Transparency in Business, Value Chains and Customer Retention

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.