Companies Have Slashed Costs to Show Profits: Technology Is The Next Frontier


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Companies Have Slashed Costs to Show Profits: Technology Is The Next FrontierSince the economic downturn in 2008, corporate America has been managing to squeeze profits by reducing budgets, stretching staff thin and adding technology at every turn to reduce human interactions. Now the wake-up call!  Virtually, everything has been turned into a commodity.

According to Mike Berman, founder of Berman Means Business and a leading turnaround consultant, “differentiation will not come through low cost advantages, but by creating superb customer experiences able to offer unrivaled value to the marketplace. Because cost management has dominated the landscape for several consecutive years, companies have generally lost their intellectual as well as physical way for executing on the customer-oriented growth strategies.”

Companies must consider the impact of loyalty and repeat business when new technology is considered or “reminding” customers of self-service technology that already exists.  ATM’s are a good example.  They were first introduced in the early 1970’s.  Data has shown that customers were comfortable using them to withdraw cash, but not so eager to deposit money or checks.  They wanted the human-to-human interaction to confirm their funds were safe.

Fast forward to today.  Most people know how to use an ATM and do so, but sometimes want to speak and interact with a person, the teller.  If a customer is standing on line at the bank, there is a reason.  My friend went into Chase the other day in Manhattan and told me that managers approached customers waiting on line to walk them to the ATM machine.  In effect, Chase is ‘chasing’ customers away. People were angry, frustrated and probably thinking they would rather take their business elsewhere. There is competition on every block eager for new customers.

I called American Express and the recording announced the wait time will be long and “suggests” to use the web. I push “O” and get an agent immediately. It’s obvious they are trying to reduce costs, not build my loyalty or continue the customer journey.

I love technology; my mobile devices, our really cool Echo (Alexa) from Amazon, but don’t push me to self-serve when I know I need or want to speak to a person. That’s not good customer service. It doesn’t make feel good or warm and fuzzy towards the company.

Once my loyalty to a company has been compromised, it is difficult to repair. Verizon Wireless has a major media campaign to get customers to return. They obviously have lost customers. The other day I received a letter from Liberty Mutual Insurance Company.  It said, “ I used to be a customer, and would I consider coming back?” Too little, too late! It was two years ago. I’m happy with my new insurance provider. I deal with Larry and Ken at a State Farm office in my neighborhood. Even if they were on the other side of the telephone or computer, I could still feel a connection if the interaction was personalized.

Competition is fierce. Customers yearn for the human touch and want to connect. Customers cannot become a commodity.  If a company wants to grow, become more profitable and survive, technology must enhance the customer relationship, not detract. Departments need staff who know how to create and build relationships.

Human bonding is the differentiator and the glue.  Replacing staff with machines doesn’t make sense if the primary reason is to cut costs.  Customize the customer journey; don’t be penny-wise and pound-foolish.

What do you think?

Republished with author's permission from original post.

Richard Shapiro
Richard R. Shapiro is Founder and President of The Center For Client Retention (TCFCR) and a leading authority in the area of customer satisfaction and loyalty. For 28 years, Richard has spearheaded the research conducted with thousands of customers from Fortune 100 and 500 companies compiling the ingredients of customer loyalty and what drives repeat business. His first book was The Welcomer Edge: Unlocking the Secrets to Repeat Business and The Endangered Customer: 8 Steps to Guarantee Repeat Business was released February, 2016.


  1. There’s a tremendous amount of truth here. In certain industries, we’re seeing a great deal of technological, self-service surrogacy for human support, as if that is supposed to make consumers feel more positively about how companies are considering their time and convenience needs.

    Banks have been at this for some time, as they use high-tech service tools to replace the branches they are closing. As you note, credit card (and insurance) companies are also reducing service staffs and pushing mobile and high=tech resources.

    Comcast has taken this trend to new levels. The company has an ad campaign, in which the new app they offer, completely bypassing customer support, will enable the consumer to register for a service call-back at a time that works best for the customer. It features a busy, pregnant mom who can’t stop her crowded day to speak with a Comcast rep, and so sets up a time when the kids have gone to sleep. She looks happy to hear from Comcast. Don’t know about other customers, but if my computer connection or cable goes out, my strong preference is to have customer service immediately available, i.e. NOW, not default to using an app to schedule later contact.

  2. Hi Michael, thanks so much for adding your expertise to the conversation. You are 1000 percent correct; it’s nice to have a call back feature, but it’s better if you can speak to an agent within a short timeframe and have your problem resolved immediately. If companies want to generate repeat customers they need to ensure the human element has not been completely removed. Have a wonderful rest of the holiday week. Richard

  3. I agree. Replacing staff with machines doesn’t make sense if the singular motivation is to cut costs. Often it is – a conundrum that Walmart faces today. Maintaining their hegemony as the low price leader has required strategically paring direct labor costs. Now the chain is backpedaling on that, raising hourly wages, and recognizing that customers have a limited tolerance for long checkout queues and spotty in-store service. It will be interesting to see how this plays out as they attempt straddle the low-cost / great-experience fence.

    In my experience, companies have used employees as “shock absorbers” for chronically flawed systems design and tactical weaknesses. So, when inventory is out of stock, when quality is low, or when processes break down, employees have been there to cover mistakes. Companies trim costs by removing employees, but they mistakenly transfer the onus of correcting their systems flaws on customers – who are now expected to navigate complex telephony systems, use “chat” and others tools which do nothing to improve customer services, but provide cost relief to vendors.

    I don’t think having human interactions in customer service necessarily makes the service better. But if automation doesn’t make outcomes better for customers, I recommend not removing people from the process.

  4. Andrew has gotten to the heart of this issue. Effective, proactive human service represents the point of the customer-centricity spear, which is carried through by employee ambassadorship. When employees are unmotivated, reactive and disengaged, even the best support system won’t drive loyalty behavior. When employees are motivated and well-trained, and they are aided by seamless and customer-sensitive processes, everyone wins. Further, if the self-help systems that companies provide to take some cost pressure off their customer support operations are seen as consistent, or inconsistent, with the rest of the transactional or relationship experience, the same perspective applies.

  5. Andrew and Michael, thanks for continuing the conversation with such valuable insights. I have been writing about Walmart for years. You would think that they would have the resources to at least map out a consistent service strategy that would’n turn away customers, but make them loyal Walmart fans. It shouldn’t be that difficult to figure out. Get back to the basics. Have a great day. Thanks again, Richard


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