COST Priority

In our recent E-Journal, cost management was one of the six priorities in the lead article dedicated to organizational recovery. Please remember that cost management is not the "slash and burn" culture that injures the organization, customers and staff. It starts with a value driven philosophy which is customer-centric followed by reinvention thinking on how we can do better through integration, innovation and interaction evaluations. What returns are generated with what risks and at what costs? Most organizations do not exhibit holistic, integrated cost understanding on all business aspects, segmented value propositions and customers preferences. The customers today control the value relationship!
Does your team understand what this means in their thinking around profitable relationships?
Many readily present transaction service cost data but are light on sales costs by channel to specific segments. How much do the implicit risks cost and are we competitive?
Cost management is not cost accounting. The priority is cost knowledge in everything we do and how those costs generate excess returns through the customer value proposition. Channels have proliferated with the Internet communications available today and more and more users are jumping on board for not only service transactions but also to purchase products. Segments such as women are accelerating this trend and service costs will be a fraction of "over-the-counter" expenses, as will be sales costs. Customer complaints are usually gems opening doors to unnecessary costs if they are managed for that purpose and not hidden amongst various branches and departments. What is the trend in variable costs versus fixed? You want to continuously build the variable portion and its benefit in terms of resources and capital.
The priority around cost today is a competitive necessity for survival, let alone profitability.

Pat Palmer | Sunday, August 23, 2009 | Comments (0) | Trackbacks (0) | Permalink