Intelligently containing costs by using the right tools to understand the products and customers who deliver bottom-line profit vs those that cost you money, along with smart ways to motivate your staff to be more productive can make a huge difference. You need to hang on to your customers, and motivated staff who know what they are doing can help you do just that. iStart investigated a number of approaches and found some interesting solutions...

1. Support sales
Look for opportunities to better connect staff with customers and prospects – and improve sales staff performance at the same time. Management consultants McKinsey looked at this issue in its recent report, Managing IT in a downturn: beyond cost-cutting. It gives the example of a bank that wanted to increase its salespeople’s productivity.

The bank had been relying on haphazard paper-based referrals from tellers for sales leads. It improved on this by fully automating its sales process, providing staff with a window on sales progress at all times. Staff performance was also tracked, with more leads being directed to the more successful sales staff. The system also featured call scripts to help reps push new products. The result? A doubling of sales calls, more sales and much better productivity.

Consider if all your staff know how to recognise a sales lead and, more importantly, what to do with it.

2. Simplify pricing
Businesses often over time create complex pricing models, and these can be a headache for both staff and customers. McKinsey also looked at this issue and gave the example of a telecommunications company that increased revenue and profit on new contracts by centralising disparate information. This uncovered unnecessary discounts and inconsistent pricing, which, in turn, led to simpler, more customer-friendly pricing.

Airlines have led the way with simplifying their product/ price offerings, overcoming hard-to-fathom prices, terms, and conditions. The Air New Zealand Grab-A-Seat offering is a good example, with simple one-seat, one-plane, oneprice ‘grab-a-seat’ deals. It has worked profitable wonders for the airline, putting bums on seats as people have clicked to spend money on tickets they would otherwise likely not have bought – in the process converting them to become loyal and cheaply serviced air travellers.

If you can’t quote the cost and terms of your key products or services in less than a minute there are probably opportunities to simplify your elevator pitch. Your sales team and clients will thank you.

3. Do the Numbers
Gathering detailed metrics on the performance of your business – including suppliers and customers – can help trim unnecessary waste by giving you a window into what is happening in different business areas. iQ4bis’ general manager, Sunesh Samarasinghe, whose company specialises in BI solutions, says his clients are using BI to optimise business efficiencies to help beat the recession. Examples include cashflow analysis, and identifying slow-paying customers.

“Ask yourself whether they’re worth it in a recession,” says Samarasinghe. “Ask: how much is this guy really costing us? Remember the 80/20 rule (20 percent of customers generate 80 percent of business).”

Samarasinghe suggests companies also look to optimising the supply chain. “Ask: who are our suppliers? Who’s supplying on spec vs exceptions that need to be managed?

Pull the data on the company’s assets out of your BI system too, and ask yourself what assets are worth keeping and what aren’t, says Samarasinghe. “We’re getting lots of enquiries around vehicle fleets; analyse each vehicle in terms of running costs. Is it cheaper to get rid of them or buy new ones – or lease instead?”

The same questions can also be asked of stock. Use BI to analyse inventory turnover and ask whether you need to carry so much stock, says Samarasinghe. Similarly with staff – “look at sales reps’ efficiencies and do margin analyses.

A rep’s dollar sales value can be high but the margins low compared with someone who is selling less in dollar terms but whose profit margin is high.”

An extension of this thinking is provided by Convex Plastics’ use of their ERP solution (Microsoft Dynamics AX). Convex created multiple-level bills of materials for its products. This component approach then made it easy to build quotes for its made-to-order products. CEO Owen Embling reports that “We can now deliver a customer a quote within 15 to 30 seconds.” This is down from a minimum of 45 minutes. His vision is for sales reps to be able to “quote on the fly using their PDAs”.

This kind of smart pricing methodology is critical in preserving profitability in sales negotiations – and reducing the pressure to discount too heavily. For example, suppose your customer likes the $10k solution you are offering but only wants to pay $7k. A multi-level, itemised quote could either be used to justify the $10k price or to help him or her decide what service or quality components to leave out or compromise on, without affecting your margins badly by just dropping the price.

4. Streamline processes
Another technique is to combine sometimes complex back-end processes with a customer-friendly web front-end so customers can help themselves. This also saves on staff costs, and is an approach recommended by Australian design and software agency Gruden.

