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In our last
newsletter we introduced the series on “Avoiding the Death
Spiral While Reducing Operating Costs.” This series includes a
review of the following approaches that can be taken to reduce
operating costs while maintaining customer confidence and
increasing customer satisfaction:
- Cease activities that provide
no value-add
- Implement efficient and
repeatable processes
- Focus on existing product
quality instead of new features and functions
- Enable customers to self-serve
- Perform elements of the work
with lower cost labor
- Segment the customer base and
provide “appropriate” levels of support for each
- Make informed, not random,
cuts
- Cease big, expensive projects
with long-term ROI
- Renegotiate vendor contracts
In this edition
we will cover: Ceasing activities that provide no value-add
In the course of
growing a business, each person on your team undertakes various
activities which, at the time, make perfect sense to effectively
deliver service to your customers. This could include policies,
procedures, one-off databases, agreements with third-parties, etc.
Over time, however, these can become outdated or no longer
effective in the current business environment. When looking for
ways to reduce operating costs while minimizing the impact to the
customer, you are encouraged to “look here first.” While you won’t
necessarily find a silver-bullet, each step you take to improve
operational efficiencies contributes to the cause.
Let me provide
you 2 examples from personal experience. A business that I was
involved with had to take some serious actions to reduce costs and
become more efficient, while at the same time making sure that our
customers' confidence and satisfaction remained high.
Example 1 - Outdated policy:
I had, quite serendipitously, come across a fax document that
was developed as part of a customer authentication policy. I asked
the dumb question: “What is this for?” To my amazement, I learned
that “years ago” a policy was instituted where each new customer
was required to complete a paper-based form with contact and
related information, and fax it to our customer service team. I
then asked: “What do we do with this document?” The answer (not so
much to my amazement) was: “Oh, we file that away.” You know my
next question: “Do we ever need to go back to that file to
retrieve the document?” The answer: “No”. No further questions, I
suspended that activity IMMEDIATELY. This saved us quite a bit of
time. We no longer had to fax the document to each new customer,
follow-up with the customer (time and cost of the long-distance
phone call), receive the fax and file it. Not to mention, we made
it easier for the customer to do business with us.
Example 2 - Subsidizing the work of a third-party:
We had negotiated a contract with a third-party provider to
perform elements of our overall service offering. Over time, this
particular third-party was increasingly NOT pulling their weight,
and the work was instead being performed (subsidized) by my
customer service team. This initially went unnoticed, as the
customer service staff just “sucked it up.” However, when the
pressure was on to reduce costs this item bubbled-up, in a
haphazard way, as a ripe opportunity to reduce work-load. What
this required was our reviewing the original contract that we had
established with the provider, quantifying the work that was being
performed by our organization, when it should have remained with
the third-party provider, and then working with the management
team of the third party to hold them accountable to the original
contract. Finally, we had to lock-in accountability on our own
team for who would manage this third-party on a go-forward basis,
because we had obviously not been paying attention to their
performance and instead simply “doing the right thing” by
servicing every customer that called in to our service
organization.
The lesson from
both of the above examples is that you are encouraged to
consistently ask your team-members (on the front-line) the
following questions:
- What is in
your way of delivering excellent customer service?
- If you were
running this operation, what policies or procedures would you
eliminate to save time and money?
Finally, the
approach of “management by walking around” can be highly effective
in this regard as you make your own observations about the working
environment and the various interactions your team has with the
customer. Guaranteed, if you haven’t done this in the last 3 to 6
months you will find “low-hanging-fruit” that is ripe for the
picking.
Upcoming newsletter editions will cover additional items on the
topic of “Avoiding the Death Spiral While Reducing Operating
Costs”.
Previous articles in this series:
Part 1
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