Last week’s grim, if not entirely unexpected, announcement from the Bank of England of an imminent fall into recession for the nation will have business leaders – and their people – feeling uneasy. In times of economic downturn, it is often tempting for organisations to take immediate action, making sweeping cuts and introducing efficiency gains to swiftly cut expenditure. Yet as we have seen time and again over the past few turbulent years, this sort of short-sighted vision has the potential to do more harm than good.
In the midst of a scramble to protect immediate bottom lines, it’s not just organisations that will be feeling the fallout of another economic crisis. Customers facing increased financial pressure are thinking more carefully about how and where they spend their money, and are increasingly looking to organisations for advice, support, an empathetic understanding, value and quality. In times of recession, excellent customer service is more important than ever – and knee-jerk decisions to cut service staff and put on hold technological development risk breaking the psychological contract between businesses, their people and their customers, risking long-term damage to relationships and brand reputation.
The reality is, attracting new customers is generally more costly and time-consuming than keeping existing ones. Understanding the needs and desires of our customer base, and building effective solutions to meet them, is paramount to long-term stability and survival during a recession. Some tough decisions lie ahead, but in an already strained labour market, cutting back too deeply risks losing good people from roles that will be difficult to fill once the economy bounces back.
For me, the fundamental issue is the understanding and belief of a business’s key financial decision-makers in the long-term value of service. Successfully weathering and thinking differently in terms of how we grow through improved service innovations depends on the executive team – including CEOs, CFOs and COOs – truly understanding the intrinsic link between an excellent customer experience, employee engagement and stronger productivity and financial performance. Ultimately, service should by now be a boardroom priority – and finding ways to balance the short-term financial realities of the business with the desire to support customers and build loyalty in the long term.
There is no doubt there are extremely difficult times ahead. But in the face of a challenge, we must not demolish our strongest defence. If we avoid the temptation to make rash decisions and keep an eye on the long term, the financial benefits – in the form of customer loyalty, share of wallet and productivity – will follow. I urge all CFOs to spend more time really understanding the link between service and financial return to drive the best outcome for the organisation.