How Do Companies Simultaneously Cut Costs and Add Services?

Question: Cost cutting: what the first things to go?

 

Amanda Mesler: The first things to go are things that are typically done in our own operations. Though absolute last thing to go is anything that touches the customers. You need to be able to, especially in these times, add more service to what your clients’ business is all about. And so what we do is we look internal to the company, how can we save on travel, how can we save on unnecessary expenses around the office, how can we use more, smart working, if you will, rather than office space. We’re going through a lot of that study and research right now. But it’s always back office first. Nothing that touches the customers.

 

Topic: Mistakes in cost cutting.

 

Amanda Mesler: I had an example but which of course I won’t use the name of the company, but there’s a lot of things that this company needed to do to be more competitive. It’s very difficult right now, not only is the economy very low, but competitors are coming from out the woodwork to try to go and get customers. And so what this one client of mine did, was they scaled back on sales resources and marketing resources and really the folks that position your products out into the marketplace and it severely handicapped them. Yes, they save on their SG&A [Selling, General & Administrative] expenses, but absolutely lost clients because another competitor came in and gave them better service.

Everybody is in cost cutting mode and we’re not any different than that. And so what we do is we actually go to the employees and we have what’s called a thousand dollar challenge, where we try to get ideas from the actual employees that are working in the front office or the back office, working with clients or working in our own operations, to determine how can you actually really cut cost without cutting service to your clients. So the employees come up with a lot of ideas, a lot more than just the executives sitting in the rooms sometimes.

 

Recorded on: June 07, 2009

Logica North America CEO Amanda Mesler insists that cost savings should be focused internally, never on services used by customers.

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