Planning on Staying in Business? Stop Cutting!

  This company saved a buck but left customers angry and disappointed.
Yesterday we talked about the perils of cutting expenses and shrinking the business without giving thought to the consequences. 

We said that cost cutting measures usually interfere with the job of selling and will, therefore, reduce revenues over time.

This story illustrates the point.
The retailer in this story is a well known ice cream and chocolate company that was once owned by a huge international company who sold ice cream and confections, and more, to wholesalers and distributors.  

When they decided to sell off the relatively small retail chain of ice cream and chocolate stores, they did something that was almost unthinkable!  

Well, to the employees and loyal customers it was unthinkable.

They got rid of a little perk customers had come to love…and expect.  

Customers had been forced to endure quite a few changes over a relatively short period of time.

Every change was a cost cutting exercise for the company.  

For one thing, the free gift wrapping they had come to expect was no longer available.

Too expensive…even with the advertising benefit taken into account.  

Then some of their all time favorite products – staples of the business for years – were no longer available as they were, apparently, not profitable enough.   

Finally, the small, oval chocolate that had always been placed on the top of every ice cream cone sold, was discontinued.  

That was the straw that broke the camel’s back, so to speak. 
It was almost hysterical!  

For years, at the front of every shop, stood a huge cutout of a picture of an ice cream cone with a small, oval chocolate on top.  

The chocolate was inserted into the top of every ice cream cone served…as advertised.  

The cutout/stand was made of very durable material – hard, thick, plasticized corrugated material.   

The cutout was moved into position every morning when opening the doors.

Customers loved that chocolate…adults and kids alike.  

I would go so far as to say it often made the difference when choosing which ice cream shop to buy their cones from.  

District Managers were issued heavy duty scissors and told to go out to the stores and cut off the oval chocolate as they would no longer be putting the chocolate on ice cream cones and didn’t want to represent that they would.
The reason I say it was almost hysterical is because of the scene.

Try to imagine a professionally dressed individual kneeling on the floor, wresting with a toppled 5 foot tall cardboard cutout of a huge ice cream cone, at the entrance of a store, using a giant pair of scissors to cut around the shape of a chocolate that was at the top of it. 

It was extremely difficult to cut the chocolate out and the appearance, after the surgery, was terrible.
  It was ridiculous.   

Customers were very unhappy and made  their views known to store employees.    

Store employees, in turn, made their views  known to their District Managers but to no avail.

The chocolate was gone. End of story.   The change was not going over well at all. But that didn’t matter. 

You know why?   Unbeknownst to field personnel, the chain was being sold.

It was deemed important for the chain to show as much profit as possible so prospective buyers would see it more favorably.   

For the current owner, who had no intention of growing the chain and planned to sell it within the year, it made sense.

Cut, cut, cut and future business be damned.   For customers it was a loss.  

For the buyer who was not likely aware at the time, it meant nothing until after they made the investment and soon came to find out that the chain had recently lost a lot of loyal customers – the worst kind to lose!   

Eventually, the small oval chocolate returned.

The buyer of the chain realized it was an important part of the customer experience.   

The moral of the story is this:    If you’re selling your company then you will do whatever you feel you need to do.   

If you plan to stay in business and prosper, don’t cut indiscriminately.   Reduce waste, of course.   

Cut unnecessary expenses, absolutely.  

Find new sources for things and make sure you’re getting the best you can for your money.   

But be certain that your cuts won’t negatively affect customers, profit and future business.  

It can be difficult and we can help you.
Register for  The Retail Operations Management Workshop ONLINE: Next Available Session – Tuesday, August 31 & Thursday, September 2, 2021 9 AM – 12 PM Eastern (New York) (3 Hours Each Day) Registration covers both sessions.

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The full presentation and recording is sent to all registrants, whether you attend or not, so scheduling is never an issue.
Or, get personal attention from our Operations experts. Check out the program here.
We love to hear from you! Let us know how your business is doing.

Until next time,
All the Success!

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