The Random Thought Generator (RTG)

During tough economic times, companies typically look for any and all ways to cut costs. This is natural, since sales revenue streams diminish rapidly while many fixed costs remain, well, fixed. In a scramble to cut costs, prudent executives begin asking tough questions about each department/organization, namely what value does the function provide and how does it contribute to the bottom line?  

This type of “soul searching” is actually very healthy as it tends to put a spotlight on processes and organizations that have grown over the years, but that may no longer be adding maximum value to the business. But before you start swinging the axe, don’t underestimate the impact that cutting customer-facing processes may have on current and future customers. As we have discussed in prior installments of the Outside-In Sales approach to running a business, the overall customer experience is all-important to building loyalty, taking market share from competitors, and driving up margins.  

Does this mean that everything should remain status quo in the customer service area while other departments are being cut? Certainly not! But it does mean that the probable consequences on customer buying behavior should be analyzed before making across-the-board budget cuts.

Let’s look at an all too common scenario. In an effort to “spread the pain” evenly across its many functional departments, a cost-cutting decree comes down from the corporate executive team:  all organizations will operate within a 10% reduction in budget, effective immediately. Sound familiar? Sound reasonable? Since most departments have a bit of slop in their budgeting process, a 10% reduction should not be catastrophic, right? For example, for a large development team, a 10% reduction in budget could simply mean that the launch date for a new product gets moved out by a few weeks. [In my experience as a product manager, a slip of a few weeks during a major product launch can certainly be annoying, but is all too common, with or without a “full” budget!]  

Now let’s see how a 10% reduction impacts a customer support call center of 38 agents. According to a recent study conducted by the International Customer Management Institute, eliminating just four reps in a call center of this size increases the number of customers that are put on hold for four minutes or longer from zero to 80!

How do you like being put on hold?