Is Saving Money COSTING You Money?
Strange question, Angie! How on Earth can SAVING money actually COST you money? As improbable and counter intuitive as that statement may seem, there is some truth in there that can be easily overlooked, and cost you big bucks on your bottom line.
There are smart ways to save, and there are ways that are not so smart. Let’s start with the not so smart ways first.
If, for the sake of saving a few shekels, you have backed off of your service level, needed staffing, benefit programs, multiple visit discounts or any other program you had in place to differentiate your business from your competition, you have cost yourself money. Why, you ask? Well, you have built your business on the backs of all of those things you are now looking to cut. Without them, will customers perceive you as the same company, or will they search elsewhere for the service, perks, and discounts you used to offer? Yes, you may save cash in the short term, but if you calculate the cost of obtaining a customer, plus the cost of keeping them, you will find that cutting in the wrong places has cost you far more than you may have thought you saved! Customers are golden, and losing one hurts not only for the moment, but for the long haul. If you ever want to reclaim that customer, it will now cost you twice what it did to gain them in the first place as now you need to incentivize them to return, which leads to surrendering your profit margin to correct an error on your part for giving them a reason to look elsewhere.
Consider even the smallest cuts and how they will be percieved. If your clients are accustomed to a lovely cup of herb tea or bottled water after their treatment, they consider it part of the experience you provide. Cutting this is tantamount to cutting service level in the eyes of your client, as they have now become accustomed to the perk. Without it, they may perceive your business as failing, and have a small excuse to look elsewhere. Once they do, and are successful, you have now lost a client over a cup of tea /bottle of water. You saved 20 bucks at the store, but you lost a client and therefore revenue totaling far more than tea for 100 people. Sounds small, I know, but EVERYTHING is about perception.
You may well be the most magical and amazing therapist on the planet. You could even make people levitate with your skills, but if you begin to let your client see you tightening the belt on their experience, you will lose them. It is that simple.
Find other ways to save without sacrificing anything to do with the client perception of your business. Smarter ways to cut back are ways that impact your personal knowledge of the business, not cutting in the eyes of the client. One way may be to look at your expenses, and see if you can consolidate some of them. Let’s take a look at how you might be able to do this without much upheaval in your daily life.
Take a long look at your vendors. Is it possible to combine your purchases and consolidate 3 vendors to one? In our hometown, you can get special incentives and discounts when you bundle all of your utilities into one package. I save about 20% when I utilize this service, and while I did have to pay a set up fee, I can lessen my monthly bill and therefore free up regular cash flow.
Another thing to look at would be your business advertising. This is often the first place people think they should cut. That being said, it can be the one place you should never cut. Again, we are talking about public perception, and if your clients no longer see you advertising or getting out in the community, you may just become a cliché; Out of sight, out of mind. You can really save money here on advertising if you are bit savvy about it. Buddy up with another business in your community that you could see as a complementary service to yours. Perhaps the Chiropractor, Clinic or Salon down the street could share some ad space with you, and you might split the cost. This could increase referrals for you, and save you money on advertising. All a win / win without sacrifice for the customer.
One more thing to consider is the rent or mortgage you are paying for your place if business. If you are renting, get a meeting with your landlord and see if there is a way to reduce your rent. Good, reliable renters are hard to come by these days, and rather than risk losing you at renewal time, they may well work with you on reducing your rent to keep you in place. If you have a mortgage, consider refinancing with a lower interest rate. You may have closing costs, but you will more than make that back in the money you save on lowered points. If your overall goal is to cut monthly expenses, this is a great place to start.
By protecting the perception of your customer, and making sure you maintain the value they have come to expect, you are saving money. How? You are likely not scrambling to figure out how to replace lost customers. You are also not trying to do damage control as a result of customers chatting to others in the community about how they changed providers because you don’t serve tea anymore and have had to cut back on perks. < Not the message you want floating around >