Few weeks ago, I went to the market to get some tools for my church technical department.  I went straight to the store that I had been patronizing for over a year. After making inquiry of a new product, I was told the price, and to my utmost surprise, it was three times the price I bought on a normal day elsewhere.

Before you even wonder what it could be, it was a pair of battery. On a normal day, I bought it for just five hundred naira around my location. In the store I had patronized, it was told one thousand five hundred naira.

At first, I thought the salesman was joking until I realized he was serious; I felt so stupid. I mean what kind of joke is this? I looked at the battery and it was exactly the same battery I have been buying for over a year.

The salesman later said he would give me the battery for eight hundred naira and this got me more furious. I mean what do you take me for? A dunce? I bellowed and told him out-rightly that it wasn’t a stupid decision on his part to go that high just because he wanted to make profit. Then, I left without purchasing anything, and immediately switched to another store where I would be purchasing things.

If there’s anything customers are ever concerned about in this age, it is the value they are getting from their products which is why as business persons, you have to be careful about transparency in business.

Nobody is saying don’t make huge products but the sales price must be equal to the value you are offering. The disadvantage you have as a business person at this time is that the market is saturated with so many sellers, giving the buyers control over the market, and this extends to their purchase decisions.

Two things you should be aware of in this era is information travels faster than any other thing. It spreads like clouds of fire. What this implies is that it is easy for a customer to be aware of a thousand sellers of a product because there’s a chain of connection in the information world. So cheating on your customer makes you a second option instantly.

The second thing is that customers do not have extra seconds to spare over a product because there are a wide range of choices for them, so you make a mistake, they are already in the next store.

Now am I saying you should not have good profit? No! Matter of fact, selling the battery at one thousand five hundred naira would not get me infuriated if there was another value attached to the battery, and he had just five seconds to convince me of the value. He failed and lost a customer.

Customer retention is key –  he has lost me and will never get my money anymore. Most business owners do not focus on customer retention which I believe is the heart of a business.

Why is it the heart of a business? It’s simple; nobody told me to journey down all the way from my location to board a cab down to purchase a lot of products from this same store. Customers that you retain are your real customers. They are the ones who visit you without you sponsoring any new ad to remind them.

You have built a brand or an impression in their minds. Your store or business is the first they consider when they want to shop or get a service.

Now, I will just give two secrets to customer retention:

1. Transparency: You must be transparent with your customers or consumers. Talking about transparency, it doesn’t necessarily mean you tell the exact profit you make but you must be sincere and honest. Customers are not blind people; that is one of the key things they seek. Talking about customers, we are all customers to a brand or product.
2. Under promising and over delivering: This is another key tool that works every time. If you are a fashion designer, an artist, or you sell yam or even watches, once a service is needed, give a date that you know you would be able to complete the job a week before. Give a promise to deliver at a speed when you know you can deliver twice the speed. You tell the customer that this product will last for a year when you know that it will last for a year and half. This is better than failing. This builds trust; this builds confidence; that you would not fail. Yes, that your product is the best.

What products do you sell, what service do you offer?

That question is a very important question you need to ask yourself in whatever field or business you’re in. The reason is simple: is customer retention for you?

Now let me break it down so that you would understand where I’m coming from. There are two duties you need to do when it comes to clients or customers. The first is called customer attraction and the second is called retention. Customer attraction is what you do to win a stranger or a friend to become your client or customer.

Customer Attraction

For example, if you sell shoes, there are some things you do to get customers to start buying your shoes. Things like opening a shop or running ads online or telling friends one after the other.

Remember the first thing I asked was that you identify the business you are doing. At this point, I would say that not all businesses need consumer retention but most businesses do.

If your product or service is a one-time service or a lifetime need, then you do not need to focus on consumer retention. For example, if you are a company producing the most expensive car in the world, you do not need to focus on consumer retention because chances are your customers would only get the most expensive car once and not come back the second time even if the car spoils. They would prefer to get a more expensive car if they even want to purchase another expensive car.

