Monday, 6 December 2010

Leadership and Cost Management

Every relationship has a basis. The fundamental premise of a Customer-service provider relationship is the "promise-to-deliver". Large corporations were trusted more than the smaller ones because they often provisioned significant resources to deliver the promises they made to their customers. In the last decade or so, business leaders across spectrum chose to focus on cost saving as a means to achieve better financial results. When you start squeezing the resource pool, you not only force efficiency, you start forcing resource manipulation. When it comes to staffing as a resource, the big bosses secretaries are not released out of the head count, its always the "back office" that gets squeezed to make those gains. This is what results in sharp increase in negative costs as compared to positive costs.

The was this corporation which increased the headcount to generate information after cutting the customer service staff by 30%. The same corporation increased allocation to customer retention budget after reducing the loyalty programme budget. Negative costs are quick to grow and the problem with the negative cost is they create a long term damage to your customer franchise.

Recently my relationship manager in the bank very proudly defended his bank by stating that they handle large bars of clearing volumes and hence they cannot provide a certain service. If your volume is consistently high are you not supposed to provide for more people to manage that volume or seek automation to that extent?

It is important to communicate to the leaders that shortchanging the customer is not only unethical, but also bad for the health of the brand....