Succeed by Cutting Costs - For Your Customers

The scenario is too common these days. A company isn't doing well and so decides to cut costs. They fire a bunch of employees, cut back on expenses and become profitable again. Meanwhile, the remaining employees are overworked, underpaid, don't have the resources they need and no longer do a high-quality job. Do this repeatedly over a few years and the company won't last. Even doing it once severely damages a company. In many companies qualified, top employees are refusing promotions - too much extra work, too much grief, not enough benefit. How do these companies expect to continue to provide their customers with high quality goods and services when they have created this kind of attitude among their employees?

Companies are delicate organizations. The job of management is to make them work at peak efficiency and this can only be achieved by focusing on employee satisfaction, technological progress and product quality. If the company is not doing well and all these factors are in place, then the company needs to sell more product or sell product with higher added value to bring in more revenue. And this is where cost cutting comes in.

Imagine that you manage a company and someone told you that they could reduce your costs and showed you information to back up what they said. You'd probably buy their product. If you can figure out how your customers could reduce their costs by using your products, you can increase your sales.

So, let's see. First, you have to study your customers' businesses to see how they operate and what their major cost items are. It's handy if you start with an area where you have many customers so that the analysis will work for a whole market segment. Then, you look at how they're using your products and why they are buying yours and not someone else's. Since you know your products better than anyone, you have to look for a way they can make better use of your products or identify something you can change in your products which will save your customers money. It's OK to invest considerable resources in this because, if successul, you'll save much more in sales costs since the products will practically sell themselves.

So, by all means, cut costs. But figure out how to cut costs for your customers and you'll be miles ahead of your competition while they're still trying to recover from firing all those employees.

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