Customer Retention

Now everyone, let’s take a practical example and let us use Christopher as an example. He is an artist. Also, we have Mama Kemi who sells foodstuffs. Now, I would put myself in their heads; so flow along. 

First thing first, as a seller or someone who has a service to offer, the key step is to make sure your product is good or your service is very good. If you are still learning or you don’t have a quality service to offer, then I would suggest that you go back and make better plans.

The reason is simple: in this age, only products that are remarkable win, only services that matters win. Seeing the long line competitors you’ve got, you have to make sure you have a good product or service. 

So, I’m a very good artist, I have few clients monthly, let’s say two or three. The big question to ask at first, if you want to consider customer retention, is how often do they need my service?

The reason is quite simple: if such product or service is something your customers need often, let’s say monthly, you need to plan. Note I said such product, I didn’t say your product. The more you are aware that you have competitors, the more you take your execution seriously. How do you ensure that your customers come back to you? By visiting them daily? 

For foodstuff seller, it is important you ask yourself how you make your customers come back to you to buy more foodstuffs since you are certain there’s no way your customer would not need food. At this point, you should see the solution already. I mentioned some key points the last time in the last post that you need transparency, and that you need to under promise and over deliver. 

However, there’s no way this can perfectly work if there’s no customer relationship, and there’s no proper value system built. There should be at least one value system built which could range from weekly texts, fortnight calls, Whatsapp chats, or even to the point of offering opportunity to pay instalmentally. Those are value chains.

Value chains are like bridges and they are the bridges your customers cross to return to you when they want to return. If there are no bridges, it gets more difficult for them and this can discourage them from crossing. If you have none, you are simply saying goodbye to them.

So back to where I stopped, remember we are talking about consumer retention and I am still using an example. Don’t forget. In this scenario, if your customer needs your product or service very often, then pay attention to your customer retention even while you’re figuring out customer attraction because it’s still important till you reach a point where customers don’t seem to be coming. By then, you’d totally rely on your retained customers.

Congrats Tony Elumelu Entrepreneurs for the successful Forum in Abuja. It remains like yesterday when legendary banker Mr. Tony Elumelu invited me to the Selection Board of the $100 million TEEP fund. It is simply amazing what the Foundation has accomplished in scaling luck and opportunities across Africa. I want to wish all of you good luck as you begin to execute your missions.

I am also an entrepreneur – and I understand why you need support. Get a great mentor who will challenge you to push more even when it seems impossible.

Africa is counting on you.

#TEEP2019

Entrepreneurship is not the only way to succeed. It’s also a die hard mission. It is hard. Really hard, especially when you are building a product. Which is why succeeding is long term.

Now, let’s take an example. You have an idea. Let’s say you want to start a company that sells ladders for emergency cases. What are the things to consider?

Will you just go to meet carpenters to be making ladders for you? Or how do you succeed? You need to ask yourself questions that will push you into months of research.

Follow me as I analyze some.

1. What emergency case? Is it fire incident or building collapse or escape from robbers or hurricane?

This one doesn’t need too much research but you still need to be wise about it. This will make you do research #1 which is Which disasters occur mostly in the area I want to focus on?

You know you cannot just assume it’s fire; that means you will leave your house to your neighbor, to the next street, to the next shop, to the churches and mosques nearby, to the schools, hotels, etc to make inquiries.

Day 1 has gone.Matter of fact, 2 weeks have gone.. You cannot accomplish this in a day.

So after research, you discover it is fire which means the ladders you will be making will be for fire incidents.

Emergency ladders remember.

You will only be foolish to go and meet carpenters to make wooden ladders. Matter of fact, no investor will sponsor you if they hear it’s wooden ladders. Wooden ladders will catch fire before they even rescue the victims.

People will flag your company. You have lost trust; go home and pay your huge debts.

So if not wooden ladders; metal ladders, right? Now, another foolish thing to do is to call blacksmiths. They should just build any metal ladder. Either they will rust, or matter of fact, there’s something else you might have never considered. What if the fire gets so intense that the metal gets very hot?

