By Timi Olubiyi, PhD
In recent times, we have seen more and more companies reporting low or no profits and, in some cases, no revenue. The case of corporate bankruptcies is equally high and widespread, which could be attributed to the changing landscape in the wake of the coronavirus pandemic, high inflation, poor supply chains, poor diet high exchange rate and a host of other struggles.
Although the coronavirus pandemic has drastically changed business operations and customer experience, many businesses in Africa, especially in Nigeria, have stuck to the old model of customer service, which often involves a lack of comfort and a low customer satisfaction.
Although we have seen more innovations around the adoption of technology in businesses to improve performance and retain customers, not much is noticed in small and large businesses in Nigeria. Despite the evolution of business models in different industries around the world to meet current realities and customer expectations.
Therefore, businesses wishing to maintain their survival must adapt without delay to the realities surrounding customer expectations, preferences and convenience. If small businesses fail to recognize these shifts in customer expectations, they may face a threat to business continuity rather than just poor performance like larger enterprises.
The majority of business advancements in recent times have been driven by technology, especially in service businesses and food service industries, especially restaurants and transportation.
For example, if we consider the case of Uber, the car rental company and others, the business model was driven by changes in consumer behavior and convenience was the main driver. The success of the business model is not based on a deep emotional connection with customers but success can be summed up in one word: convenience.
Also, based on my observations around Lagos State, the economic capital of Nigeria, I saw a restaurant with multiple outlets offering a single meal, rice with a boiled egg, for 500 N. It is less than a dollar for the meal, noting that a dollar is around 600 naira in the country.
Similarly, banks offer mobile banking software applications (apps) through which accounts can be opened online and transactions can be carried out, even to borrow funds, without having to enter the bank lobby.
Another example is the sudden rollout of point-of-sale (PoS) terminals to agents across the country, with agents performing certain banking transactions almost anywhere outside of banking halls.
Moreover, in Somolu, a suburb of Lagos State, I also saw that a local cafe (Amala joint) opens on Sundays when the competitors are all closed, and chooses to close on Mondays to observe the day of leave per week.
With this idea, the local coffee shop operator can offer many customers the flexibility and convenience they need on Sundays while making a premium on business earnings. All of these concepts aim to capitalize on customer convenience and current realities, nothing more.
Therefore, business owners and SME operators need to understand this and know that when it comes to the most crucial aspects of customer needs, convenience is paramount. Each customer, however, may have different ideas of what constitutes convenience, from pricing to business location, payment options, ease of purchase or transactions, opening days and time flexibility, customer experience of ordering, delivery, etc. It is important to note that most consumers are price sensitive and base their purchase or service decisions on it.
From my subsequent observations in Lagos State, I have noticed that despite a lack of sound business concepts and knowledge, the many neighborhood businesses, hawkers and businesses without recognized classification operate on this convenience model.
Although it may seem like a trivial way to run a business, the turnover, revenue, and profit could be enough to sustain the operators. Customers are expected to need items or products quickly, and such businesses exist on this premise. While I see large companies with a brick and mortar retail strategy paying exorbitant rent to maintain a physical presence without operating online or embracing technology for convenience. Ignore the digital age that has changed the retail industry, and indeed most sectors of the economy, where businesses can connect with customers anywhere, anytime.
As a result, it is high time that formal businesses, retail businesses and large corporations embrace the proximity model to improve business sustainability and profitability. Convenience is more important than ever for consumers, especially in terms of price (i.e. affordable services or products) and easily accessible location (physical or online). What matters to most consumers is the time and effort they have to put in as they are largely impatient – less time is better, and less is better. .
Giving an illustration of how convenience can make a business more profitable in the case of a hypermarket, footfall can be increased by having a good convenient location, cutting back on expensive, specialty or premium products and increasing exponentially the practical goods.
Convenience goods are items or products that customers can easily afford and often buy on impulse without much thought. These items are groceries, food, detergents, toothpaste, paper products, and emergency items such as light bulbs, etc. The idea is that a large volume is likely to be sold in a short period of time, repeat purchases will occur continuously, and such a business will be active and successful.
Moreover, technology can also be of great help in this case, which is where e-commerce comes in. Added levels of convenience for customers to efficiently use their phones with seamless payment platforms or gateways to make purchases or transactions will help a lot, no matter how small. For micro businesses, social media platforms and WhatsApp status can also help advertise cheaply and keep customers informed.
For other forms of business, especially large corporations, a business model can be designed or redesigned around practical solutions. To create convenience, businesses must find ways to eliminate any “friction” that may arise when a potential customer interacts with or purchases from their business. Such convenience can be designed around packaging, delivery, user-friendliness, automation, and product variety.
Truth be told, convenience can actually increase repeat purchases from any form of business, which in turn helps increase and increase profit margin. Any strategy aimed at increasing customer convenience can also build brand loyalty, which ultimately leads to competitive advantage and market dominance.
Convenience, therefore, may be the key to business success in a time of high inflation, low disposable income, and low purchasing power for the majority, which is the masses. Because by saving customers time, money and energy, businesses can also generate more revenue.
Significantly, market research and customer research can help determine which solutions will improve business service and, overall, provide a high degree of ease.
Very often I have noticed that companies do not take advantage of customer feedback. It’s good for customers in attendance to submit comments or reviews that highlight instances where a particular business (or its rivals’ business) has failed to meet their expectations for convenience, and this may indicate that which needs to be resolved.
It takes more than pricing to outperform the competition, so consider how to build convenience into a designed business model. Who says customers can’t order a haircut, photoshoot, home-cooked meals, or even a manicure right from their cell phone for convenient home service? All it takes is for salespeople or business owners to think critically and research how things should work.
In conclusion, to effectively interact with today’s hyper-connected, tech-savvy, and impatient consumers, companies must focus on providing solutions that are fast, convenient, and simple. In short, nothing pays more for businesses these days than being more convenience-focused, as it could be the shortest path to increasing customer retention, loyalty, and profitability. Good luck!
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Dr Timi Olubiyi, an expert in entrepreneurship and business management with a PhD in Business Administration from Babcock University of Nigeria, is a prolific investment coach, author, senior scholar, Chartered Fellow of the Chartered Institute for Securities & Investment (CISI) and Securities & Exchange Commission (SEC) registered capital market operator. He can be contacted on the @drtimiolubiyi Twitter account and by email: [email protected], for any questions, reactions and comments. The opinions expressed in this article are those of the author, Dr. Timi Olubiyi, and do not necessarily reflect the opinions of others.