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Why cost cutting strategies require putting the customer first
Retailers, like every business niche, are continually striving to save money while making more money, and if you’ve been reading the national business headlines, you may have noticed a new trend that seems to be taking root.
June 24, 2015 by Judy Mottl — Editor, RetailCustomerExperience.com & DigitalSignageToday.com
Retailers, like every business niche, are continually striving to save money while making more money, and if you’ve been reading the national business headlines, you may have noticed a new trend that seems to be taking root: companies are slicing and dicing everything, and it’s not staffing or other big cost points.
They’re cancelling rug cleaning. Yup. Olive Garden is sending bean counters out to its restaurants to literally pull invoices for “hints at ways to keep costs down,” reported Bloomberg.
Now first of all, why a company would have to dispatch operations teams to pull invoices in the digital age has me scratching my head, and heck, how much can the carpet cleaning bill be each month? Well apparently it’s adding up at Olive Garden as they clean carpets two times a month. And the twice a month effort may be actually wearing down carpet which then leads to having to buy and install new carpet.
“There’s a protocol that you clean carpets once a month,” CEO Gene Lee said during Darden Restaurants’ quarterly earnings conference call, according to Bloomberg. “If you do it more than that, you end up actually destroying the carpet -- and really not a whole lot of benefit there.”
The restaurant company is moving ahead on a new financial strategy apparently, but the strategy itself isn’t new as zero-based budgeting is an approach that’s been adopted for eons, both by business and by the American household. It’s likely more popular since the recession years but it is a standard financial operating mechanism.
The thing is, while you save money when you cut back on rug cleaning, you also run a risk: turning off your customers. Who wants to eat at a place where a rug is stained and clearly not maintained? It’s like the gym that doesn’t stock paper towels in its lavatories or disinfectant soap in the gym area. Those are customer-facing elements in the shopping and user experience. They’re not sexy or fun but they can make a customer think twice about returning for a meal or re-upping that gym membership because there are plenty of other places to eat and workout.
According to the Bloombergreport the restaurant company’s new management team has already pared $100 million a year from labor cost and operation expenses. That’s a good thing, but going forward the focus should be first and foremost on cutting costs on things that don’t directly impact a consumer or client or user. For example, as the Bloombergreport notes, other companies are reducing office supplies and printer use, to save on paper, ink cartridges, etc. Obviously HP and other printer makers won’t be thrilled to hear that, but hopefully these kinds of cost reductions are temporary fixes. Maybe those companies will now investigate updating and upgrading printer fleets to more efficient models which will be good news for printer makers.
JPMorgan has decided to slice its employee voice mail service, which will reap them a whopping $3.2 million in savings. The decision, announced at a recent industry conference, came about as the consumer banking company realize it was hardly being used.
"We are all carrying something in our pockets that's going to get texts or email or a phone call to you," said Gordon Smith, CEO of JPMorgan's consumer and community banking, according to a CNBCreport.
The point is, reducing printing activity and eliminating voice mail isn’t going to negatively impact the customer experience. And that’s the key to unlocking good decision making when it comes to saving money while keeping customers happy and revenue on a growth path.
About Judy Mottl
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