BOKO HARAM AND THE ALMAJIRI SYNDROME: WHAT'S THE WAY OUT?

Thank God the Sallah celebrations are over with no major security skirmish in the North or around Nigeria. It seems to me that the State of Emergence declared by President Jonathan is actually working, but at the risk of speaking too soon I reckon we should look at a more sustainable solution to these security challenges rather than imagine that the brute force of Military power can continue to lead the way in the quest at having a safe, peaceful and harmonious society where people can live their lives without fear of losing it to mindless causes and where business can flourish and grow unhindered. Thank God, the Sallah passed without any bombs exploding or without some hoodlums going into a school to shoot at innocent students, however, we must use this period of respite to critically re-examine and reassess the security situation in Nigeria with specific focus on the North.

BEFORE BOKO HARAM, THERE WAS A CULTURAL PRACTICE:

Before the coming of Boko Haram, there exist an archaic practice up North where people willingly firm out their male Children to Religious Clerics to be trained in Arabic and the Doctrines of Islam. Over time, these Clerics took on more Children than they can care for, leading to a situation where the Children are left to go into the streets in search of food and alms. This situation continued over time,creating a mass of uneducated, ill-bred and ill-prepared people who lead a desperate, destitute and despondent life which makes them vulnerable to indoctrination and puts them at the disposal of mischievous Clerics and Politicians alike. A manifestation of  this cultural practice are the incessant religious uprisings in the North starting from the Maitasine Riots to its later day devious and dangerous transmutation - Boko Haram.  Ofcourse, some have blamed the Boko Haram uprising on the Arab spring which suddenly liberated potent energies and weapons that had hitherto been held bound by Dictators like Moamar Ghadaffi, my take has always been that behind every fire, is a fuel which had seemed harmless until there came a flicker of fire romancing the seemingly harmless fuel and giving birth to death and destruction. In the case of Nigeria, there was already an Army, willing and able to start a crisis and suddenly arms came pouring in, and with it, the spirit of death and destruction. Unfortunately, years of irresponsible and careless leadership up North as with everywhere else in Nigeria, had failed to see this coming!

WHAT'S THE SOLUTION?

Although I am not one of President Goodluck Jonathan "cry till your voice becomes hoax" supporters, I none the less acknowledge that the problem was not caused by him and that the solution actually lie far from the ambit of his influence because the problem stems from an archaic cultural practice which has created an army of ill-informed and ignorant mass that are usually willing sparks for religious or political fire. I do not mean to denigrate anyone or lay the blame at anyone's table because indeed inimical and antediluvian cultural practices exist in every culture - from the sacrifice of human beings as penance for communal sins in parts of Yorubaland,  the Osu Caste system in Igboland, to the killing of Twins in Calabar;  cultural practices which bear no place in modern societies had existed in our various communities, but what shows an indication of progress in any society, is the ability to rethink the route that  society must take in order for there to be peace, progress and prosperity under a changing order. This fact become more glaring when one notes the fact that Europe did indeed pass through the dark-ages long before the coming of the Industrial Revolution and America actually fought a war of liberation in 1776 and a war between the Industrial North and Agrarian South before settling to the ideals which today makes them a model for democracy and free-markets. What this points to is that any situation can turn around for good depending on how it is managed.

THE SOLUTION IS NOT IN MILITARY BUT SOCIAL SECURITY

Although, I supported and still support the idea of State of Emergency declared in volatile States in the North by President Goodluck Jonathan, I believe however that Military putsch is not a sustainable solution, rather the solution lie in Social Security:

1. A resolve by Northern Elites, working with government, to rein in the inimical Alamajiri tradition and create a vent for everyone who is born in the North of the Niger to have access to education (inspite of the fact that Boko Haram preaches that education is a sin).

2. The creation of Welfare camps for existing destitute and despondent Almajiri's with soft infrastructure such as Mobile Clinic, Skills Acquisition Centres and Farm Settlements. This is in keeping with the need to positively engage the Mass of the Almajiri's.

