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 They may be inefficient, outdated or even redundant but a healthy bottom line has meant they have been able to avoid scrutiny.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.
Why is customer experience important?
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.
How can cost-cutting improve CX?
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.
How can you reduce costs while improving CX?
The dream for any business is to find ways to deliver premium service for the lowest cost. Here are five tips for making that dream a reality.
- Reduce the length of phone calls: there is a reason ‘average handling time’ or AHT is one of the key metrics for contact center managers. A few unproductive moments spent on a customer interaction may seem insignificant in isolation but when combined with thousands of other ‘wasted’ moments, the cost can soon become significant. Utilizing the likes of interactive voice response systems and knowledge management tools can help agents speed up calls, let alone investing in technologies that enhance the ability for customers to self-serve. Along with reducing costs, such options enhance customer experience by allowing consumers to spend less time in the contact center world.
- Use automation for repetitive tasks: the greatest asset any business has is its people and that is why they should spend their time doing the most valuable and rewarding work possible. Solutions such as robotic process automation (RPA) are revolutionizing the traditional workplace by using cutting-edge software to tackle repetitive and time-consuming tasks in a more efficient and accurate manner than humans ever could. Along with being able to operate 24/7, the potential to eliminate expensive errors and increase productivity without hiring is a financial winner. Crucially, automation also frees employees to spend time on more meaningful tasks and initiatives that involve directly engaging with consumers, thus enhancing customer experience and improving brand perception.
- Embrace outsourcing: a common mistake many businesses make when talking about cost-cutting is reducing their workforce. While a lower wages bill may be a short-term sugar hit, the risk of a long-term headache is significant given it puts them in danger of future labor shortages and being unable to meet demand. The best way to manage workforce resourcing without impacting long-term goals is to partner with an outsourcing provider that can recruit, train and nurture staff at a fraction of the cost of doing so in-house. The cost of living in outsourcing hot spots such as the Philippines means companies can save up to 70% on fixed costs such as wages, technology and infrastructure. It is also not solely about saving money, with quality providers combining passionate staff, best-in-practice tech and high-end systems to improve their customer experience for clients of all shapes and sizes.
- Invest in data capture: it may seem odd to promote new investment in a cost-reduction article but when it comes to data, it is an investment that will deliver long-term rewards when it comes to both saving money and increasing customer experience. Relying on guesswork has never been the best way of doing business and all the more so in a world where we have never had more access to data and insights into customer behavior. Taking a proactive approach to collecting and managing data can help create a personalized experience that has the power to increase loyalty and boost profits. Quality data practices also allow businesses to identify potential problems and take whatever action is needed to mitigate unnecessary expenses.
- Promote remote working: where working from home or remotely was once considered a luxury for a lucky few, the global pandemic has inspired a revolution. A survey of 400 U.S. and UK contact center and customer experience leaders showed 69% of agents worked in a physical office in 2020 but that statistic had flipped within a year, with 64% of agents working remotely in 2021. While that number has understandably fallen as the pandemic eases, many businesses are continuing to enjoy the cost savings that come from allowing remote work options as it means less money being spent on office space, equipment and other infrastructure. Meanwhile, the flexibility of remote work is playing a role in creating more motivated and enthusiastic workers, which is a vital driver for improved CX.
Great CX is all about balance
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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