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Be Careful When Cost-Cutting

Posted by: Rod Kurtz on January 21, 2009

As the economic slowdown continues to affect industries of all kinds, many small-business owners have cost-cutting measures in mind. These are moments where cost cuts should be handled with caution.

The 80/20 rule of thumb in business holds true during economic slowdowns; 80% of your income will usually come from 20% of the clients or customers. It may be easy to consider streamlining or cutting some customer service staff, but you should only do so if quality of service won’t be affected.

If you can staff certain hours or positions personally without damaging the experience of clients and customers, then by all means work those extra hours. But never do so if the reduced customer service will drive your most loyal customers elsewhere. Remember, during times when consumers are more aware of their wallets, they will vote more with their dollars.

Here are some tips to help you can continue to provide excellent customer service:

• Ask for customer feedback and make changes based on it.

• Remind and reward employees for consistent and excellent customer service.

• Keep a list of best-sellers or best customers and pay extra attention to their needs.

Peter Pham
Redwood City, Calif.

Reader Comments

Eric Fraterman

January 21, 2009 1:37 PM

Please allow me to build on this post with seven areas to focus your customer service efforts despite the difficult economic forecasts.

• Love your loyal customers This is the time to make sure your loyal and profitable customers have no reason to question your value. Love them and appreciate them.

• Distance yourself from unprofitable customers This is the perfect time and excuse to let your unprofitable customers go. You can no longer afford to waste resources on them. These resources are better served reaffirming your love for your profitable customers.

• Review complaints to add value Look for clues and cues in customer complaints and act quickly to add value to your customers. Added value does not have to be costly.

•“How can we help?" Your customers are facing tough times as well. Speak with them about their problems. Look for ways to help them. They will appreciate the willingness and efforts in these trying times. You will build loyalty and equity in times when other vendors might disappear.

• Innovation now Necessity is not only the mother of all invention, it is also the mother of innovation. Creativity can substitute the need to spend heavily. What can you innovate for your customers quickly that will surprise them? When was the last meeting you conducted to seek such ideas?

• Emotional engagement does not cost money Caring comes from the heart, not from the budget. You can go a long way to build loyalty by simply unleashing the power of emotional engagement.

•Training This is the fastest way to differentiation. Your employees are still the best asset to create a difference. If you have a little budget, use it to train and refresh their commitment and solicit ideas to create a difference for each customer.

Eric Fraterman

Mr. Jean Pillet

January 22, 2009 2:49 PM

Your associates are the best safety net you have. Encourage and reward good customer service and re-direct those who may hurt your image.

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