3. The creation of a social safety net built around trade and guild systems such as credit and thrift systems which can free up their productive energies and consequently raise SME's in traditional Northern trade and businesses such as Pasturing, Hides and Skin, Tie and Dye and Farming with a possibility of moving from primary production to secondary production as the society settles on a growth and productive part.

4. Decentralisation of Nigeria's Policing system in order to allow for local intelligence and a better understanding of cultural nuances which often lead to unrest.

All of the above may seem simple, but it does demand firm introspection not blame trading, a sense of sincerity, a willingness to concentrate on the big picture rather than chasing shadows and above all, it will require a lot of political will on the part of the Nigerian power elite to achieve.

THE CEO BRAND AND CORPORATE SUCCESS

In the normal context, a company as corporate citizen should have a life, an essence and a personality, which will distinguish it from other companies which offer similar products or service.   However, most companies as corporate citizens take the definition of their life, character and personality from individuals who are either founders or operators. Indeed, companies are defined by the character and personalities of their founders or those who run them.

This is so because, the values, the philosophies and the characters of these individuals usually rub-off on these entities and determine their success or failures. Hence, it is difficult to think about Apple without thinking of Steve Jobs, or Microsoft without Bill Gates or Virgin without Richard Branson or South-West Airlines without Herb Kelleher or General Electric without Jack Welch. These individuals function as the lifeblood of their enterprises in such a way that the company takes its functional existence from these eponymous personalities. In other words, there is a kind of symbiotic relationship between corporate brands and the personality brands of their principals.

The pertinent question to ask then is: what is the significant correlation between the success of a Corporate Brand and the personality of its CEO? The obvious answer is: the personality of the CEO either as a change agent, a deal maker, a quiet and conservative builder, a hardline technocrat or a people person, will have an impact on the direction of the company he / she runs. Since the buck stops on the CEOs table, the direction of the enterprise is certain to be shaped by his/her temperament.

Cases abound of enterprises that were stipe in legacy, losing market share and tottering on the brink of collapse. However, the arrival of a CEO on the scene turned-around the fortunes of the company. In this instance, a CEO does not just make the company to rise above water; he also rethinks the route to market – either by selling under-performing units of a company, acquiring another either in similar industry or a complementary one. The CEO’s managerial ingenuity can further be demonstrated by vertically or horizontally integrating an acquired company into the old either to gain scale and scope advantage, overcome legacy issues, move to primary production from the secondary market in order to leverage the value chain approach to resolving critical supply and access to market hurdles.  Aside from the strategic focus enumerated, the CEO may also take a soft or human approach to waking up a dead enterprise – either aligning a demotivated work-force, rousing them to rebuilding the enterprise through a better management of soft-issues.

From Roberto Goizueta in Coca Cola to Lou Gerstner at IBM, CEO’s as eponymous characters are critical factors in corporate success. This can be attributed to the fact that not only does a CEO carry the burden of change and progress at critical times in the life of an enterprise, the man at the driver’s seat determines how the company he drives travels. He / She may decide to toe the line of tradition and maintain the well-travelled road as Tom Cook is doing at Apple with the demise of Steve Jobs. Or at other times may decide to make a U-turn like Jack Welch who shut down the white-goods side of GE because it could no longer compete with the Asian white-goods market. Jack Welch upon taking over from Reg Jones in 1981 embarked on a number of reform measures. His first strategy was to either fix or sell any business within the conglomerate that was not playing either as number one or number two in its industry. The second was to refocus the enterprise by choosing to acquire companies in Broadcast and Finance Industries and integrating them into the operations of the erstwhile electrical and white-goods business. Welch prioritized the chemical plant, turbines, heavy-duty and medical equipment business by leveraging the GE heritage while acquiring strategic companies which were either competitors or had critical skills needed to consolidate GE’s market growth. The earnings of the business grew by well over a thousand percent before his exit in 2001.

