The COVID-19 pandemic has caused sharp drops in sales and revenues for many companies, resulting in layoffs and other cost-cutting measures, including reductions to customer experience (CX) budgets.
While the most common recommendation is to demonstrate the value of CX programs well before the budget ax falls, that tactic may be too late and not enough to avoid cutbacks in a sharply declining economy. We asked CX professionals how they would handle a reduced budget.
Prioritize Customer Engagement
“The priority for customer experience is to focus on engagement,” said Ali Cudby, CEO of Your Iconic Brand and adjunct professor of entrepreneurship at Purdue University. “When customers feel seen, heard and valued they’ll be more inclined toward retention. To boost engagement, develop a plan for personalized customer outreach. There’s an art to personalized outreach, and it’s easy to get wrong. At some point in your life, you’ve probably received a well-intentioned, but utterly impersonal, ‘personal’ note from a sales rep. Those do little to improve the relationship.”
Instead, Cudby advised put some time and effort into thinking about customers to make the outreach sincere and customized. Ensure that the messaging focuses on the customer and not the brand. When companies are stressed about hitting their numbers, it’s easy to have that message infuse the outreach. Instead, take time to consider the value your customers get from their relationships with you and lean into those talking points instead.
“As you consider your mechanism for outreach, think about the value of digital vs. analog interaction,” Cudby added. “Picking up the phone to connect, not sell, is a powerful commitment to the customer relationship. Even for digital businesses, some analog points of connection can go a long way to cement the relationship.”
You may not be able to reach out to every customer via analog, Cudby added, but you can be effective by starting with your best customers. She recommended prioritizing outreach based on customer lifetime value, with a future-looking perspective.
Related Article: Design Thinking Starts With Empathy for Customer Needs
Communicate Business Benefits of CX to C-Suite
By clearly communicating CX benefits, including increased customer retention, customer lifetime value, and reduced churn, particularly in subscription and platform businesses, CX leaders can help safeguard their budgets. Executive teams tasked with cutting costs will be less likely to eliminate CX initiatives that are closely tied to revenue and retention.
During volatile times, executive attention often turns to self-service and automated technologies that may enhance or replace human CX reps. But these technologies are not quick fixes, and short-term savings should never take the place of long-term CX strategies. CX leaders who have developed their initiatives over five years or more showed significant financial and customer satisfaction benefits.
Related Article: How to Convince Your CFO to Invest in Customer Experience
Look for Ways Cost-Efficient Programs, Non-CX Cuts
Various customer experience products and services that we have come to expect are facing the chopping block, said Robert M. Hebeler, adjunct business professor at Rollins College and hospitality industry veteran. For example, the once sacred programs of in-room guest hotel amenities of coffee, water bottles and snacks have all but disappeared. And prompt, courteous in-person service has been replaced with long phone cues or yet another digital app.
“Unfortunately, all of these cost reducing initiatives will further erode revenues by providing a customer experience that falls below customer expectations,” Hebeler said. “Numerous customer experience research projects have found that when customers notice a reduction in quality, quantity and responsive service, they will not return nor recommend the company to friends and family.”
To reduce customer experience costs without compromising the customer experience and ensuring profitability, Hebeler recommended:
- Renegotiate vendor supply contracts. Ask for a 5% cost reduction, and in return offer a longer-term contract or an exclusive arrangement.
- Complete a “customer experience blueprint map” that illustrates the customer experience in three dimensions: on-stage with the customer; backstage supporting of customers and offsite stage supporting employees. Companies will find that by exploring savings opportunities in the backstage and offsite areas, they won't compromise the customer experience.
- Consider outsourcing services that are not core competencies to your business. Significant savings can be achieved by outsourcing cleaning, engineering, maintenance and personnel-related services such as payroll and recruiting.
“Delivering a compelling and memorable customer experience does not need to be compromised due to COVID-19 pandemic,” Hebeler said. “Business leadership must look what lies behind the curtain to reduced costs and ensure profitability.”
Related Article: Rewriting the Language of Customer Engagement