How To Cut Costs and Boost Business Growth During Tough Economic Times

E-commerce business leaders are under pressure to drive growth while cutting costs. Many find themselves caught in a difficult economic situation — sandwiched between stubborn inflation, rising interest rates, and a potential drop off in demand.

However, if cutbacks negatively impact the customer experience (CX), it could dampen growth long into the future. That means e-commerce business leaders must toe a fine line by trimming costs while improving CX.

Here’s the good news: Most business leaders don’t realize they can strategically drive down costs and lift CX at the same time. Here’s a look at how to accomplish both.

Start by Re-Evaluating Cutbacks

It’s common for business leaders to assume all spending cuts are helpful when economic uncertainty surfaces. But cutting in the wrong areas — such as CX — can stifle long-term growth. Most companies are now competing mainly based on CX, and studies show that profit for customer-centric brands is significantly higher than for brands that don’t focus on CX.

Even if businesses are willing to put their growth plans on hold, abandoning CX upgrades is unwise. One survey found that 65% of consumers severed ties with sellers as a result of a poor customer experience. That means companies that aren’t actively working to improve CX could easily hemorrhage customers. Once a business’s reputation slides, it’s difficult to regain ground on competitors who have continued investing in better CX.

Target 3 Areas of the Business To Lower Costs and Improve CX

It may feel counterintuitive, but business leaders need to invest more strategically to lower costs and improve CX. That means funneling time, resources, and energy into growth drivers — and cutting in areas that don’t serve those growth sources. Here are the three areas of the business to focus on in times of economic uncertainty:

1. Customer Retention

Too often, business leaders assume growth is only possible by expanding sales. Then when the economy declines and sales prospects dwindle, the company’s growth engine sputters.

Many leaders don’t realize that they can save money and increase long-term growth by limiting customer churn. There are a few reasons increasing retention helps boost companies during economic downturns:

• It lowers costs: By focusing on improving the experiences of existing customers rather than trying to track down new customers, the business can reduce customer acquisition costs. Bringing in a new customer can be five times more expensive than retaining an existing one.
• It drives long-term growth: Focusing on current customers opens new upsell and cross-selling opportunities. Reports suggest that businesses have a 60-70 percent chance of selling to existing customers — compared to just a 5-20 percent chance of selling to new customers. That means e-commerce businesses can increase customer loyalty while lowering customer acquisition costs.

2. Employee Experience

Improving employee experience (EX) is vital for several reasons. First, EX directly influences the customer experience. More engaged and happier employees pass on positive experiences to customers.

Second, employee churn is expensive. According to Indeed, hiring a single new employee can cost between $2,000-$20,000. By creating better employee experiences, businesses save money on hiring, onboarding, and retraining. At the same time, investments in the employee ripple out to the customer — and drive growth.

3. Data Analytics

Most business leaders are sitting on a pile of data but don’t always squeeze the most they can out of it. By enabling the right tools, businesses can analyze the data they’re already collecting and identify opportunities to save and improve experiences. Overall, data analytics highlights what strategic adjustments will unearth the most value.

How to Improve Customer Retention

Here are a few ways to improve customer retention and lift loyalty:

Identify critical customer touchpoints.
The first step in lifting customer retention is identifying 3-5 critical customer touchpoints. These are the interactions that most impact a customer’s decision to stay or leave your brand. Search for these critical moments across all channels in the customer’s journey — and always back them with data.

Understand friction points.
Within those critical customer touchpoints, look for friction or pain points that make it hard to do business with your brand. Use customer data and research to identify the root cause of the pain point and determine an action plan.

Are customers making it to a checkout page but struggling to pay online? Is there an issue causing a high number of calls? Repairing these gaps in CX are low-hanging fruit that often yields high returns.

Create a CX roadmap.
To address friction points, develop a CX roadmap to address pain points and create new and enhanced future state experiences. Each initiative on the roadmap should be prioritized based on customer value, company value, and cost/complexity of implementation.

How To Improve Existing Employee Experiences

There are a few ways to build better employee experiences quickly:

Dig into causes of employee churn.
One of the most efficient ways to improve employee experiences is to identify what’s causing employees to leave. Is it related to remote or hybrid culture? Is it work-life balance or compensation? Whatever the cause, recognizing it is the first step to solving churn problems.

Search for training opportunities.
Not every organization will have retention problems. In those cases, look for training and development opportunities. Dig into customer data, find any employee knowledge or skills gaps, and use training to fill those gaps.

Use technology to increase productivity.
Employees don’t enjoy work when they feel they’re unproductive. That’s why organizations need to use technology to help employees accomplish more — whether through existing tools or by bringing in new ones.

Leverage AI platforms and bots to reduce employees’ time writing emails or conducting research. Whatever the bottleneck, technology can free employees up to do more specialized and meaningful work.

How To Leverage Data Analytics

Here are a few quick tips for using data analytics to lower costs and improve CX:

Dive into digital channel data.
To use data analytics effectively, locate the channels that are critical to the customer’s journey. From there, pick out any choke points. For instance, maybe purchase journey data shows prospects are falling out of the process after they’ve filled their shopping cart. Look at the possible reasons why and build out a plan to solve the issue.

Track down what’s driving calls.
Tools like speech or chat analytics can uncover why customers call the business. This technology can highlight high-volume topics, customer sentiment, and the root cause. In turn, business leaders can fix the problem, reduce calls, improve CX, and lower service costs. It’s another tactic that can turn out high returns quickly.

Businesses Can Accelerate Growth During Economic Downturns

Even if the economy dives, e-commerce business leaders can grow their organizations. But they need to stay laser-focused on CX, EX, and data analytics. Leaders can push down costs and position the organization for long-term gains by investing in these key growth drivers.