Cutting Costs While Delighting Customers

Gandhiji rightly said, “Customer is king. He is not dependent on us. We are dependent on him. He is not an interruption of our work. He is the purpose of it. He is not an outsider of our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us the opportunity to do so.” Hence it is very important to not only keep your customer happy, but also delighting them. Delighting is the process of going the extra way to make sure your customers are more than happy so that the next time they will come to you instead of choosing your competitors.

Delighting your customers always comes with a cost. Some strategies applied may be effective in retaining customers, but it may also exceed the budget. Hence, it is necessary to conduct a cost-benefit analysis always. Following are tips to reduce costs while delighting customers.

1. Reduce cost-to-serve
Understand the true cost right down to the customer and product level with an analysis that incorporates costs from transportation, production, customer service, and raw materials. Look for opportunities to consolidate orders and convert to lower-cost transportation modes.

2. Remove non-value added service
By doing so, you shorten lead times and save money. Solutions can range from reducing the number of times an order is touched in a warehouse to more complex inventory and working capital projects.

3. Provide Enough to Keep Customers Loyal
Although this finding may surprise some, it should offer senior leaders some relief because organizations only succeed in delighting customers 16% of time. Additionally, 80% of service leaders report that their efforts to exceed customer expectations require significantly more resources than do their efforts to just meet those expectations.

4. Consolidate loads.
Aggregating loads has the potential to lower logistics costs. Inversely, shipping less-than-truckload may be less expensive. It is important to understand your customers’ expectations to help you decide. Other ways to lower costs include assigning ship day(s) of the week or utilizing multi-drop truckload.

5. Beware of hidden costs
You may not be aware, but transportation involves a lot of hidden costs like freight invoice errors. To dodge this charge, you can partner with a freight bill audit and payment provider. Choose a firm that audits against your bills of lading and carrier contracts, and delivers detailed solutions.

6. Collaborate with an outside firm
If you find a partner to do this business for you, you, as a company, can focus on your core competencies. With a co-managed approach, you can maintain the control level you desire, whether that means continuing to handle transportation planning and carrier management in-house or outsourcing that function.

7. Cost-benefit analysis
Conduct a cost-benefit analysis on a regular basis to keep tabs on your cost. Also, evaluate your performance with the help of performance metrics to ensure customer service and meet on-time deliveries. Having measurements in place will help you see business trends and act quickly.

Besides the above mentioned points, you can even implement the following points to cut your cost:

• Use cost metrics to balance service and revenue goals
• Aggregate reviews to deploy the appropriate agents to customer experience situations
• Identify “must have” services and customer deal breakers
• Analyze and terminate investments based on the importance to customer and effects on revenue

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