Stuart Gentle Publisher at Onrec

What Cost Optimization Tactics Worked This Year?

The last few years have been difficult for business: the pandemic and economic uncertainty in the world forced many companies to downsize and even close down.

Others started to reduce wages and marketing expenses. This solution is logical but far from the most rational one. Reduction of expenses can lead to the loss of the entire business. Therefore, it is worth analyzing each expense item before taking specific steps. If everything is done correctly, optimization will definitely benefit the company.

What is cost optimization?

Many business owners confuse cost optimization with cost reduction, and employees are sure that company optimization and downsizing are the same thing. In fact, this process is not about cost reduction but finding the most efficient and cost-effective mechanisms to achieve company goals. What activities does this approach include?

  • Reducing the time spent on performing routine operations;
  • Reducing the cost of a product or service, but without losing their quality;
  • Achieving transparency of the company’s business processes and resource distribution;
  • Allocating resources for company development;
  • Improving control and planning.

Thus, cost optimization is not just about spending less money but also making sure that things like how much you sell, how much money you make, and how happy your employees are, stay the same or even get better. It might seem tough, but the biggest and best companies in the world do this regularly.

How to identify whether your costs need optimization?

58% of finance executives say cost optimization is their biggest concern today. But how to know whether you need to optimize your cost distribution? The first step is to study the company’s finances for the last six months. It will allow you to see what the money is spent on. With this information in hand, you need to answer the following questions:

  • How relevant are these expenses at the moment?
  • What will change after reducing one or another cost item?
  • How much profit do investments bring?

This approach will allow for the identification of weak points where the company is greatly overpaying. For example, bonuses are paid to employees regularly, but the required KPIs are not achieved. It is also important to monitor reasons for all excessive expenses or income decline.

What are the proven cost optimization tactics?

Modern trends and technologies are changing the way we do business. By automating routine tasks and embracing new staffing approaches, businesses can significantly reduce labor costs and human error.

Automation with CRM

A lot of tasks can be solved by automating business processes. Effective expense management requires a systematic approach that includes planning, analysis and control. Organizations can prorate expenses based on individual activities using a good CMR, making financial management easier. CRM will reduce the costs associated with transactions, reduce the influence of the human factor, organize the work of employees and better control them. CMR enables you to:

  • see the profit and profitability of each transaction so you can focus on the most profitable projects and get rid of unprofitable ones;
  • evaluate the efficiency of employees using automatic reports.  You will understand who earns the company’s profit and who can save money;
  • plan expenses and monitor them;
  • analyze cash flows and financial performance of the company via automatically generated reports.

You can also automate logistics and delivery, warehouse, and other processes. If all things are done manually, mistakes and expenses will keep growing. Take a look at some workflow automation examples to fully understand how much time you and your team can save.

Implementation of chatbots

A chatbot is a virtual assistant that can perform a variety of functions. Most often, chatbots are used for:

  • answering customer questions;
  • responding to emails of potential buyers;
  • instant consultations;
  • post-sales support communication.

The main benefit of a chatbot, however, is the ability to segment leads and move them through different funnels, depending on the goal. In addition, a chatbot will considerably save costs on the sales department or support department. Even if the app cannot completely replace human consultants, it will definitely allow you to downsize the staff. It will naturally lead to cost optimization.

Adoption of energy-saving techniques

Sustainability is not only good for the environment but can also translate into cost savings. Reducing energy consumption through energy-efficient technologies, sustainable practices, and facility upgrades can lead to lower operational costs. Additionally, going green is one of the latest trends that resonates with environmentally conscious consumers. It will significantly drive brand loyalty and increase profits.

Hybrid work mode

Online work format is no longer a new idea, but it proves to be efficient. Remote work is ideal for IT specialists, marketers, and web designers. Accountants can also work remotely. Even sales managers may be more effective working from home. And thanks to technologies like video conferencing tools and project management applications, it’s easier than ever for teams to collaborate even when working remotely.

For a business, this is the optimization of company expenses by saving on both rental space and workplace organization through the use of virtual offices and digitalized mail. Moreover, there is additional motivation for the team - because employees will not have to waste time on the commute.


In today's gig economy, flexible staffing models are inevitable. By involving freelance talent and outsourcing functions that are just temporarily needed, companies can access specialized skills when needed. This approach allows them to hire experts in particular niches without the long-term financial commitment associated with full-time employees. This approach can reduce labor costs and increase the overall efficiency of the company.

Main cost optimization mistakes

A basic principle for successful cost optimization is that you should not touch the areas that help you earn.

  • Product or service quality. Your customers should not feel the consequences of optimization. If cutting costs reduces the value of the product and makes it less attractive or reliable, you will lose the main thing - customer loyalty. This means that profits, instead of the expected growth, will go down.
  • Employee salaries. If you start cutting salaries, social packages, and training costs, you will, of course, save money, but in the long term, you will have serious problems. Lack of motivation and loyalty to the company will eventually affect productivity and staff turnover. Without strong employees, any business is doomed.
  • Marketing. Sharp reduction of the marketing budget can seriously affect the number of your customers, significantly reducing their flow and worsening the overall situation. The smartest way to save money on marketing is to focus more on maintaining and developing relationships with existing customers than attracting new ones because retaining customers is always cheaper than attracting them.


It does not matter what factors push a company to optimize costs. The main thing is not to be afraid of this process because it can bring a lot of benefits to your business if done correctly. Furthermore, the saved money can be directed to higher-priority areas. Cost optimization and building more efficient business processes should be continuous, not only in difficult economic conditions. The main thing is not to go too far: do not cut staff payroll and vital operating expenses, preserve marketing budget and maintain product quality.