Furthermore, beyond following tradition or departing from tradition, a CEO may decide to do a mix of both in order to bring back the spark in his / her business—Robert Goizueta did just that at Coca-Cola. Goizuieta, a Cuban-American, arrived as CEO of the Coca-Cola Company in 1981 at a time when the company’s mystique had begun to wane as Coke was fast losing its market-share to rival Pepsi. Immediately he got on the job, Goizuieta made a detour from legacy by radically re-inventing the brand portfolios of the Coca-Cola Company, essentially focusing on consumer preferences such as the need for less sugar, a demand of the emerging health conscious consumer, positioning the diet range for this class of people. He toyed with the age-long formula of Coke, making a departure from what was the original mix by John Pemberton. This experiment immediately raised a quest for the original coke taste, which he later brought back as Coke Classic. This action drove sales northward and created exceptional shareholder value never before witnessed in Coca-Cola’s contemporary history.

Aside from adopting a mix of tradition and inventiveness, Goizuieta’s witty personality and grass to grace story, having arrived in America as a Cuban immigrant and rising to the top of corporate America also captured the popular imagination and broke down a lot of resistance to his corporate moves while at the CEO suite at Coca-cola.

Bringing home the point I am making on the relationship between the personality of the CEO and corporate success, let us look at the story of Guaranty Trust Bank in Nigeria. A bank started by two young turks seeking to change the banking landscape in Nigeria. Fola Adeola and Tayo Adenirokun before venturing into owning a bank at the behest of the liberalization of the Banking and Financial Services Industry by the General Ibrahim Babangida regime, had jointly owned a barbing saloon and had used this experiment to hone their skills as entrepreneurs as regards what a consumer actually desires from a player in the service industry. While running the barbing saloon, they discovered that central to the success of any service business, is the ability to create a differentiated service experience. Based on their antecedents as professional bankers, who had risen through the ranks, they transferred their insights from running a barbing saloon into the banking industry. Upon winning a banking license, they immediately raised service experience, a value-added strategy that most bankers usually avoid in order to save cost and created a value proposition which differentiated Guaranty Trust from its competitors. Looking at the drab way in which service was delivered in the banking halls of the old order, Fola and Tayo from the outset, resolved to build banking halls with grandiloquent facades and boutique interior designs which offered comfort and style and beyond ambience, also elevated customer experience using people and technology. This apparently attracted the young and young at heart. The strategy paid off because it immediately won converts to this “new generation” banking style and it created exceptional shareholder value in the process. It is note-worthy that despite Fola and Tayo’s exit from the management of the Bank, this novel tradition continues today with the result being the creation of a huge banking franchise that ranks as one of the most efficient bank in the Nigerian banking industry in terms of cost to income ratio and return on equity, easily defeating the earlier held notion that a value-added strategy such as the like pursued by Tayo and Fola will make a bank uncompetitive in terms of cost. That said, the magic at Guaranty Trust Bank did not just happen, it took the over-riding influence of Fola Adeola and Tayo Adenirokun – two out-going and cosmopolitan individuals – who created a system which placed a premium on customer experience and pursued a strategy that elevated customer value and changed the way banking service is delivered. It did not take much for the magic at Guaranty Trust Bank to happen; it took the personalities of the founders and successive CEO’s of the enterprise.

THE CORPORATE PERSONALITY - IS IT HUMAN OR INSTITUTIONAL?

From the fore-going, a critical question arises: is the corporate personality human or institutional? This may appear to be a difficult question, but I will attempt an answer.

a.      Corporate Governance and the Institutional Route to Creating Value

Corporate Governance often lays water-tight rules which prevent individuals from over-powering an enterprise. This perspective looks at an enterprise as institutional citizen which must be protect and seeks to create barriers which will mitigate the overpowering influence of individual(s) over the enterprise, because such influence, when not exercised with a conscience, often-times corrupts a system and destroys shareholder value.