Will those who they want to rescue be able to climb down? What if a lady was escaping from a bathroom and she has no slippers on?

So you see, you cannot just order for a metal ladder; you will have to go out to ask, visit Google, go to ladder shops and ask questions, meet blacksmiths, even experiment… two months gone already.

If no ladder exists for such a case, you know you will either have to pay people to come up with a new type of metal that can withstand heat at high temperature, and yet usable.

That will take months again. Let’s say 5 months. So 5 months and no kobo from your company. People will out-rightly say you might not succeed. Or write you off.

Another problem is: it must be easily spotted in emergency cases.

If rescuing a victim, such a victim must easily spot the ladder from long distances. That means very bright colours must be used.

Hope you know you are not the one doing the rescue but you’re just selling ladders right? But you must solve the problem for the person who wants to get your product to solve a problem. This will lead you to do two things.

1. Consider the colour people identify with danger.
2. Consider if that colour is easily spotted.

Now if those two are antagonizing, you know you already have another research and work to do again.That’s another one month.

That’s like 6 months already gone . Remember, you’re still building the product. Marketing isn’t there yet.

Now look at another problem. Let’s assume blue is the colour of danger, you will need to get the ladders blue. But have you even looked at the cost of making one ladder and the amount you will sell it. What if they cannot afford an expensive ladder? Another problem?

You need to cut down cost, another 3 months if research on: “The best quality material for the ladder that would be cheap and have necessary features”.

If there isn’t, you will need to pay people or give them shares to build it Three months again. That’s 1 year spent.

One year without a dime made. Your friends earn N500,000 in their companies where they work already. Does that mean you’re stupid and losing? Definitely not; you are planting a cocoa seed, you shouldn’t be on a maize farm inspecting it.  Be bothered about how diseases will not kill your cocoa. 

Next, in an emergency situation, if I buy a ladder at home, when a fire outbreak happens, that ladder mustn’t be what the whole family needs to carry before we set it against the window.

What if daddy and Uncle Jimmy, the muscle guy are not at home? How will Mom and Stephanie carry such heavy ladder?. Your product is useless to a single mom and her two daughters. Shortage of sale.

Another problem: “Cheap * Lightweight * Ladder that has all the features”.

Another research on how to make it light weight. One year, 2 months gone. Friends who do not understand business will be calling you broke in secret. I laugh when I hear stories like this though.

What if the ladder was foldable as well? I mean where should I keep such a long ladder? Besides, it needs to be nearby not in the basement!

One year, 5 months gone, and you’re ready for sale. Your friends are all earning well but you. I feel every entrepreneur building a product needs to understand that entrepreneurship works this way. I feel they don’t.

Now sales. Well, you have a solution to their problems doesn’t mean 1 out of 1000 people will buy. In sales is where the most work lies. You need months of research again to know how to sell.

Now, if I were to be the one who has my ladder ready for sale, I will begin to pen down why they may and may not buy my ladder. What if they all believe in God to deliver them out of fire disasters. They wouldn’t see the need for a ladder.

What if all houses had fire extinguishers to quench fires and they trust that it would save them without needing to escape .

These and many more are things you should consider during sales. Now, you need to consider how to make a profit.

Remember you are trying to fix sales and at the same time accelerate profit making. This is another huge problem.

Will they come over to your store to get it, or would you deliver to their stores? How do you fix the glitch. You already have employees; you will pay them and profit must still be made.

Two years have gone; yet, profit is like peanut butter. This doesn’t mean your startup has failed. I will soon write on “SEED TIME AND HARVEST TIME IN BUSINESS”.

There are so many factors to consider as you expand. For example, how to maximize channels to reach your customers and all. 

I have codedly given you a business plan process. Besides, I have given a tip on how you can structure out a business to succeed using a ladder. But that ladder can be pencil, milk, moi moi or practically any product or service you want to sell in the market.