Despite hopeful predictions for the economic future, many businesses are still coping with the problem of sustaining growth in a down economy. Organizations continue to tighten budgets by reducing staff and work hours. However, some of these budget-trimming moves can have a negative impact on customer relations.
In a classic study reported in the book, “The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value,” by Frederick Reichheld, a mere 5 percent improvement in customer retention rates was found to result in a 25 to 100 percent increase in profits. Considering the fact that it costs more to acquire new customers than to retain existing ones, clearly it is prudent to give top priority to customer relations, even—and especially—during difficult economic times.
Many organizations, which are dealing with the current economic downturn, are finding outsourcing to be the ideal solution, allowing them to reduce expenditures while maintaining a high level of customer service. In its January 2009 BPO Index, Nelson-Hall reported that “BPO is holding firm in a difficult market.” One reason for this, the report states, is that “BPO has a major role to play in improving customer retention and facilitating new market entry, as well as reducing costs to serve.”
In their recent white paper, “Retain Your Customers in a Down Economy”, EDS, an HP company and provider of IT services, observed that, “By focusing on the value of existing customers, and by leveraging the cost and performance advantages of an outsourced service model, companies can manage costs, retain customers and position themselves to survive and even thrive in a difficult economic environment.”
Partnering with outsourcers that specialize in customer management can help your organization retain and acquire customers while reducing operating expenses. Outsourcing also lets you easily scale up or down as needed, which can be especially helpful during times of unpredictable change.