perspective is far from reality. This article will highlight several key takeaways that logistics business owners can learn from Flexport’s experiences and other general mistakes that must be avoided.
The Positive Takeaways from Flexport
We strongly believe that Flexport has imparted a valuable lesson to the logistics community, a lesson that has long been evident in various service sectors. This lesson is crystal clear: marketing and public relations are potent tools. Refraining from promoting exceptional services is a critical misstep. While it’s true that Flexport may have allocated excessive resources to marketing and faced other challenges, it undeniably demonstrated the effectiveness of this approach in attracting significant clients.
To be candid, in many instances, Flexport’s marketing and sales efforts were the primary distinguishing factors setting them apart from other freight forwarding companies, even when those competitors also possessed advanced technologies. While we cannot directly attribute Flexport’s heightened marketing efforts to a universally positive shift in opinions within the broader logistics sector regarding marketing, there is an unmistakable change in sentiment heading in the right direction.
Furthermore, Flexport’s hype has drawn attention to logistics technology, attracting investors who have benefited other logistics tech firms. This is advantageous for the entire logistics sector, as innovation, when done right, is crucial for any industry. While opinions on Flexport’s ultimate success may vary, they have demonstrated that securing significant funding is attainable.
Lessons to Learn
Now, let’s delve deeper into what we believe to be mistakes made by Flexport (and generally, by digital freight forwarders) and offer insights that can be valuable for newcomers to the logistics tech space and the broader industry.
Service Trumps Marketing
Expanding on prioritizing service over marketing, it’s crucial to understand that the foundation of successful marketing and sales is delivering exceptional service. This principle has been a cornerstone in the world of business for decades.
The initial step in any effective marketing strategy is conducting a comprehensive analysis of market trends and ensuring that the proposed service aligns with the validated needs of the target audience. Here’s where Flexport appears to have deviated from the ideal course. Rather than first ensuring that their service adequately met the expectations and requirements of their customers, they seemed to prioritize creating a formidable sales and marketing apparatus.
While Flexport did indeed have a product to offer, the quality and uniqueness of that product may be a subject of debate, particularly when examining feedback from social media and other sources. It is evident that some individuals have expressed doubts regarding Flexport’s services, which raises concerns about whether their product genuinely met the high standards expected in the logistics industry.
This serves as a poignant reminder that regardless of the scale of marketing efforts or the sophistication of the sales apparatus, the foundation of any successful logistics business must always be rooted in delivering a service that not only meets but ideally exceeds customer expectations.
Accurate Marketing Matters
Understanding the far-reaching consequences of making and promoting statements that do not align with the reality of your services or industry is essential. Accuracy is the cornerstone of trust in business, and in the case of Flexport and other logistics companies, it is no different.
One notable example of this is the early claim that traditional freight forwarding relies exclusively on outdated paper-and-pencil methods. While it may be true that digitalization and technological advancements have significantly transformed the logistics sector, it is an oversimplification to suggest that traditional freight forwarding is entirely stuck in the past. Such a sweeping assertion has provoked controversy and skepticism, particularly among those who deeply understand the industry.
In a world where information spreads rapidly through digital channels, it’s crucial to be precise and truthful in marketing messages. Inaccurate or misleading claims can not only alienate potential customers but can also lead to a loss of trust among existing clients. Once eroded, this trust can be challenging to rebuild and tarnish a company’s reputation in the long term.
Furthermore, consistency in strategy statements is another vital aspect of maintaining trust and credibility. Flexport’s recent shifts in strategy, which have created confusion and raised questions, underscore the importance of aligning your messaging with your actions. When a company’s strategy appears in flux or at odds with its previous messaging, it can sow doubt and damage the brand’s integrity.
Understanding Shippers’ Needs
Understanding the actual needs of shippers is a pivotal aspect of success in the logistics industry. It transcends surface-level assumptions and delves into the intricacies of what shippers genuinely seek.
First and foremost, it’s imperative to recognize that shippers are not necessarily clamoring for self-service portals, computer screen visuals of their moving cargo, or single-window communication interfaces.
Shippers yearn for innovations that enhance the ordering process, prioritize efficient issue resolution, reduce errors, and ultimately boost profitability. Companies must scrutinize new services critically to make a meaningful impact in this industry. They should assess whether these services represent true novelties capable of delivering substantial benefits or if they merely offer incremental improvements to the customer experience.
Companies aiming to make a profound difference should not focus solely on creating “nice-to-have” features or gadgets. Instead, their mission should be to develop products and solutions that revolutionize logistics processes and generate significant improvements. These innovations should streamline operations, eliminate bottlenecks, and provide measurable value to shippers.
Balanced Marketing and Sales Budget
In the logistics industry, where profit margins are often razor-thin, judicious allocating marketing and sales budgets is paramount to a company’s sustainability and growth. Flexport’s experience highlights the importance of managing financial resources wisely in this highly competitive field.
First and foremost, it’s crucial to exercise prudence when allocating marketing budgets. Overspending on marketing initiatives, investing in lavish office spaces, or participating excessively in trade shows may not always yield the best returns on investment. While these activities have their merits, they must be approached strategically.
Ensuring that marketing and sales expenses are within the customer’s lifetime value is imperative. Maintaining this balance is critical for sustaining profitability. Overshooting marketing budgets in pursuit of short-term gains can jeopardize long-term financial health.
In addition to budget considerations, hiring sales teams with pre-existing client bases from larger logistics firms, accompanied by extraordinary bonuses, does not guarantee success. Flexport’s experience and other digital freight forwarders illustrate that simply amassing a high-profile sales team may not lead to sustainable growth.
In conclusion, we extend our best wishes to Flexport for a successful future as we firmly believe that every business has the right to thrive and succeed; nevertheless, it won’t be easy at this stage. Moreover, we hope that Flexport’s and other digital freight forwarder’s experiences will ultimately lead to positive growth and evolution of the Logistics technology industry.
Finally, we emphasize the enduring importance of marketing and the pursuit of new avenues for business development within the logistics sector. These are essential components for any company seeking to thrive and make a lasting impact in the ever-evolving world of logistics. By harnessing the power of effective marketing and staying attuned to emerging opportunities, logistics businesses can position themselves for success and contribute to the continued growth and transformation of the industry.
About the Author:
Tomas Ananjevas is a supply chain professional with 15 years of experience purchasing and selling Logistic services and building a supply chain from scratch. He founded a consulting, training, and staffing company that works exclusively with the logistics industry. Tomas is helping logistics companies implement the necessary changes to ensure business growth and continuity. You can arrange a time to talk with Thomas by clicking here.