Reducing Costs: The Additional Benefit of Focusing On Customer Experience

Are You Reducing Costs Where it May Matter Most To Your Customer?

What better time to write this article than in the current economic malaise.  Companies are cutting costs in response to the continuing economic downturn. It makes sense to tighten the belt when times are tough.  And many companies tell us they are measuring customer satisfaction and loyalty as a means to determine when their internal cuts begin affecting their customer.  Is this a reasonable approach?  Well, in a word ALMOST.  Here’s why:

• Most companies are measuring the wrong factors when it comes to their customers.
• Focusing only on loyalty and satisfaction scores does not tell you the entire story:
- what is causing downward data trending and customer churn, and
- what’s most important to your customer and their business.

If you’re only gathering satisfaction and loyalty metrics, you’re missing a strategic ingredient – the “why” behind trending and crucial customer decisions.

A Customer Guidance System

By focusing on your customer, and utilizing a comprehensive measurement program, you establish an effective guidance system for reducing costs without losing customers.

A comprehensive customer measurement program should encompass:

• The key drivers behind your customer’s purchasing and business decisions. The “why”.
• The key drivers behind loyalty (Likelihood to Recommend), satisfaction (performance), and competitive stance (how your company compares with the competition).
• The expectations of a customer experience (both emotional and physical). Probing beyond the physical: products and services, and into the emotions and senses.
• The gaps between importance (to their business) and satisfaction (performance).

The Emotional Aspects of the Economic Downturn

Keep in mind your customer is facing the same ever-increasing scrutiny on their costs and spending.  If you’re worried, so is your customer. Anything you can do to:

• Demonstrate their investment will meet their business needs (ROI) to eliminate the anxiety and concern from their purchase decision, and
• Construct a purchase experience that your customer will find enjoyable and easy.

To understand the customer experience, requires delving into customer emotional wishes, wants, and needs.  And discern, before you lose a customer, what matters most to retain them as a customer. What’s driving their needs and action?

Are You Spending Money Where It Doesn’t Matter To Your Customer?

The guidance system enables you to clearly distinguish where you can shift emphasis. If you’re thinking of cutting services or programs, first look at it from your customer’s perspective.

For many of our clients, identifying the gaps or disconnects between company and customer perceptions resulted in driving down costs and enhancing the customer experience. We discovered, by talking with their customers, clients were spending money on factors that simply weren’t perceived by customers as valuable or differentiators. In many cases, reallocating resources to matters that were highly important, and leverage points for customers, was either an even trade-off or less costly.

Is it Time to Invest?

Yes, you need to be more in tune with your customers and put them at the center of your decisions to surgically reduce costs in ways that will not impact your most valuable asset – your customers.
In closing, Colin Shaw, founder of Beyond Philosophy, advises: “This is the time to invest.  This is the time to accelerate, not slow down. This is the time to put some space between you and the competition, as those businesses will be slowing down.”

By Sue Morgan
Senior Consultant with Beyond Philosophy.