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Observers say keeping customer care high will help companies thrive after downturn

Business owners who lay off workers face a litany of concerns.

They ponder severance packages. They fret over the morale of remaining employees. They worry about the well-being of the people they let go. They even stress over the potential legal liabilities that come with terminating staff members.

The last thing most business owners think about is how layoffs will affect their company’s customer service.

And customer satisfaction is one of the worst elements to overlook, experts say, because boosting service amid recession can help companies accomplish a host of goals, from improving their brand to papering over higher prices to securing a permanent new base of clients. In short, sustaining high service levels in a downturn can pay major dividends for businesses after a torpid economy improves.

“Eventually, we always come out of these (recessions). Companies like ours that really focus on customer service as a key component during these times are usually big winners in the long run,” said Scott Voeller, vice president of marketing and advertising at Mandalay Bay. “As things come back, people remember how they were treated. If guests had a great experience, the opportunity to turn them into loyalists is so much greater.”

Added Martha Rogers, author of “Rules to Break and Laws to Follow” and founding partner of Connecticut consulting firm Peppers & Rogers: “Many companies cut things that affect the customer experience, and unfortunately, many of those companies are not going to finish the downturn. They’re certainly not going to come out on the other side of it very well. They’ll be helping themselves six months from now, but they won’t be helping themselves in a year or five years.”

Balancing staff cuts with customer service is an unusual conundrum for Southern Nevada’s dominant employment sector, noted Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno.

The casino industry isn’t accustomed to boom-and-bust business cycles. Gaming companies have always existed in expanding markets. The lack of experience grappling with business contractions has yielded “strategic weaknesses” inside gaming companies, with cost reductions that aren’t as “strategically balanced” as they might be in a more-mature industry, Eadington said.

Plus, some of the city’s bigger casino operators have few choices beyond cutting staff. Eadington cited Harrah’s in particular, pointing out that the company can’t issue stocks and bonds, or sell assets.

“When you have a big gap between your debt obligations and your cash flow, the only thing to do is cut workers,” Eadington said. “And everywhere you cut, you have an awful lot of people interfacing with customers.”

Harrah’s didn’t comment by press time.

But even nongaming businesses with downturn experience often gravitate toward cuts that affect customer service. That’s because slashing part-time workers inside call centers and other service areas is easier than, say, closing an entire branch or factory temporarily, Rogers said.

Keeping fewer workers on hand will raise service issues at any consumer-oriented business, said Lise D’Andrea, president and chief executive officer of Maryland-based consulting firm Customer Service Experts. With a smaller roster, companies have less flexibility to respond to a sudden onrush of customers in busier hours, for example.

And service doesn’t suffer for lack of workers alone. It also hurts from the bad morale that often accompanies layoffs. Staff reductions put increased demand on surviving employees. Morale problems can crop up fairly quickly, and “customers are not insensitive to vibrations from unhappy employees,” Eadington said.

“You’ll probably find a lot of concern, angst and dissatisfaction at what has occurred, with a lot of people saying, ‘I have to keep my job, because there’s not any alternative, but it’s certainly not as fun as it used to be,'” Eadington added. “Employees have more work, and it’s not as fun a job.”

Paring costs — and workers — doesn’t need to harm your clients’ experience

Consider Mandalay Bay.

Voeller wouldn’t disclose how many workers Mandalay Bay has let go, but the property’s parent, MGM Mirage, has released thousands of workers companywide since the recession began in late 2007.

Despite the cutbacks, daily e-mail surveys of recent Mandalay Bay customers show a “tremendous upswing” in customer satisfaction month-over-month since November, Voeller said.

Credit part of the improvement to a focus on employee morale and communication with workers.

MGM Mirage started a daily newsletter through which managers can share ideas, and employees can read suggestions for helping the company. And managers at Mandalay Bay frequently talk with employees about the recession’s impact on the hotel-casino, Voeller said.

Managers at Mandalay Bay also remind employees constantly that in today’s economy, consumers chase value above all else. Supervisors keep employees constantly updated on hotel specials, new value menus at restaurants and events designed to drive business.

Mandalay Bay has grown more efficient and flexible with its staffing levels, too. Property managers don’t maintain the same level of workers at all times. If they expect a big surge in visitors because of a concert, boxing match or big convention, they adjust staff accordingly, and downshift if customer volume lightens.

Nor has the hotel eased up on training programs. It continues to offer online education, as well as seminars and intradepartmental training. Also, managers meet with workers regularly as individuals and in groups to ask for workers’ thoughts on where and how Mandalay Bay can deliver more customer service. Mandalay Bay has even gotten back-of-the-house workers, who don’t typically deal directly with customers, into the customer-service act, asking them to greet customers on their way to work, and having them welcome customers to the property and wish them a great day. It’s one of the smaller touches that’s increasingly shown up as feedback in those daily consumer surveys, Voeller said.

For Mandalay Bay, it’s not just about keeping the customers the hotel-casino already has. Thanks to the recession, the property has a new customer base, and serving that base well today could secure a permanently expanded clientele.

With the recession forcing room-rate cuts, consumers who couldn’t afford to stay in some of the Strip’s higher-end properties during boom times can swing the expense now. Internal numbers reveal recent upticks in first-time visitors at Mandalay Bay and The Hotel at Mandalay Bay. The goal: to wow them with service, so they’ll come back, and so they’ll recommend the property to others.

“People are making choices about where to spend their dollars, and in an environment that’s all about interactions between people, I just can’t think of anything more important than customer service,” Voeller said. “I don’t think you could put enough emphasis and dollars into taking care of the guest. The guest absolutely has to come first. Everything else will fall into place.”

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.

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