Last month, I went to an organized retailer, Spencer's Express to buy my weekly groceries. It was four in afternoon and temperature outside was 45 degrees which seemed like way more than 50 degrees. I entered inside the store thinking that there will be some respite from this simmering heat. But I was wrong.
AC inside the store was not working and I felt as if I am standing in a furnace. I inquired from staff about non-functioning of AC. "We switch-off AC during non-peak hours" came the reply. I asked "What are your non-peak hours". "11 to 5 during the day are our non-peak hours" replied the staff.
"Great" I told to myself. When the temperature is highest and AC is required most, retailer has switched-off the AC and saved some cost but killed the customer experience.
Cost cutting or managing costs is the order of the day. Every service organizations has taken certain steps - some harsh, some comical and some genuine to control their costs. Some Indian organizations have saved some important bucks by cutting their travelling cost and shifting to video conferencing.
Some software and real estate companies have saved money by cutting on toiletries, saving on AC costs by increasing temperatures, cutting back on tea bags and tea cups, newspapers and magazines and by not giving increments to their staff.
Hotels have also cut their costs. But they have done it in a way that is not noticeable to customers. They have reduced number of towels from bathrooms, reduced the number of flowers, reduced the number of pages in notepads and are making wiping cloths from discarded sheets. Hotels have not touched the amenities which directly impacts customer experience.
Hotels have not cut their staff strength as this will mean impacting customer service directly. Virgin Airlines have also not laid off as much staff (in proportion to other airlines) as it will help them in maintaining higher service levels and standards.
Managing costs is good for the business but it should not be visible to customers. Kill expenses where you can but without killing customer experience.
by A journey called Life , on June 10, 2009 2:24 PM
re post- absolutely, there is still a way to function despite trying times.. i can imagine how u must have felt in that sweltering heat..
re title- bang on!
by Dhiman , on June 10, 2009 2:35 PM
I remember one of the Airlines had planned serving unheated food or food that doesn't need to be heated in-flight to cut-back the heating equipment to reduce the Aircraft weight, thus save fuel cost....
This move left a lot of passengers concerned because like you said it was a very 'visible' change for the customer.
by le embrouille blogueur , on June 10, 2009 5:38 PM
Ha ha .... Delta Airlines (after the NWA merger) stepped down from serving two packets of pretzels and got it down to one. Saved millions. No air in grocery store ....not fun.
by preposterous girl , on June 10, 2009 9:22 PM
Hey I have also noticed that PNB ATMs also have non-functioning ACs or they have been shut down on purpose .. that I dnt knw..
Now I realise after reading ur post that it is also a cost-cutting measure..
But ATM experience ca still be managed but grocerry shopping??OMG u shud hav better bought ur stuff from ur local grocerry shop..
by SiD , on June 11, 2009 12:04 AM
some ppl use brains...while some bookish knowledge to solve problems.
by rads , on June 11, 2009 1:16 AM
great post...Over here in the stores staff has been cut down where it is more necessary like in a pharmacy n drugs store, a customer is totally lost when he has to find a needle from a haystack with so many cosmetics available and not knowing what to chose. So obviously they'll just move on without buying any and that is more loss to the store.
by Ramesh , on June 11, 2009 5:50 AM
Great post. Many a time cost cutting is thought out by accountants who have little clue about how the customer experience is affected. In reality cutting paper and toileteries don't add up to much - there are bigger things to go after. But all this small penny pinching gives an impression that something is being done, which makes everyone feel good, but in reality can kill the business. Loved reading this post.