Contrary to what cost-cutting beancounters contend, the slashing approach during economic downturns may do more harm than good to profits.
Now, new research shows that programs aimed at building revenues through customer retention and loyalty are far more successful at generating profits than any other approach.
Researchers say cutting costs is not the best way to go if your company wants to boost profits during a downturn. It found that the most profitable companies flew in the face of conventional wisdom.
Instead of looking for ways to cut costs and increase revenue, these winners had a single-minded focus on boosting revenues through increased customer satisfaction and retention. That doesn’t mean they ignored cost savings. They just emphasized cost savings less than other companies did.