CEO Todd Trevillion says, “What I’m hearing from clients is all about how they can work smarter with the use of technology efficiencies across the whole company.” “You’ve got reduced headcount, work is being dumped on someone’s desk, how do you deal with it?”

“And, when it comes to process and workflow, clients are asking how to use technology to eliminate human touchpoints.” The problem is typically that they have new initiatives to deliver, but no more headcount, so they can’t handle changes in the traditional way, says Trevillion.

Gruden deals with finance and insurance companies, where, he says, these issues are focused around signing up customers. So, as well as integrating their back-end systems better, which makes for a smoother sign-up process, these companies have been creating an attractive front-end for customers. Gruden uses products from the Adobe suite (“flex” and “lifecycle”) to take care of the back-end and tie the two together.

“Adobe flex is a smart way to create intelligent forms that are easy to complete and so make for a nice user experience. Rather than have people step through a series of buttons, you have everything on one screen. This results in a much higher completion rate,” says Trevillion.

The forms are made even less daunting by only including the important information, and by being nicely presented, says Trevillion. This saves on staff time, as customers are effectively doing some of the work. Dashboards are then included in the back-end, so staff can see the current status of sign-up activity at any time.

5. Innovative, cheap marketing
The big TV, radio and newspaper marketing budgets tend to come under pressure in tough times, but there are smart ways to approach your marketing spend by using your website, email marketing and, increasingly, texting.

If your brand culture can cope, get creative by targeting email newsletters with humorous, edgy or controversial content. You benefit from low cost mail distribution, direct trackable links through to your website and also, potentially, from the viral effect to grow your prospective customer base.

Also try adding a newsy blog to your website – by generating new fresh content you attract google traffic, encourage a longer stay on your pages and develop rapport with visitors that will pay back if they go on to become clients.

TXT response mechanisms also provide an instant feedback mechanism to better track advertising effectiveness, and get actionable sales leads. A recently launched service (TXT2GET) is designed to allow campaigns to be created easily, and also allows for the response to include an e-mail address so you can use TXT response to start communicating with prospects via (free) email.

So get creative and look closely at your marketing plans – craft campaigns that give a reason to act and a fun element that encourages responses – and think about not just this campaign but future ways to communicate with those who have responded to previous initiatives.

6. Review IT
The Big Bang IT budget is another that comes under pressure when budgets are squeezed, but there are a number of ways to continue to deliver incremental process improvements or simply save costs. Here are a few:

• Consider free software services like Google Docs for your non-secure working needs. This web-based service allows staff to work on and review work-in-progress at any time. It’s good for getting remote workers to collaborate, as they don’t all need to be in the same place and can view the work plan whenever they want.
• Look to buy in services that you can’t support, such as CRM. Our case study on Eco-decking features their local distributor Outdure, which has opted for a hosted open-source CRM service as IT is not part of its core business.
• Cut back on the toys. Do your people really need the latest expensive smart phones or are they just status symbols? Indeed, do they all need high-end $2,500 laptops when there are now $400 netbooks that might serve just as well for their mobility needs? Netbooks are the small, internet-enabled notebooks with flash drives (just like your USB stick) that can run simpler, less resource-hungry or browser-based applications that might be all you need to meet your business needs. They are small and light and so are ultra-portable, with no moving parts. They are also great for web/online applications.
• Upgrade rather than replace. Many PC problems can be solved by simply applying more memory. If you are running Vista, for example, your PCs are using a lot of memory. Upgrading your memory can be a cheap, effective way to improve productivity and reduce the load on your IT support team.

7. Train for better productivity
Staff productivity is another big recession issue, but many organisations pay very little attention to training even though it can lift it considerably.

IT productivity specialist and writer Debbie Mayo- Smith says it’s amazing how much more effective staff can be if they’re actually trained to use software properly, for example. She describes how a Wellington manager thought his staff didn’t need any database training. Later, she discovered his staff were enduring days of hell to put regular email marketing lists together.

A quick lesson in Excel use resulted in instant lists, and the “ladies”, she says, “nearly fell over in joy”.

“We were able to show them several different functions in Excel they could do instantaneously, instead of taking hours or days to complete everything row by row.”

