Executives are looking for savings in all the wrong places. Attend any business conference these days and it’s easy to believe that cutting-edge technology is the only way to make money or reduce costs. Hot trends like artificial intelligence and virtual reality are irresistible to senior managers — who’s not afraid of getting left behind? Yet these aren’t sure bets: One in three enterprises that invest in AI are either not seeing returns or not effectively tracking their return on investment.
Exploring cutting-edge tech is important, but many senior managers are overlooking how to use those technologies to attack low-hanging fruit that can yield big savings or bigger profits. In short, our thinking is stuck in the boardroom, making big bets on strategy and high tech, and we’re forgetting to look in the boiler room where real, practical and relatively immediate action can take place.
There are approximately 5 million commercial buildings in the U.S., and these buildings account for hundreds of billions of dollars in maintenance and repair costs annually. The teams that run these facilities hold the (literal and figurative) keys to cutting costs and driving up sales. Store, restaurant and bank locations consume vast amounts of energy and serve millions of customers every day, yet many executives view these as “solved areas” that can’t be further optimized for greater savings and other customer-facing benefits.
Your buildings are the face of your brand, and it’s worth investing time and effort to ensure they’re running as efficiently as possible and putting on the best face for customers. Better building maintenance reduces costs and creates greater customer experiences and loyalty.
And your customers do notice. For example, our recent survey on the state of brick-and-mortar found that seven out of 10 shoppers have had a negative experience in a store in the last six months, and that these bad experiences make them less likely to come back. Common complaints were half-stocked shelves, disorganized layout and lack of cleanliness. These are not hard problems to fix, and they don’t require hefty investments in robots or VR goggles to do so.
Maintaining equipment is another big issue. Lighting and HVAC systems consume a ton of energy, but managing them smartly can greatly reduce costs. Here, technology can play a role, but it doesn’t need to be experimental. Simply maintaining and monitoring equipment more proactively, to ensure it’s running efficiently, will lengthen its lifespan, reduce electricity costs and improve the customer experience. Proper insulation can save millions on heating bills, and LED lights are far more efficient to run and maintain.
We should also pay more attention to labor costs. Are you paying the same for electricians in New York, Nevada and Nebraska? If so, you’re being overcharged somewhere. Did that service technician in Wyoming really show up and do the work? How well did they do it? These costs add up when you’re running hundreds or thousands of buildings; tracking them more closely nationwide, with real data and benchmarks, will help the bottom line. According to data we collected from a national chain that has close to 10,000 locations, benchmarking prices to ensure vendors are charging transparently and fairly can save millions of dollars per year.
And what of high tech in these physical locations? It certainly has a place. Many of the leading brands are experimenting with robots to stock shelves and count cash. But these investments must be targeted with a clear ROI. The fact is, customers care a lot more about cleanliness and quality than they do about having their faces scanned when they walk in your store.
In fact, our survey showed that high tech can work against you when it’s not done right. Four out of five shoppers said they would rather have a clean store than one that prioritizes tech, and two-thirds think retailers are too focused on tech and not enough on the basics. In fact, four out of 10 shoppers said they would be less likely to shop in a store that uses facial recognition technology. People find it creepy.
Which leads back to the question: Are you hunkered down in the boardroom looking for the next big shiny thing, or watching the boiler room where real opportunities are hiding in broad daylight? Thinking beyond the boardroom makes everyone smarter about the business. You’ll be closer to customers and have a better grasp of what’s happening on the ground. Your customers don’t hang out in the c-suite, they hang out in your stores. Get out there with them; you may be surprised at the opportunities for improvements you can find.
Tom Buiocchi is chief executive officer of ServiceChannel, a facilities and contractor management solution provider.