Taking a cue from corporate history; with the movement of business from Laissez-faire attitude at the advent of the industrial revolution, to the era of corporate citizenship which dictates a need for the operations of business to come under regulatory scrutiny and statutory contributions to society in the form of taxes to government, to the era of enlightened self-interest, which gave rise to corporate philanthropy; to the era of Corporate Social Responsibility, which presupposes that because companies draw their profits from society, they must of necessity exercise a duty of care by giving back to society; and the most recent being the era of sustainability  which preaches the need to ensure continuity of business by ensuring that the social, economic and technological environment in which businesses operate is not destroyed. Looking at developments through these various epochs, corporate historians discovered that the concentration of too much power in the hands of an individual in the quest at raising shareholder value may be counter-productive as such individual in exercising his discretion, if not checked by written corporate rules and the board which needs to exercise the needed oversights, may become power drunk or corrupt. Therefore, the thinking is that creating processes and procedures which defines the corporate direction of an institution as opposed to allowing the discretion of the CEO prevail all the time, is a better route to attaining year-on-year growth and stability of the enterprise. Hence, the widely held notion CEO’s as individuals operating within the corporate context must operate within an institutional framework for corporate success.

However, the problem with this approach when rigidly followed is that an enterprise may not be nimble and fast enough to re-invent itself in the face of changes within the operating environment. We have seen businesses such as IBM before Lou Gerstner and Apple before the comeback of Steve Jobs go under because of the rigid application of the Institutional approach.

Let us look at the Apple story:  Apple was founded by two young and ambitious geeks – Steve Jobs and Steve Wozniack - who wanted to put the computer on every table in America. Along the line, Apple needed venture capital to expand its operations and this gave rise to a need to have an institutional framework with a board at the head of the whole company’s structure. The board, aided by Steve Jobs himself, appointed a CEO, John Sculley, who had a responsibility to expand Apples product portfolio and market-share. Steve Jobs and John Sculley disagreed on a number of issues regarding Apples product and marketing strategy and given that John Sculley had garnered a lot of goodwill coming from his success as a President in charge of operations and marketing at Pepsi, the Apple board sided with John Sculley and Steve Jobs had to exit from the business he founded. What followed Steve Jobs exit was years of near-misses and outright blunders by Apple which Sculley’s exit and a succession of other CEO’s could not fix until the comeback of Steve Jobs himself in the mid 1990’s. And upon his arrival, the board agreed to take a back-seat and gave Steve Jobs a free hand to re-launch Apple’s success, leading to the creation of the world’s most valuable company before the death of Steve Jobs.

b.      The CEO’s Personality Being Synonymous with the Enterprise

Beyond tight corporate governance, another school of thought believes that the CEO’s personality and the corporate personality should be subsumed in each other, in such a way that the CEO’s personality becomes the hallmark of the brand and business.

Here the reference is Richard Branson and the Virgin brand and Donald Trump and the Trump Organisation. Both personalities define their enterprise and not just doing so, they continue to capture the popular imagination because of their maverick and unusual approach to business. Both personalities have grown their enterprise, surpassing expectations and creating exceptional shareholder value. However, one critical risk that dogs this approach is the key-man risk! A risk which comes as a result of placing so much premium on the discretion and ability of one human being at the expense of other variables which may catalyze corporate success. Hence the share price of such enterprise will react either positively or negatively to physical and intellectual as well as the psychological disposition and mortal existence of a personality while tying it pungently to the enterprises they run. Imagine what is today happening in Apple without Steve Jobs? Imagine how Samsung a company without an eponymous character and a charismatic CEO is stealing Apple’s fire and creating exceptional shareholder’s value at Apple’s expense? Imagine what the situation would have been like if Steve Jobs were to be alive?

Striking a Balance – The Asian Example

The scenario above shows that while the CEO has the power to create exceptional shareholder value, he or she also has the power to destroy value and given the need to keep value growing, organizations need to strike the right balance.

Let’s look at the success of Asian companies like Toyota, Honda, Tata, Samsung, LG and Hyundai. Let’s consider the context in which these companies grew to become global power-houses in their industries. It is glaring that a lot of these companies focused on building systems as opposed to promoting the CEO’s image.

An example is Toyota’s focus on six sigma as part of its quality assurance and customer experience strategy; building automobile products that outperformed their American counterpart and not only dominating the American market and giving Detroit a run for its money but also conquering the world.