The above story is a neat illustration of one reason New Zealand has a staff productivity problem and how to fast-track improvement through training. A number of companies are experiencing downtime now, perhaps you could use this time positively to upgrade staff ’s skills and reap rich rewards beyond better Excel use?

8 Make staff more productive
It is a simple thing to say, but delivering real change initiatives takes time and effort – and time out from the day to day grind.

• Team building. This isn’t a luxury in recessionary times, as it could provide the competitive edge you need and help motivate staff to perform at above and beyond level you need them to. In a recent White Paper entitled, Team building magic, recruitment specialist Drake International talks about teams needing to “play together well”, and providing them with the skills to do this. It says a team needs clear goals and a mix of personalities to deliver. It also suggests looking for a leader with a mix of drive and relationships skills, as such a person can move “forward with velocity and achieve consistently extraordinary results.” Good teams are built on trust, says Drake. It suggests that at your next team meeting you ask each person a non-business question to learn more about each other and so build that trust. Suggestions include: “What is your favourite place to travel? What inspires you? Remember to share something about yourself as well,” says the report.
• Fun activities. These can be part of team-building. They can also be useful for building trust and creativity. Auckland Council engaged in a recent controversial team-building exercise, getting staff painting a picture of their workplace, to encourage creativity. It was seen by the New Zealand Herald as wasting money, but creativity can pay off (see No. 9 below). This may not be your company’s style, but looking to the unusual can help inspire and motivate teams. After all, the Apple PC was dreamed up during beanbag-lounging chat sessions.
• Performance management. In another White Paper on performance management, Drake recommends companies take a partnership approach to staff performance. They should view themselves as coaches, setting goals to motivate staff – without goals, employees often view work as a pointless grind. Clear guidelines are also part of this, says Drake. Employees generally respond well to these. “Yet often, particularly within smaller organisations, these elements simply do not exist.” Writing key policies and procedures into job descriptions at offer time is worth the effort and lays things out up front while you have the employees' attention. It pays dividends, as staff know what their jobs are and their performance can be measured, and this, in turn, contributes to the bottom line.
• Time management. Law firms and PR firms both use time-management software as a means of both controlling staff and as an aid to billing – it allows them to itemise staff ’s time on client accounts. If you have slacking-off problems, this can mitigate time-wasting, as staff have to log their use of time in anything from 30-minute to six-minute intervals, which keeps them focused on doing productive work. Some people swear by it; others hate it. It requires investment, but can pay dividends in both staff productivity and improved client billing and relationships.
• Getting tough. If you do have to get really tough with, say, staff who spend too much time surfing the net, just lock out the problem sites. You should also have an IT-use policy – and make sure everyone has a copy. This should prohibit improper use of work PCs and can be referred to in disputes.

9. Creative lessons from Gen Y
It’s tempting to just get one’s head down in tough times, but this is just when creative solutions are needed – they can open up opportunities and shave costs. A recent Economist magazine article entitled, ‘Generation Y goes to work’ described how cosmetics firm Estée Lauder launched an initiative called iForce, to bring together young staff to dream up ways of marketing products using emerging technologies.

It also quoted the example of US consumer-electronics giant Best Buy approaching an external consultancy to build a new employee portal. Shocked at the multi-million dollar quote, it turned to its young employees, who put together a small team of developers from their own networks.

They produced a new portal for a fraction of the cost. Another “Net Gen-er” at the company cobbled together a mobile-phone version of Best Buy’s website for fun in just seven days in his spare time.

Recent research by Drake on NZ and Aussie Generation Ys throws light on what’s happening here. Young workers want “challenging, fun, stimulating work”, says Drake. They’re not uninterested in the bottom line, but they want recognition and to be consulted. The examples above fulfil those needs – profitably.

10. Shedding staff?
Think creatively here too – you’ll need them again when the upturn comes. So, if you can, instead of making people redundant suggest they go part-time. Some people might even prefer this, or if they don’t they’ll probably see it as preferable to redundancy. You may lose them to another job, but you will retain their goodwill. And, if they do choose to stay, you’ll retain their skills, while trimming the wages bill. The working-from-home option is also popular with some staff, particularly those with young children, and can help trim office rental costs.

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