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When Cost Cuts Go Too Deep

Diana Vollmer |

CHICAGO — When times are tough, we cut back. We cut everywhere we can. We cut where we should have cut before. We cut in places we shouldn’t cut for long-term viability, but the need for short-term cashflow forces us to do so.
When other businesses do the same thing, it’s easy to justify. Many large companies are cutting costs in customer service, and whether or not they could achieve better results for less money, we’ve been lulled into accepting poorer customer service.
Have you noticed how the staff at United Airlines rarely smiles? Many were forced to accept pay cuts. They’ve seen predecessors train their own replacements to earn less. It’s no wonder they don’t smile or provide real assistance when it would be appreciated.
It’s easy to spot poor customer service in other companies, of course. It can be more difficult to see problems in our own businesses and understand what customers think about our level of customer service.
Customer feedback is intermittent and often comes too late to win back those who found it easier to go elsewhere than to complain. When interviewed, some customers admit driving by a store to see whether or not a certain customer service representative (CSR) is working. If they don’t see his or her car, they might stop by. If they do, they just keep driving.
This explains why volume can grow quickly when you swap out one CSR for another—customers know. And an uptick in volume should offer motivation to improve customer service continuously, rather than cut back on it when you need the added volume.
Training sessions on equipment maintenance are common in the industry, and as a result, you might install a preventive program or fix the most frustrating leaks. But what’s available in terms of training and support for monitoring and improving customer service?
First, you must decide that exceptional customer service is a critical part of your operation. In tough times, it’s all about cost: Counter labor as a percentage of sales should be 10%, 12%, 15% or 25%. What’s the answer?
The “right” answer is a function of volume, level of service and job description. If you have a single, $1 million counter, you may achieve a 10% cost factor. If your staff is also pricing and tagging incoming garments, or assembling and bagging finished garments, the percentages will grow.
The answer is different for every business, but the numbers ignore a discussion of acceptable and outstanding customer service issues. If your goal is to cut wait times to zero at all times, your cost will be higher—and so will your service level.
Recently, a fantastic CSR—one who oversaw 6% growth in the last two years—left one of the businesses I know. “It was for the best,” the owner said. “She was making mistakes.” We all make mistakes. Today’s order gets thrown into the basket for tomorrow. Garments get into the wrong conveyor slot. An upcharge gets missed.
But if you have a CSR who offsets the impact of any mistakes by recognizing every customer who walks in, discusses the current promotion with each of them, points out the advantages of coming to your plant, and makes everyone feel like “one of the family,” you can overlook a couple of mistakes.
There are systems that can prevent mistakes in pricing, conveyor slotting and cash reconciliation. But an employee who can make the customer feel wanted by making the weekly “chore” of drycleaning more pleasant cannot be replaced easily.
Many owners are again initiating wage increases, or reinstating training programs and staff meetings. If you are in a position to reinvest, don’t ignore the front-counter staff. Errors are obvious on the plant floor, but a quiet counter can go unnoticed. It can plod along, hurting you more than you ever imagined—or it can flourish and allow the entire business to blossom.
 

About the author

Diana Vollmer

Methods for Management (MFM) Inc.

Managing Director

Diana Vollmer is managing director of Methods for Management (MFM) Inc., a consultancy specializing in drycleaning businesses. You may contact her at dvollmer@mfmi.com, 415-577-6544.

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