Another example is Samsung, a global Original Equipment Manufacturer, Mobile Phone and Electrical Appliance Company, which leveraged its access to cheap but skilled labour to create a scale and a scope advantage which its western competitors could not beat even with offshoring and outsourcing. Samsung built a learning organization, one that was receptive to changes within its external environment, adaptive to new trends and nimble and fast in its market roll-out.

It must be noted that one critical fact that cannot be controverted is that all the successes recorded by these Asian companies is that success cannot be traced to just one individual as opposed to the Hollywood styled CEO’s in corporate America, but rather to systems and processes with a usually unseen and oftentimes uncelebrated  eponymous character working behind the scene and leading change, while embarking on an aggressive succession plan which leaves no room for the erosion of corporate value upon his or her exit.

 

NIGERIA HOUSING CRISIS, WHAT'S THE WAY OUT?

1. THE PROBLEM:
Nigeria currently has a Housing Deficit of about 16 million. Lagos alone accounts for 30% of that deficit. Let’s look at the state of Housing in Lagos:  according to recently released statistics, Lagos has about 4.75 million Houses against a population that is in excess of 20 million. Statistics also show that out of these 4.75 million Houses, only 3.15 million are residential, while the rest are offices, churches and mosques. And over a third of the remaining 3.15 million houses are in slumps and areas which clearly need urban renewal. 

One may not appreciate how bad the issue of housing deficits currently is until one considers the size and the age distribution of the Nigerian population and the population growth rate, which is put at a year on year average of 2%  against the low rate of growth of the real estate market, especially at the lower end of the market.  World Bank statistics  puts Nigeria at 168 million people with 70% of the total population below 40 years of age.  From the total population therefore,   about 118 million people are below age of 40 years with the median age at 17.9 years . Now if that statistics  is placed against other key indicators such as rate of migration from rural to urban centres, it becomes palpable that beyond the current 16 million Housing deficit, there will be a major Housing Crisis in less than 20 years from now.

2. FINDING A SOLUTION:
The question to ask is how do we resolve this problem? An easy answer will be to say that Government should prioritize the building of low cost houses. But Government already has a lot of issues it is battling with, such as Education, Health and other Social Amenities, so where is the money for mass low cost housing going to come from? Another hurried answer will be to use the PPP model? The question then arise, how do we do this successfully since the PPP model already adopted by some State Governments like Lagos appears to be failing, with the cost of the houses delivered through PPP's being out of the reach of the people it is meant for.

 With minimum wage pegged at 18,000 naira it will be near impossible to get people of low income brackets to buy houses delivered at over 5 million naira even if they were expected to be allotted on owner occupier basis with repayment made through deductions from their salaries over a twenty year period. Now the next solution will be to prioritize Medium Income Housing through PPP’s while we rethink low cost housing. The current reality is that the interest on  Mortgage loans in Nigeria averages 19%  and equity contribution is about 20 - 40%. Now if a medium housing unit which is delivered at an average of 20 million naira through a PPP is put on the market for 22 million naira at 10% profit (which is below the rate of inflation, put at 12.3% in 2012); how will a medium income earner be able to access  a mortgage facility at 19% interest and an equity contribution of between 5- 6 million based on national income averages? 

Of course some will say why not access the Federal Housing Loan through the Federal Savings Bank that has a 6% charge attached to it? But then, the maximum available is 15 million naira, and how many people are able to access that? 

3. SO WHAT IS THE WAY OUT?

a. CRASH THE COST OF MORTGAGES
The way out is to get the banks out of mortgages first of all because the current interest structure from the Banks defeats the essence of Mortgages. The question then arises; where will the average person desirous of owning a home get funding? Some will quickly say through the Pension Funds. But we all know that all Pension schemes in Nigeria before the Obasanjo Pension reforms – from National Provident Fund to the Nigerian Social Security Trust Fund - have been embezzled with the consequence being the lack of real long term funds within the economy for projects such as mass housing.  So how can Pension Funds bail us out of this Housing quagmire?

