Practical tips to save money (without losing customers)


If spending must be cut, then the best we can do as managers is ensure that it’s cut in ways that position our business better relative to competitors, rather than worse.   Jan Hofmeyr shares his thoughts with us.Here are four practical suggestions:

1. Knowing what can and can’t be cut

It’s a well known fact that the gains that come from specific investments in CEM (e.g. employing more frontline staff so that queues are shorter) may not be symmetrical with the losses that result from cutting them. In good times, our focus tends to be more on the upside, i.e. on what investments we should make. In bad times, by contrast, the focus should be rigorously on the downside, i.e. on being certain what it might cost to cut certain services. The winning businesses will be those that have the best insight as to what must be maintained and what can be cut.

2. Do not break a promise…

… unless you absolutely have to!

Human beings the world over respond very badly when promises are broken. An obvious target, in this regard, are loyalty programmes. People see loyalty programmes as promissory notes. They are the business’s way of saying ‘thank you’ for spending that’s already occurred. If you have to ‘break your promise’ (as it were), bear in mind that people will take it personally.

3. Symbolic rewards count for more

This is a simple tip that goes for good times and bad. It’s based on the observation that people often respond more strongly to symbolic rewards than sheer monetary rewards. This is especially useful when it comes to high-value customers. How do you reward someone who is wealthy? A cash rebate may count for little. But a similar-sized donation to a needy charity, especially in bad times, may count for a lot more. And don’t bother to spend money on expensive customer junkets.

4. We’re all in this together…

This is perhaps the most important piece of advice I can offer. Businesses are under pressure in recessions because their customers are under pressure. One of the most important things you can do is signal to your customers that you understand the problems they may be having; and respond by trying to accommodate them. In many businesses this may mean that the decision has to be taken away from machines for a while (many businesses have handed decision making over to machines, scoring systems, etc.). Flexibility and service innovation will be appreciated in tough times.

Conclusion

It’s important to remember that it’s not just your business that’s challenged by a recession. All businesses are. All businesses will therefore be facing the challenge of what to continue and what to cut. Usually, there is plenty of ‘fat’ than can be cut (from head office, for instance) as the good years come to an end. Perhaps the most important lesson is: don’t treat CEM as the first stop. It is the marketing space where you interact with your customers. Put yourself in their shoes and appreciate how much you have to gain by being smarter than your competitors.

This has been taken from a large publication called “The Importance of the Customer Experience in a Down Economy” – available free from www.customerfutures.com/downeconomypublication.


Jan HofmeyrJan Hofmeyr, Ph.D., is the International Director of Innovation of Synovate’s Brand and Communications practice. He is headquartered in South Africa.

Published On: 28th Jan 2009 - Last modified: 22nd Mar 2017
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