How Great Inventory Management Leads to Great Customer Service

November 21, 2023 - 11 minutes read

Inventory management means much more than data and reports.A customer service team

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We all know great inventory management software can improve efficiency and visibility by making accurate inventory data available at all times and helping you keep track of complex order fulfillment processes. But can inventory management really impact the customer experience? Absolutely.

Customers want high quality products at a fair price delivered to them quickly, and that is what inventory management is all about. Delve a bit deeper into some important inventory management functions and you’ll discover just how intricate these connections really are. 

“The best customer service is if the customer doesn’t need to call you, doesn’t need to talk to you. It just works.” Jeff Bezos

The humble beginnings of customer service

Popular company slogans like “the customer is always right” and “customers are priority one” show the importance businesses place on those who provide their lifeblood. The modern concept of customer service as a series of important interactions before, during, and after a sale first emerged in the 1760s, after the Industrial Revolution. Over the years, technological advancements like the telephone and the internet have made it easier for vendors to communicate with their customers regularly.

With so many channels available for customers to communicate problems, questions, or praise, customer service is now recognized as the face of most retail businesses. When customers need answers, you need to have the right information at your fingertips, and this ready data source is one of many ways inventory management contributes to great customer service. Inventory management features that directly impact the customer experience include:

  • Return management to ensure customers get the product they want and need
  • Automation to speed up order processing and reduce errors
  • Mobile POS capabilities that bring versatility and flexibility to the customer experience
  • Multi-channel commerce to give customers more integrated online and in-person options
  • Customer Relationship Management (CRM) functionality to personalize the customer experience

5 ways inventory management enhances customer service

Each inventory management feature plays a unique role in optimizing customer service, with the collective result being satisfied customers and repeat sales. 81% of people claim that receiving good customer service makes them more likely to make another purchase. With so many online and in-person options to choose from, discerning customers are no longer tolerating the long waits, delayed shipments, incorrect information, or lack of flexibility that spell poor customer service.

Let’s take a closer look at the ways inventory management can have a meaningful impact on customer service.

1. Order fulfillment

Slick advertising slogans and sales campaigns mean nothing if customers don’t get what they ordered where, when, and how they expected it. That is why order fulfillment capabilities are so important for establishing a base of satisfied customers who spread the word about your business through online reviews and word of mouth. Inventory management software helps to improve your order fulfillment processes by:

  • Optimizing picking and packing to reduce errors
  • Tracking orders from beginning to end and sharing the data with customers
  • Supporting problem resolution when orders are damaged, lost, or delayed
  • Ensuring adequate stock is on hand to meet promised delivery dates

2. Pricing strategies

Customers will pay a premium for high-quality products and great customer service, but that doesn’t mean pricing has lost its relevance in the digital age. Competitive pricing can attract first-time customers who will remain loyal to your brand based on a combination of value and service. Pricing strategies supported by inventory management include:

  • Dynamic pricing: Pricing based on real-time supply and demand has spread from the travel industry into E-commerce and many other retail channels. This pricing strategy can boost profits but must be done skillfully to avoid alienating customers. Inventory management software can help you make the right dynamic pricing decisions.
  • Discount pricing: Well-timed discounts and promotions are good ways to reduce excess or unwanted inventory. Discount pricing requires analysis to optimize the price point and real-time inventory data to identify the right products to mark down.
  • Seasonal pricing: Inventory management software can help you analyze seasonal demand and cost of goods fluctuations to develop cost-effective seasonal pricing strategies that meet customer expectations.

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3. Information accuracy

Access to reliable, real-time inventory data supports customer service in many ways. Perhaps most importantly, accurate product availability data will prevent customers from focusing on unavailable or long lead time items. Up-to-date inventory information also benefits customers and retailers by:

  • Enabling customer service reps to track down answers on orders and history efficiently
  • Providing accurate delivery estimates throughout the process
  • Reducing errors that can lead to returns, exchanges, and dissatisfied customers
  • Ensuring quantities, pricing, and availability presented on different platforms (or in store) are consistent

4.  Segmentation  

Retailers, especially those with multi-channel commerce operations, benefit from segmenting products based on various criteria so that the right offerings reach the customers most likely to be interested. Customer segmentation helps you design the customer journey based on these preferences and demographics, while market segmentation helps you focus on a specific niche.

Inventory management software can help you create and execute segmentation strategies that work best for your products and customers. Inventory allocation, pricing, marketing, and order fulfillment are likely to vary for each segment. This variation will only increase as AI begins to shift marketing strategies from segmented to personalized. The power of inventory management software helps you manage each subset of your business effectively.

Take some time to play around with segmentation – if you can pinpoint your best and worst customers it’s well worth the time.” Des MacHale

5. Data analytics

The best inventory and order management software packages don’t just keep track of stock levels and order status. They can also use customer data collected over time to analyze trends and form deeper insights into customer preferences. This helps you forecast more accurately, prevent overstock or stockout conditions, and tailor marketing and promotions.

Having this data source available also allows you to personalize customer service practices and provide support in ways that best suit each customer. The customer feedback you collect becomes part of an ongoing continuous improvement loop designed to enhance customer experience and brand loyalty over time.

Creating a customer service toolkit

Eliminating customer service problems and building a customer-focused brand requires trained and motivated resources armed with the right set of tools. Communication, real-time information, and flexibility are the common traits of all important customer service tools, and inventory management software is no exception. A well-rounded customer service toolkit also includes a few other items:

  • Surveys. If your customers are not reaching out to you, reach out to them. Create non-intrusive surveys and send them to select groups of customers to yield actionable results.
  • CRM. Customer relationship management (CRM) tools help you stay connected to customers while storing, organizing, and analyzing valuable customer information throughout the relationship.
  • Quality assurance. Quality control means verifying order accuracy as products leave your door. Quality assurance practices use customer feedback to continuously improve products and processes so that less inspection is necessary.
  • Live support. Chatbots have certainly improved, but there is still no substitute for live customer support. Well-trained customer service representatives can use inventory management platforms to answer questions faster.

Customer service and inventory management: Final thoughts

The conventional notion of customer service, with rows of busy telephone operators subduing irate customers, has endured. Today, the intelligence and access afforded by CRM and inventory management software are changing the equation by moving customer service practices from reactive to proactive.

Agiliron inventory management software provides the advanced features you need to build your brand through optimized customer service. We also offer full-featured CRM software as part of our comprehensive and versatile suite. By unifying customer data from across all sales channels, we help you improve your sales management and marketing campaigns while enhancing customer support with real-time access to order, inventory, and product pricing information.

Outstanding inventory management is the hidden gem behind outstanding customer service, and this trend will continue. Schedule a consultation today and let our solution experts help you discover more exciting ways to level up your own inventory management and customer service toolkits.