My recommendation will  be to first of all build more transparency into Pension Fund Administration and the next step will be to encourage Pension Funds and Insurance Companies to pull together long term Funds for Mortgage lending through the a National Savings and Loan Scheme which is Privately run by different operators and regulated by a National Mortgage Commission to be set up by Government.

b. ENCOURAGE LARGE HOUSING OFF TAKERS TO ACCESS THE PULL OF FUNDS FROM INSURANCE AND PENSION FUNDS 

i. ON THE SUPPLY SIDE - Large Real Estate Off-takers can  be encouraged to take advantage the pull of funds from the Pension and Insurance funds with preference given to those with low cost designs and cheaper source of building materials. These Real Estate Off-takers will be licensed on a Regional basis based on proven capacity to deliver cheap and durable housing under a National Mortgage Policy akin to what is be is obtainable under the Power Reforms. Allocation of land for this purpose will be done through State governments under a land swap arrangements which will give marginal equity to State Governments for housing projects under their jurisdiction. If this process is fine-tuned and backed by relevant legislation, there will be a huge interest by credible foreign and local participants on the supply side and selected Off-takers will be able to leverage scope and scale advantage to lower their cost and have a good spread in terms of margins.

ii. ON THE DEMAND SIDE - Prospects will be encouraged to form thrift associations to buy into such housing projects. And this thrift system will further reduce cost as subscription will be done on group basis in order to drive down cost.

It is my sincere belief that if this strategy can be fine-tuned, with other Fiscal policy measures which will encourage cheaper building materials and more cost effective housing solutions taken by government, Nigeria will begin to tread the right path to reducing her huge Housing deficit, while putting plans in place to arrest the looming burst should Nigeria's population begin to age.

Breaking the Cycle of Poverty in Nigeria

As the whole 2015 drama gathers steam, the issue that seem to dominate the polity is this concept of turn-by-turn Presidency and not the real issue.

I have heard supporters of the current President play this up and I continue to hear the Chief Antagonists like the Northern Elders forum also pack their punches in this regard. But truth is, we know the real issue, I reckon we also know the solution but something tells me there is no will to solve it, BECAUSE HERE, ACCESS TO POWER MEANS ACCESS TO OPPORTUNITIES FOR ANY SECTION OF THE POWER ELITE THAT ATTAINS IT.

Nigeria today has a poverty level of 63%. When this statistic is pitched against a year on year growth average of 7.4%, it becomes clear that Nigeria's growth is not trickling down. Yes people have blamed corruption for Nigeria's uneven development, but the question is what fuels corruption? I reckon the answer lie in the structure of Nigeria and the values of the Nigerian power elite. Here, you have a situation where power is seen as an opportunity to share rather than care.

I have listened to every political party speak about their manifesto but non thus far is speaking about the real issue: How do we restructure Nigeria? How do we change the values associated with leadership and above all, how do we end the cycle of poverty that fuels crisis and causes instability? For me, the answer lie in doing three things - 1. EDUCATION - 2. ENERGY - 3. EMPOWERMENT.

1. EDUCATION - Tied to poverty is illiteracy. How do we avail the right kind of education that can feed our development needs? Is it education that priortises white-collar jobs or blue-collar, one that seeks to accelerate development and one that targets the bottom of the pyramid - giving them requisite vocational skills that can feed into a chain of small businesses and can guarantee a supply of support skills that can help quicken our infrastructure and industrial development?

2. ENERGY - Growth and Development are actually not synonyms. In Nigeria's case, growth has averaged 7.4% in the last 10 years without commensurate development. How can a nation fast-track development with electricity supplies to the national grid averaging 2,500 Megawatts in a nation of 167 million people? It is often said that small businesses are the engine room of development in any economy, and China remains a classic example. There is correlation between access to energy and cost doing business as well as the development of small businesses.

