The red pen is out in earnest. Between soaring inflation, the lingering impact of the global pandemic and supply chain issues, executives and managers around the world have been told to prepare for tough financial times and that means taking a serious look at where money is being spent and, more importantly, where it can be saved. There is nothing quite like a budget paper covered in red ink to send a chill down the spine of a business unit or team, let alone customers who fear that cost-cutting will inevitably lead to poorer service.
What many people fail to realize is a strategic approach to cost reduction can actually lead to a better customer experience. It is not about cutting costs for the sake of cutting costs but identifying processes and areas of a business that result in a poor CX despite the fact they require significant injections of cash. They may be inefficient, outdated or even redundant but a healthy bottom line has meant they have been able to avoid scrutiny.
An economic downturn is an ideal opportunity to target such processes and embrace systems, tools and solutions that help eliminate inefficiencies, increase productivity and ultimately improve customer satisfaction and loyalty – all while saving money.
Customer experience (CX) has rightly become a business buzzword in recent times, even earning itself the easily identified acronym of CX. Defined as everything that affects a customer’s perceptions and feelings of a business, research has shown that customer experience has overtaken both price and product as the pivotal reason people remain loyal to businesses. It is not about one key moment but the total of every exchange no matter how minor and even if it does not lead to a purchase. Be it a call to a contact center, hearing an interview with the CEO or something as simple as paying a bill, one’s customer experience rises – and falls – based on every interaction they have with a business.
Needless to say, organizations that thrive in customer experience management are well rewarded for doing so. One study found that consumers who have a positive CX are 54% more likely to make another purchase, while those who enjoy a great customer experience are five times more likely to recommend a brand to other people.
Given such numbers, it is little wonder modern companies are investing a lot of time and resources into building and implementing winning CX strategies. When doing so, however, they should not only focus on where to dedicate more funding but remember that reducing costs in select areas can also lead to a better customer experience.
When business leaders turn their attention to cost reduction, they typically start by looking for departments and processes that are inefficient or failing to operate at an optimum level. The irony is that when they consider how to enhance customer experience service quality, it is inevitably the same areas that they identify as requiring an overhaul.
Rather than being detrimental to CX, strategic cost-cutting should be viewed as an opportunity to use technology or better resourcing to reduce the friction and hurdles that so often cause customers to walk away from interactions with negative feelings. From being forced to repeat their details on phone calls to wading through unhelpful websites, it is so often the little things that can prompt big frustrations for customers – and manifest into big headaches for businesses.
Customer dissatisfaction is a fast track to customer churn, with almost 70% of consumers listing bad customer experience as one of the primary reasons for walking away from a business. Improving efficiencies can help stem that flow and, in a modern world, the key to improving efficiencies so often aligns with introducing systems or employing strategies that cost less and deliver more.
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Ultimately, it is all about balance. Cutting costs will end in heartache if it means a significant drop in positive customer experience, just as a huge investment in CX is only sustainable if it is done in a cost-effective manner. By factoring customer experience into the cost-reduction conversation, executives and managers can ensure that two of the keys to business success are top of mind. Better still, they will emerge from any downturn with the organization not only in a stronger financial position but with an increased number of loyal customers by their side.
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