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With the economy and business environment as it is, news of employee layoffs and cost cutting measures abound. While this is expected behavior during a recession, the danger of cutting too deep in areas that affect customer satisfaction is very real. Such actions would drive away customers and thus further reduce sales in the medium term.

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It is important to remember that while sales and employee morale are at all time lows, customer demands for quality, service and value, keep increasing or at minimum remain the same. While actions taken show well on an excel worksheet on how costs structures are being improved, the damage they are doing for the business and its ability to sustain growth when good times return are not equally well represented.

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Efforts to reduce costs and stretch budgets should not be done with the end result of making life difficult for the customer. Good performing companies are known to take better care of their customers during difficult times because they recognize the value of loyal customers. Where a choice is to be made, between keeping a good customer versus trying to wow a new customer, the former should be the priority. Customer loyalty should not be put at risk at the expense of short term gain proposals dished out by finance people that simply look at the numbers without understanding the business processes and activities behind them.

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Where cutting costs in customer service areas is justified, the organization needs to take time to thoroughly evaluate and plan actions that will be taken to keep the customer from noticing the difference or change. Examples of actions that may be taken include, providing cross training for those expected to cover expanded duties, providing increased empowerment to customer service staff for improved decision making and customer problem solving speed, identifying your strategic customers and ensuring that they are well taken care and seeking out opportunities to incorporate additional services that cost little but provide the customer improved satisfaction.

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The customer is arguably the most valuable asset of the organization. Whatever the business situation, changes to operations need to be done keeping the customer and their satisfaction in mind. The costs of not doing this, is to court eventual business failure.

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Dr Fernando Kevin Vince is currently the Vice President of Strategy & Human Resources with a global multinational. He is the author of 5 books, regular speaker at regional conferences and a certified trainer with American Management Association. He is the founder of The Association for Strategy & Leadership Professionals. Details can be found on http://www.strategy-OE.com

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