Monday, 28 February 2011

Cost Cutting

With the current economic situation, people are cutting costs to increase productivity or competitiveness, increase profitability or just to stay in business.

In many cases, the highest cost of an organisation is salaries and any related taxes (Employers’ National Insurance Contributions in the UK, for example).

When it comes to cutting costs of any sort, painful decisions are needed. However, these decisions need to be based on a balance of what is good for the business as well as what is good for the “bottom line” or for shareholders. Some costs are necessary to bring in the revenues that keep the business alive. If you can’t keep it alive, you might as well close down anyway.

You need to understand which costs add value to a business. Which costs result directly in new sales or revenue, preserving sales or revenues or in maintaining efficiency? If a business relies on sales, does it cut its sales force? Surely not (unless the problem is definitely with the sales force). The comparison is “Profit Centre” versus “Cost Centre”.

It may sound nasty, but if a business is “up against it”, the first costs to cut are those that don’t directly contribute to sales growth, retention of business or to efficiency of operations. Often, though, it’s the Sales or the Customer Service teams who are cut first because “if we’re selling less, we don’t need as many highly-paid sales people or Customer Service staff”. You end up with the proverbial tail wagging the proverbial dog. A reduced number of revenue-earners or keepers end up supporting the same number of “cost centres” and profitability and productivity fall. This translates to dissatisfied customers, sales drop, and the cycle continues.

If anything, Sales and Customer Service Teams should be maintained to ensure that customer opportunities, communication and service are kept at the highest levels. Cut those who aren’t pulling their weight, by all means. You can’t carry any excess fat.

Other staff may have strong relationships with your biggest buyers (they may be the only reason that buyer deals with you). If they go, so may the business that they look after (straight into the arms of a competitor).

Some may be highly efficient at chasing debts, or at making sure that production meets deadlines. Who are they? You should know. If you don’t, others do (including your customers).

You need to know how and where to cut costs in hard times, but all too often, this is left to chance, by which time it’s too late. Have your strategy ready before this happens.

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Thursday, 17 February 2011

An Easy Way To Improve Customer Service

The first (and lasting) impression your business can make on a potential customer is the way it handles telephone calls.

Some businesses just seem to be “naturally good” at this. The voice sounds friendly, energised, nothing is too much trouble, you’re the most important person in their life and every atom of their being is focussed on you and meeting your needs.

Others sound far too busy or tired, as though they’re reading from a prepared script, and only grudgingly consent to move things forward (and only after you’ve sent in a letter, email or form). “Policy” is often used as a reason not to do something.

Here’s a thought. In a quiet moment, pick up the phone with your staff and call a number of companies at random. Listen to how they handle your call. Would you want to do business with them? If so, why? If not, why not?

Listen to:

• Greeting: is it just “ABC Limited” or “Good morning/afternoon, this is X at ABC Limited, how may I help you?”;
• How do they sound? Happy or bored? As though you’ve interrupted them or as though helping you is their reason for being alive?
• Dealing: do they just go through a list or do they try to be “human”?
• Do they empathise with you?
• Ending: do they ask if there’s anything else they can do for you?
• Thanks: do they thank you for calling?

If you can’t find a quiet moment in the office (a problem common to many of us) then do this when you next call a supplier or another company with whom you don’t normally do business about a product or service that they advertise.

You could do this with your competitors – if you think that they’re answering well compared to you, maybe this is why they’re doing more business.

Get a friend to call your business and tell you what their experience was.

Another thought – if you work in a large business, how do your colleagues handle the phone? Are some departments “better” than others?

The phone is such a vital part of the “customer experience”. What do your customers experience with you?

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