How to cut costs without hurting customer service

Key takeaways

To cut costs without hurting customer service, divide your costs into those customers see and those they do not. Start with the unseen ones: internal steps, rework, duplicate tools, who does the routine work. Touch the visible ones only when you can show the customer experience is unchanged or better, and watch four measures that warn you early.

• Sort costs into those customers see and those they never do.
• Cut unseen costs first: rework, internal steps, duplicate tools.
• Removing avoidable contacts lowers cost and improves service.
• Watch 4 warnings: response time, resolution, repeats, complaints.

Which costs do customers never see?

Customers never see how many internal steps a task has, how many times data is typed, how many approvals an order passes or where the person replying is sitting. They see the result: was the answer right, was it quick, was it easy. Any cost that can be removed without changing those three is safe to cut.

• Internal handoffs and approvals.
• Rework and double entry.
• Reports and meetings with no outcome.
• Duplicate software.
• Senior staff doing routine tasks.

• How BPO can help businesses reduce operational costs
• The eight wastes of lean in an office, and how to cut them
• Process handoffs: why every extra handover adds cost

Which costs do customers feel at once?

Customers feel at once anything that makes them wait, repeat themselves or settle for less. The Institute of Customer Service, which publishes the UK Customer Satisfaction Index, consistently reports that getting things right first time and handling problems well are central to satisfaction.

• Longer waits for a reply or a callback.
• Fewer ways to reach a person.
• Staff with less authority to resolve.
• Lower product or delivery quality.
• Shorter opening hours with no alternative.

• Slow response to enquiries: what it costs and the fix
• First contact resolution explained

Can a saving improve service?

Yes, and these are the savings to look for first. Every avoidable contact you prevent saves handling time and spares the customer the trouble. Every error you stop saves a correction and an apology. In an illustrative business with 2,000 contacts a month at £2.50, preventing 300 avoidable contacts saves £750 a month and removes 300 frustrations.

Proactive updates, clearer invoices and accurate product information are all cheaper than the contacts they prevent.

• Failure demand: the customer contacts you pay for twice
• Right first time rate: the quality number that cuts cost
• Self-service on your website: let customers help themselves

How do you change who does the work safely?

Change who does the work safely by moving the routine and keeping the judgement. A managed team can handle standard queries from a playbook at a lower cost per contact, often with longer hours of cover. Complex cases, complaints and key accounts stay with your own people.

• 1. Document the routine queries and the right answers.
• 2. Set clear rules for what is escalated.
• 3. Run both teams side by side for a few weeks.
• 4. Sample replies and compare satisfaction.
• 5. Expand only when quality matches.

• The tiered support model: send each query to the right cost
• outsourced customer support for UK SMEs
• Quality assurance for outsourced teams

Which measures warn you early?

Four measures move before customers leave. Track them weekly during any cost change and set a threshold at which you pause.

• First response time.
• First contact resolution.
• Repeat contact rate.
• Complaints and negative reviews.

• Cost reduction KPIs: the numbers that prove savings are real
• How to reduce customer service costs without slower replies

When is a small drop in service acceptable?

A small drop is acceptable where customers do not value what is being removed. Answering email in four hours instead of one may make no difference to retention. Cutting a little-used channel may go unnoticed. Test on a small group, measure, and be ready to reverse. Do not assume in either direction.

• Cut costs or grow revenue: which should come first?
• Cost-cutting mistakes that end up costing a business more

What does this look like in practice?

A pattern we see when costs are under pressure: the first proposal is to reduce phone hours, because the phone is expensive. The calls are mostly customers checking on something they were never told. Sending that information removes the calls, lowers the cost further than shorter hours would have, and no customer loses anything.

• See client work
• BPO Solutions for UK businesses

Service-safe cost checklist

Use this for each planned saving.

• Is this cost visible to customers?
• If not, cut it first.
• If so, can we show service will hold?
• Have we removed avoidable contacts first?
• Are the four warning measures being tracked?
• Is there a threshold at which we pause?
• Can the change be reversed quickly?

• Operational cost reduction checklist: 20 checks
• Cost cutting vs cost optimisation: which protects profit?

Next step

Send us the savings you are considering in customer-facing areas. We will help you sort them into safe, testable and risky, and suggest what to measure.