3. EMPOWERMENT - Agriculture contributes about 45% of Nigeria's GDP but it is largely done at subsistence level with no empowerment for rural and small-holder farmer, hence the high-level of rural-urban drift and tied to this is the high level of destitute and crime in our urban centres. How can we empower small-holder farmers, implement a value chain approach to the development of our Agriculture while moving from Farm-gate to factory-gate?

I reckon that any party that can effectively answer these 3E questions and can present a candidate that has the profile and the will to execute it will have my vote in 2015. It is indeed the turn of the Nigerian people. http://data.worldbank.org/country/nigeria

** Bolaji Okusaga is the Managing Director The Quadrant Company and can be reached at bokusaga@yahoo.com

REINVENTING CUSTOMER SERVICE IN THE AGE OF THE INFORMED CONSUMER

1.      WHO IS THE CUSTOMER?

The Customer is that person or Institution that makes a demand for your products or service offering.

A Customer is the target for specific products or service and helps add value to an enterprise through the demand he / she makes of specific offerings.

The Customer is the most crucial actor in the marketing process because there can be no marketing without the Customer.

2.      WHAT DOES THE CUSTOMER WANT?

The customer seeks for the satisfaction of his / her needs in the market.

The producers of goods and services seek to satisfy the desire of Customers for value in return for profit.

The customer demands the value inherent in the consumption of products or services and also gives value to the producer in the process.

3.      PERFECT MARKET: THE OLD ORDER

In an imperfect market, where the DEMAND for specific products or services outweighs SUPPLY, producers are usually price-makers, who make little effort to woo the Customer.

This situation occurs in a monopoly or an oligopoly.

Here, producers dictate their terms and Customers strive to meet these terms.

4.      ENTER THE ERA OF IMPERFECT MARKETS

With globalization, increased innovation and its attendant atmosphere of fierce competition, where monopolies like Microsoft and Oligopolies such as Coca-Cola, IBM, Nestle and PepsiCo are now facing stiff competition from emerging enterprises in China and India, the era of price-makers in perfect markets are over.

The death of perfect markets has led to a new era where competitive edge is not only driven by product quality but by distribution, delivery and customer service innovation.

5.      THE DEMANDS OF A CUSTOMER SERVICE CULTURE

Global exposure to technology and skilled Man power, led to the advent of product parity in most industry and the consequent erosion of rigid customer loyalty.

Price now became a big consideration in choosing between competing brands and products.

In this dispensation, consumers became price-grabbers, shopping for price and not out of loyalty.

 

However given the need for differentiation beyond price and product quality, companies now started to innovate in the area of product delivery, turn-around time and Customer service.

This shifted emphasis away from Total Quality Management (TQM) to Total Relationship Commitment (TRC) and redefined the whole concept of Marketing.

6.      ENTER THE ERA OF MAXI-MARKETING...

Noting that traditional marketing with its emphasis on Product, Place, Price and Promotion, does not adequately address Customer needs, Maxi-marketing a blueprint centered around Customer Relationship Management (CRM) emerged.

Customer Relationship Management is a process or methodology used to learn more about customers' needs and behaviours in order to develop stronger relationships with them.

Customer Relationship Management  as a process which brings together pieces of information about how customers, sales, marketing effectiveness, responsiveness and market trends help to shape a Company’s Business  Strategy.

7.      CUSTOMER RELATIONSHIP MANAGEMENT: THE NEW REALITY

Customer Loyalty is crucial in the drive at year on year profit.

For a company to stay solvent and profitable, it must manage its customer churn rate and increase its customer retention capacity.

To drive this strategic intent, Companies must court the Customer by meeting or surpassing his expectations through availing the Customer a robust value proposition well beyond the competition.

8.      WHAT IS CUSTOMER LOYALTY?

Customer loyalty describes the tendency of a Customer to choose a product or service over another.  Note the use of the word "choose”.

Though customer loyalty becomes evident when choices are made and actions taken by the customer, customers may express high satisfaction levels with a company in a survey, but satisfaction does not equal loyalty. 

 Loyalty is demonstrated by the actions of the Customer; Customers can be very satisfied and still not be loyal.

