Cost-Cutting, the Magic Word. Or Not?

As the recession grows and business slows, are you tempted to look at cost-cutting as the solution to all your problems? No doubt, keeping costs on a tight rein will help you maintain some profitability. But while such steps will be necessary, are they sufficient to grow your business? Mostly not, and here’s why.
The Real Source of Growth

Business Owners, especially during recession, are often tempted to look at business growth as a function of cost. Cut Costs and you’ll be all right! Some blame competition, some government regulation. While cost, competition, regulation and logistics can all impact a business, none of them can grow your business.

Sustainable growth can only come from one source: satisfied and delighted customers.

Why Satisfied Customers Make All the Difference

It is well known that satisfied customers buy more often from you, are willing to pay a premium and often recommend you to others. It is also much more difficult to acquire newer customers. It is about 5 times more expensive to attract a new customer than to keep an existing one.

General Motors estimates that each of its customers has a lifetime value of over $400,000, taking into account the new vehicles a customer will buy as well as the service fees they pay.

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