Is there such a thing as too much cost cutting?

Is there such a thing as too much cost cutting?

When I travel for speaking engagements, my accommodations are often booked for me.  I checked in early to my Holiday Inn Express room in Houston yesterday.  As I looked around my room, signs of bean-counter hell abounded.  As I scratched my itchy skin, I noticed that only shampoo and conditioner were in the bathroom.  When I went to iron my clothes, I noticed something odd about the ironing board.  It only was as high as my mid thigh. I am 5 foot 11, so this miniature ironing board was easier to use on my knees rather than bending over. 

When I returned to my room later that night, they did not replace my coffee and the room was hastily cleaned at best.  When I went to print my boarding pass at the business center, they had moved the printer to behind the check-in desk so I had to wait in line to get my one page printout.  What’s my point?  Not to complain about Holiday Inn, but to ask, “Can you cut one too many corners in the name of cost-saving?” 

Can a quest for a low-cost business model end up alienating customers?  After my stay, I would say “yes.”  I have never been a 4-star hotel guy.  Holiday Inn type hotels are fine in my book.  However, I will admit that Holiday Inn Express has now been demoted to my “last resort” list vs. my “acceptable hotel options” list.  All this so they could save $2.48 on an ironing board, $.06 on printer output and $.15 on a bottle of moisturizer? 

In tough economic times, the single most important activity is retaining customers.  It is expensive to gain new ones.  Some companies do not have sufficient funding to aggressively pursue new customers en mass.  For Pete’s sake, don’t cheap out like Holiday Inn and lose a customer over a few bucks.  It’s always better to over-spend on customer retention than under-spend.  If you lose the customer, you can’t “un-ring” that bell. 

Venting aside, low-cost business models can be a powerful ally.  However, make sure that the level of customer service and satisfaction is acceptable as well.  Remember the old adage, “Price, service, delivery: pick any two.”  However, you cannot completely ignore the third component.

Wal-Mart may skimp on the service or shopping environment vs. Target and Macy’s, but shopping at Wal-Mart is acceptable.  The shopping experience meets the customer’s expectations for a Wal-Mart visit.  When you make the mistake of Holliday Inn, you fall short of the customer’s expectation in the name of lowered cost.


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