Is Cost Cutting Always the Best Move? Try Asking Your Customers

A recent article by CNBC highlighted 2024 as the year for cost cutting,as industries and Fortune 500 executives implemented layoffs and other measures to slash expenses. While I realize the importance of maximizing shareholder return, I can’t help but wonder if focusing on the short-term versus delivering longer term value is the right strategy, let alone what  the fallout would be.

When cost-cutting decisions like these don’t go hand-in-hand with a good customer experience, astonishingly, nearly two-thirds of executives say they are actively making tradeoffs between customer satisfaction and cost efficiency.

In short, this is a scary and narrow-minded approach, often resulting in a race to the bottom.

Further evidence by a recent Accenture report states customer service is “on the brink.” Out of 7,000 customers surveyed, Accenture found that three in five customers felt frustrated and annoyed after at least one poor customer service interaction in the past 12 months.

The consequence of this experience as stated in the report?

“That one lousy interaction can cost a company,” wrote Boring Business Nerd in a recent blog post. Nearly 90% of customers who recently had a single negative experience said they would likely avoid the offending company in the future. In the race to cut costs, too many companies are trimming the wrong things.”

I couldn’t agree more! Now is not the time to undelight the customer. And as a reminder, here are a few examples of those who chose to delight the customer by creating a great buyer’s journey with significant results.

Coach Play

Coach Play stores were designed with the intent to capture the hyper-localized experiential stores that offer a playful approach to store design, focusing on local community integration and unique experiences for customers. The result: reported in February during the second quarter of its fiscal 2025, Coach’s sales increased by 10% year-over-year to $1.7 billion.

 

Chili’s Comeback

Chili’s has revamped its menu and remodeled its restaurants to keep guest interest alive. As a result of their refresh, traffic at Chili’s rose almost 20% in the three months ended Dec. 25, indicating a trend that appears to go beyond just a temporary promotional spike.

The Foot-Covering Business

Skechers focuses on what executives humbly refer to as the “foot covering business.” They prioritize comfort and affordability over trendiness, as outlined in their comfort playbook. The result: they are the world’s third-largest footwear company, achieving $8 billion in sales over the past decade, up from $1.8 billion roughly 10 years ago.

Crumbl Cookies

Crumbl Cookies effectively harnessed the power of social media, boasting 9.6 million followers on TikTok and a devoted customer base eager to try its latest flavors. The result: Crumbl's franchisees generate over $1 billion in annual sales, and the brand has sold more than 300 million cookies to date. Crumbl posted a net income of nearly $31 million on revenues exceeding $122 million last year.

Dutch Bros

Dutch Bros attributes its achievements to three key elements: innovative drinks, exceptional customer service, and a unique company culture. It is quickly approaching 1,000 stores and nearly $1 billion in annual sales. With its stock up 74% year-to-date and an average unit volume (AUV) of $1.97 million, Dutch Bros is outperforming major players like Starbucks and Dunkin’ Donuts, which have AUVs of $1.82 million and $1.30 million, respectively. Additionally, Dutch Bros reported a 30% increase in revenue during Q3 2024, opened 156 new stores in that same period, and has plans to open over 4,000 shops in the next 10 to 15 years.

Overall, customer delight should be the epicenter of your brand—not a cost-cutting measure. Therefore, I ask: What are you doing to deliver a great customer experience? More importantly, how is that experience designed to delight your consumer? And what happens if you don’t? (Just look at recent moves by Nike, Kohls, and Southwest Airlines for examples.)

How do we build customer success? Let our Branding, Strategy and Marketing (BSM²) practice help define your consumers, their values, and, more importantly, the experiences they are seeking.

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About the Author

Eric Rittenhouse works at BSM Partners as Business Development Manager. His areas of expertise include business development, sales and trade marketing while helping brand companies uncover and execute on opportunities to strategically dominate their niche in the consumer product space. He has completed the Blue Ocean Practical Introduction certificate by the Blue Ocean Academy and is Action Selling Master Certified by Action Selling and The Sales Board.