Spending cut. This idea often sends shudders through all sectors of a company. But the reduction of expenses, although essential, does not need to be linked to the despair of the teams and the old list of dismissals — on the contrary!
There are intelligent solutions that can be applied throughout all processes and areas of the company, which can generate better results. They lead to gains for both the company and the consumer.
And what does the quality of care have to do with all of this? That’s what you’ll discover by reading this post. Let’s talk about the relationship between cost reduction and customer experience and how it can help you rethink the company’s entire value stream, indicating ways to improve processes and taking the weight off the shoulders of those who work in the financial sector or the area of shopping.
The Constant Need To Cut Costs
The relationship between what your company collects and spends is directly linked to its profitability and sustainable growth. The calculation is simple; you already know that earnings must exceed expenses. That is why cost reduction is a recurring theme on managers’ desks.
But before passing the scissors on to the departments, it is necessary to answer some questions, such as:
- Do we know all the company’s processes?
- Is it possible to optimize them without the need for cuts?
- What is the impact of cost reduction on activities?
- What consequences (positive or negative) will we have with these cuts?
- Will my customer remain satisfied at the end of this process?
This last question seems to be one of the most important—in fact, it should be taken as the main one. And if you find the right answers, you might not have to suffer from cutting the operation. The results could be financially profitable, with concrete improvements for the company. All based on the quality of care.
Service Quality As A Cost-Cutting Solution
Investing in customer experience can be a great opportunity for smart cost reduction in companies. This quality of service reports directly to metrics such as CAC (Customer Acquisition Cost), churn, and average ticket increase.
That’s because by delivering a great customer journey, revenues can increase by 10% to 15%, while costs can drop by 15% to 20%. Those who think this is impossible think there are several inefficiencies in the customer contact process on their journey.
Duplicate and non-standard procedures can create service confusion, slowing the overall process and leading to waste, which is costly for the company and the customer. This is common, for example, when different touchpoints are managed by different parts of the company (sales, call center, website, etc.).
The customer makes the complaint once and has to repeat it, making their journey complex. The more technologies and channels that are open, the greater the chances of inefficiency in your service if there is no integration.
On the other hand, by providing a unique experience, growth happens. Thus, the quality of service can lead your company to retain more customers, increase their lifetime and the average ticket, and reduce the CAC.
When the company provides good service, it shows concern for the pain and needs of its public, making it feel more comfortable to use its services again or make new purchases. This involves both pre-sales and post-sales. Therefore, developing strategies integrated with the consumer’s demands is necessary, leading to the company’s growth.
Increased Average Ticket And Customer Lifetime Value
Loyalty is a direct consequence of excellent service, which leads to greater confidence in your company, making them buy more and more often. This opens up the possibility of increasing the average ticket, an index directly related to your audience’s satisfaction, and increasing your results.
The calculation of the customer’s lifetime value has to do with how much he spent throughout his relationship with the company. This value allows you to visualize your acquisition cost; it is a way of understanding whether your customer acquisition strategies are efficient.
Customer Acquisition Cost Reduction
Speaking of how much was spent on acquiring new customers, this amount can be reduced considerably if your loyalty strategies work. We know that the investment in marketing to win a new audience is much greater than that to keep existing customers satisfied. Engaged customers buy more and recommend your brand.
Among the actions to reduce the CAC, we can mention the quality of service, investment in content marketing, the development of loyalty programs, and the increasingly in-depth knowledge of its audience.
As we have seen, the quality of service can be a strong ally for your company when considering cutting costs. It is a way of promoting a new mindset, leading to cost reduction in a less painful way for both the company and the consumer.
By rethinking the entire value stream in your brand, you can find ways to improve processes without necessarily leaving the responsibility for cost reduction to finance and purchasing. To dry up your operation, there is no need for suffering. Thus, your results will be more profitable, with concrete improvements for your company.
Also Read: Ten Reasons To Study Finance