New ways to cut costs without price increases

The Spring 2025 Fortune/Deloitte CEO Survey presents a consistent story of boardrooms experiencing a sense of cautious optimism controlled by an emphasis on fiscal responsibility. This is playing out with 42% of CEOs saying they want their teams to focus on cost-cutting measures without raising prices to avoid losing their  customers.

This is a strategic approach to enhancing operational efficiency and improving profit margins rather than random cost cutting. The challenge is hard. How do you tighten the belt without squeezing the life out of customer loyalty?

For companies armed with consolidated data and business intelligence, it can be done. The cost reduction strategies are informed by your data and the analysis helps you identify savings while preserving your customer’s experience with your business.

Leveraging data and analytics

The modern company is awash with data. The key is transforming this raw information into actionable intelligence. For CEOs or team managers looking to trim expenses without impacting prices, data and analytics offer a powerful toolkit.

Analytics can help you visualize existing business processes from supply chain logistics to customer service requirements. By analyzing this data, business people can identify bottlenecks and areas ready for automation. For example, data might reveal that a significant portion of customer service calls are related to an easily fixable issue or even a message change to your e-commerce website.

Analysis of financial statements can provide a granular view of how your operating expenses like parts, machinery or your marketing spend are being utilized. Are you getting the best price on material costs? Is machinery being maintained proactively to avoid costly downtime? Is marketing spend delivering sufficient ROI across different channels? Data-driven insights allow for the reallocation of resources and the elimination of waste. Many companies are shifting towards targeted cost actions focused on specific divisions or geographies.

Using data to better manage inventory and the supply chain

Effective demand forecasting that uses reliable historical sales data and product trends can significantly improve inventory accuracy. This means less capital tied up in excess stock, reduced warehousing costs and less obsolete stock which are all direct cost savings. Strong data and inventory management also prevents stockouts which can lead to lost sales and frustrated customers.

The Deloitte CEO survey notes that 71% of CEOs plan to expand or redesign their supply chains to mitigate risks and data analytics is crucial for making these redesigns efficient and cost-effective.

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Supplier relationship management and negotiation

Data analytics can provide insight into service providers’ performance and cost structures. With this information, companies can negotiate more favorable terms or collaborate more effectively with suppliers to reduce mutual costs. For instance, by analyzing transportation routes and logistics data, businesses can consolidate shipments and explore more cost-effective modes of transport.

Automation and artificial intelligence

The Deloitte report highlights that many companies are using generative AI tools for cost reduction (39%). This make sense as artificial intelligence is useful to replace manual tasks across finance so that your employees can do more value added work. The key is to implement these technologies with a strong data foundation, ensuring the automation is accurate and effective.

Holding onto customers

Cost cutting strategies are only half the equation. Doing so without alienating customers is the true art. This is where data analytics is also a customer retention aid.

Not all customers are created equal. Data analytics tools like Phocas Insights allows companies to segment their customer base based on recency and frequency of purchasing history, demographics and profitability. This enables targeted sales campaigns, personalized offers and customized service interactions that resonate more deeply with individual customers. As the Deloitte report suggests, leveraging advanced technologies like data analytics and AI to tailor products and services can enhance customer satisfaction and loyalty. If cost cuts necessitate changes to services or products, these changes can be communicated and potentially tailored to different segments to minimize negative impact.

By analyzing patterns in customer behavior (e.g., declining engagement, reduced purchase frequency, negative sentiment in feedback), predictive models like Phocas Insights can identify customers who are at high risk of churning. This allows companies to proactively intervene with targeted retention offers, personalized support or by addressing their specific concerns before they decide to leave. Retaining an existing customer is almost always more cost-effective than acquiring a new one.

Your data can also show which sales channels customers prefer and which are most cost-effective. Encouraging self-service through comprehensive online knowledge tools or AI-powered chatbots for simple queries can free up your people for more complex issues, optimizing costs while still providing effective support.

Systematically collecting and analyzing customer feedback through surveys, reviews, and direct interactions is useful. This data provides invaluable insights into what customers value and how they perceive any changes resulting from cost-cutting measures.

Companies that use this feedback to make iterative improvements demonstrate to their customers that they are listening and that they care. This can build significant goodwill and loyalty, even in an environment of fiscal tightening. If a cost-saving initiative inadvertently negatively impacts the customer experience, robust feedback mechanisms will highlight this quickly, allowing the company to adapt and mitigate the damage.

The Deloitte Spring 2025 CEO report highlights a challenging but manageable economic landscape. The desire to cut costs without resorting to price hikes is a testament to a growing understanding that long-term success is built on a foundation of both operational and financial efficiency and strong customer relationships.

Companies that have invested in good data and analytics tools are uniquely positioned to cope in this environment. They can implement targeted cost reductions that minimize waste and optimize resources. They can also use the same data and analytics to deepen their understanding of their customers, personalize experiences and proactively address concerns.

The balance between cost-cutting and customer retention is a delicate one. But with data as their assistant, CEOs and managers can navigate this path. It is possible to build lean and resilient organizations that can weather economic uncertainties but also emerge with stronger customer loyalty. The future may be influenced by those who effectively manage this data-driven approach.