9.      RETAINING THE LOYALTY OF THE CUSTOMER – WHAT IMPERATIVES?

If your Customer could compare you with your competitor in terms of your product and price, would you be better off?

Companies generally need to know two key principles about customer decision making:

a)      Customers never buy solely on price even though we think they do.

b)      Prices may be transparent to Customers, but value is usually opaque. By building a Customer service culture, companies build added value to their offerings.

10.  MOVING THE CONVERSATION AWAY FROM PRICE TO VALUE

In value based selling, relationship is prioritised over transaction. Sale is therefore a continuous process - from building the pipeline, the narrowing on the prospect, making the real sale to after sale service - customer satisfaction is placed very high in the entire process. 

11.  HOW TO SELL ON VALUE

Value delivery is the basis of the existence of businesses.

However, given the gradual decline in the differentiation of offerings based on quality, value delivery in most industry began to wear the toga of monotony and stasis.

Value delivery soon became defined in terms of product delivery, distribution and Customer service innovation.

Product and Service delivery based on the understanding of Customers changing needs and attitude became the order of the day.

12.  SELLING ON VALUE: CASES FROM THE MASTERS

Dell

Dell cut off the middleman in the distribution of Computer Hardware and Customized offerings to suit  individual Consumers, thereby beating competitors like HP, Compaq and IBM.

Pepsico

Pepsico shifted emphasis from the production of carbonated soft drinks to production of energy drinks and other related offerings in order to take advantage of changes in trends and consumption attitude, thereby beating a competitor like Coca-Cola in terms of profit.

Selling on Value: The Nigerian Experience

Zenith Bank

 Zenith Bank redefined the concept of Banking in Nigeria by introducing On-Line-Real-Time Banking and Convenience Banking before it became the minimum standard of entry  thereby beating Competitors like Guaranty Trust and Diamond Bank.

Ekocorp

 Ekocorp redefined health care delivery in Nigeria by being the first publicly quoted Hospital. Through its access to funds from the capital market, it was able to raise enough funds to procure state of the art medical equipment and hire experienced personnel thereby raising the bar in private health care delivery.

13.  HOW TO GET THERE

It is proven that innovation based on technology or efficiency in production not targeted at the customer do not positively affect the bottom-line.

Most profitable innovation therefore are built around the Customer.

This is because the Customer is at the core of Value Delivery and Profit Maximization.

It is therefore essential to build a Customer centric value delivery process in order to engender loyalty.

14.  WHAT DOES IT TAKE?

Understand What Your Customer Really Value

 You may find that product cost is a small component of the customer’s total cost and that price is only one of the many variables that customers consider. To build loyalty you must understand the Customer’s Life Time Value (LTV) and align this with your Product’s Lifecycle.

Develop Flexible Market Offerings

No Company can satisfy all Customer segments with the same offering. Companies need to create flexible market offerings. These are bundles of products, service and information that Customers can configure and customize to suit their priorities. Companies sometimes bundle services with their product, but the truth is that not all Customers value these services. Allow Customers to choose the service they value and pay for only what they use. 

Communicate Your Value Proposition

You need to educate Customers about the elements of your value proposition in order for them to fit these into their equation. Without this, your sales force will only use price as its competitive weapon. There is therefore the need to educate your customers on the economic benefits of the Non-Price-Variables embedded in your offering.

Be Open and Honest

A lot of People believe that transparency is an enemy of profit. They reason that Customers will take advantage of better information to drive down prices and profit, but the truth is that there can be no loyalty where there is no trust and trust is better built in an open and honest relationship.

Develop a Customer Data-Mining Process

Customer data and models based on this data can help inform you of customers most likely to respond and become loyal, no matter what kind of front-end marketing program you are running or how you "wrap it up" and present it to the customer.  The data will tell you who to promote to, and how to save precious marketing naira in the process of creating customers who are loyal to you.

15.  PARTING SHOT!

“It is much less costly to generate Customer Loyalty and retain Customers, than to deploy marketing money in the quest at attracting new Customers”