At first glance, there’s an interesting contradiction in what UK CFOs are telling us.
Earlier this year, 68% of CFOs surveyed by Deloitte said reducing costs was a strong priority. Yet in its subsequent survey, 93% expected investment in digital technology to increase over the following 12 months.
Yes, businesses are cutting costs. But they’re still investing where it matters.
So perhaps those two things aren’t contradictory after all. And when a client says, “we need to cut costs”, it doesn’t automatically mean “we need you to be cheaper”.
Cost pressure isn’t necessarily price pressure
Sometimes price genuinely is the problem. Perhaps your product costs too much compared with the alternatives, or the budget just isn’t there.
But there are other possibilities.
They might not see enough value. Something else might have become more important. Or they might like the potential return, but lack confidence that you can actually deliver it.
All of those can arrive at your door sounding like cost pressure. And automatically knocking 10% off doesn’t solve all of them.
In fact, both extremes of discounting or overservicing can simply transfer your client’s cost problem onto your own P&L.
When money gets tighter, the case gets harder
The Deloitte numbers make more sense through that lens.
Businesses haven’t necessarily stopped spending. Instead, investments are competing harder for the money available.
I’ve experienced this myself.
I once bought additional market research capability when budgets were tight. “Our competitors are doing it” wouldn’t have got the investment through.
What mattered was the connection to future demand. Could we better understand what was changing in the market, how buyers were behaving and where future growth might come from?
That doesn’t mean you can slap ‘future growth’ onto a business case and expect it to sail through. Whatever the narrative, the route between what someone spends today and what might happen as a result still needs to be credible.
Make the future easier to see
This is where a lot of propositions fall down.
“We’ll improve efficiency.”
“We’ll save you money.”
“We’ll increase productivity.”
But what actually changes?
Which activities disappear? Whose time gets released? Where does the saving appear? What can the customer do afterwards that they couldn’t do before?
You don’t always need a suspiciously precise ROI calculator either.
A worked example with clear assumptions can give the customer something far more useful. Something they can interrogate, replace with their own numbers and, crucially, use to build and defend the case internally.
Just don’t leave it up to the client to make your value proposition tangible.
What if affordability really is the problem?
Sometimes the money simply isn’t there.
But there’s a difference between taking a £100 service and selling it for £80, and working out what the £80 version of that service should look like.
Could you reduce the scope? Phase implementation? Let the client do more themselves? Remove something expensive to deliver that isn’t fundamental to the outcome?
In the first scenario, you’ve given margin away. In the second, you’ve adjusted the exchange.
And sometimes – we just need to realise that there simply isn’t a deal to save.
Three questions to ask
The next time a customer tells you they need to cut costs, ask:
1. What’s actually driving the conversation? Is it price, affordability, value, priority or confidence?
2. Have we made the value easy enough to see and defend? Or are we leaving the customer to build the business case themselves?
3. If the price needs to come down, what changes in return? Can we change the scope or delivery rather than simply sacrificing margin?
At the end of the day, “We need to cut costs” is a useful signal. But it’s rarely the whole story.
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