Knowledge management is so important that 95% of CEOs consider it a critical part of their company. In fact, enterprises like British Petroleum attribute as much as $260 million of added value to good information management. And, this practice can improve productivity while reducing expenses in different parts of your company.
Simply put, knowledge management is the process of registering, presenting, and using information. It encompasses both internal and external data; aiming to increase value and reduce expenses at the same time.
Below, we’ll go over the different ways knowledge management can help cut costs in your company.
- Allow Knowledgeable Employees to Reclaim Their Workday
- Reduce Employee Churn
- Avoid Recreating Resources that Exist Already
- Cut Research Time
- Lower the Frequency of Costly Mistakes
- Develop Standard Workflows and Processes
- Yield More Satisfied Customers
- Result in Faster Training and Onboarding
- Avoid Hiring External Consultants
Benefits of Effective Knowledge Management
The practice of knowledge management has been around for decades. Aside from reducing expenses, information management can benefit other areas too.
Internal information management can give your employees a boost in productivity. This, in turn, can result in better service, speed up internal processes, and create a customer-first mentality. And, most importantly, higher productivity translates to higher revenue and reduced expenses.
External knowledge management refers to the information that’s available to your clients. This can empower them to solve issues on their own. And, they won’t need undivided help as often. Then, you can focus on other activities without worrying about compromising customer satisfaction.
Keep in mind that the technologies powering information management evolve fast. So, you should always try to learn about the new knowledge management tools to stay up to date.
How Knowledge Management Can Reduce Your Service Expenses
Every year, Fortune 500 companies lose more than $30 billion to poor knowledge management. Implementing a solid system can have the opposite effect and increase profit margins. Here are some ways that knowledge management can help reduce costs in your company.
Allow Knowledgeable Employees to Reclaim Their Workday
In most companies, information resides in the most knowledgeable employees. These team members are usually tasked with helping their peers. This can have a good effect on performance. But, it can also reduce your knowledgeable team members’ productivity.
Through knowledge management, your most qualified team members can create resources for their peers. Whenever employees need help, they can access your knowledge base to find the resources they need.
Because knowledgeable team members will spend less time helping others, they can claim back their workday and put their skills to practice.
Reduce Employee Churn
Losing a team member is challenging from a productivity and financial point of view. Research suggests that replacing an employee can cost 33% of that person’s annual salary. And, this number can grow exponentially if you have many team members leaving at once.
Sometimes, knowledgeable employees leave a company after experiencing burnout. Instead of burning out your most qualified team members, find a reliable knowledge management system. This will relieve some of the pressure and keep your employees engaged in a positive way.
Avoid Recreating Resources that Exist Already
According to some estimates, employees spend more time recreating existing knowledge than creating new resources. Employing a knowledge base that has a powerful search engine can reduce the time spent on this repetitive task. Moreover, your team can focus on creating new resources, upselling, and other tasks that generate revenue.
Cut Research Time
The average employee can spend as much as 2.5 hours per day searching for information. This usually happens within companies that lack a centralised library of resources. Or, it can mean that the knowledge base you currently use doesn’t have the right features.
By implementing a good knowledge management system, you can reduce research time by 30%. Aside from cultivating a knowledgeable team, you’ll also deliver better service and use resources in a more effective way.
Lower the Frequency of Costly Mistakes
From accounting to quality assurance and customer service, there are many different areas that make up a company. But, mistakes in each of these sectors can result in financial loss.
To avoid these costly errors, you can set up a knowledge base that features walkthroughs and step-by-step guides. That said, you’ll have to keep the content fresh and update it whenever there’s a relevant change!
Develop Standard Workflows and Processes
Companies that don’t use standardised workflows and processes tend to lose money on the productivity front. A knowledge management system allows you to identify and establish the most effective methods for each task.
For instance, you can define the best way to upsell your services. Then, you can encourage employees to use this resource whenever the right opportunity arises.
Yield More Satisfied Customers
Keeping customer churn low should a priority for companies that offer monthly services. If you focus on delivering a great experience and keeping customers happy, there’s a strong chance you’ll have high retention rates.
As we mentioned before, knowledge management encompasses both internal and external resources. Both of these also play a major role in customers satisfaction. Internal knowledge management allows your agents to deliver fast and accurate service. And, you can also manage external information to make sure customers can solve issues without help.
Result in Faster Training and Onboarding
Customer onboarding and employee training are two different processes. But, both of them represent a period of reduced profit margins for your company.
The good news is that knowledge management can speed up training as well as onboarding.
By providing all the information they need, you can help new employees hit the ground running from an operational perspective. Customers that have access to a knowledge base will also have a smoother transition. In other words, they are more likely to adopt your product and use all the features it has available.
Avoid Hiring External Consultants
Hiring an external consultant usually represents a hefty investment. This is not ideal, especially for companies that are looking to cut costs without compromising product quality.
Depending on the issue, knowledge management systems can help change your team’s mentality. This can produce the same effect as hiring an external specialist. And, you won’t have to spend a chunk of money on expensive consulting services.
Implementing Effective Knowledge Management in Your Organisation
A powerful knowledge management system will allow you to organise product information. Not only this, but it should also help customers and employees access these details easily. And, while it may sound simple, this practice has a significant impact on your company’s finances.
Having good knowledge management and sharing practices can boost productivity and cut expenses in different areas. But, you need to take your time and find an information management approach that truly adds value to your company.