How can an organisation build a global force of loyal customers? How can you get people submit to your brand? These are questions every business leader sincerely care about the answers. This becomes even more pertinent in the face of rapidly increasing global connectedness. The limitations of distance has been done away with as international boundaries holds no real meaning to today’s consumers.
In the past, producers took their customers for granted because at that time the customers were not demanding nor had alternative source of supply or suppliers. But today there is a radical shift. The changing business environment is characterised by economic liberalisation, increasing competition, high consumer choice, demanding customer, more emphasis on quality and value of purchase.
Reports indicate that companies lose half their customers every five years. The rate of customer defection is so high that some even argue that loyalty is dead. But that’s a serious mistake. How can someone say that? Loyalty is not dead. Every serious minded executive knows the importance of customer franchise. A company that doesn’t manage customer loyalty would soon go extinct especially as competition intensifies.
The interesting thing is that any business can effectively command loyalty; all it requires is a simple understanding of the true purpose of business. For many, the purpose of business is to make profit. Everything rises and ends with how much profit a business is able to generate. Well, that’s true and if it is true, you want not just profit, but sustainable profit. And you can’t have sustainable profit by running after profit. Sustainable profit is the result of securing and sustaining the loyalty of your customers.
The thing is, you don’t secure and sustain the loyalty of your customers through advertising, neither will sponsorship of any sort produce that. Many companies have focussed on that and did it so well, yet have gone extinct.
Customer loyalty is a natural consequence of creating value; value that blows the socks of your customers away, well intended value designed to leave people’s life better. When a company focuses on creating value first, then their loyalty management efforts will produce lasting results.
You can’t advertise deceit and expect to go very far in business. Sharp practices in pursuit of profit destroys customer loyalty. You can’t secure the loyalty of customers and sustain it through deceit. You may manipulate people’s mind into submission to your brand but watch it, they will soon fetter away soon as they come to real terms with the value you offer them. I love the way Charlie Carwey, the founder of MBNA, an American credit card company thought about it. On the cover page of his company financial report he writes, “Success Is Getting the Right Customers . . . and Keeping Them.” That about says it all. In MBNA’s entire history, the company has suffered only a handful of defections from its thirty-seven hundred groups. By 1994, its individual customer base had grown to more than 14 million cardholders!
Based on all of these, the ultimate question then is, how do I secure and sustain customer loyalty to my brand?
First, understand that there is no short-cut to anywhere meaningful. Building customer loyalty to your brand is not going to be an overnight project. In fact, it is a life time project, and always work in progress. You don’t start tomorrow morning and begin to expect instant results.
Next, you will need to know that loyalty management should be a CEO’s function. Loyalty is too important to be considered the work of the marketing department. If CEOs will devote time looking at stock performance, they should do even much more for loyalty metrics. Of course, the performance of the former depends on the latter. Reports have shown that even a slight improvement in customer retention by companies results to significant changes in financial performance. That’s how important it is.
But most importantly is for the CEO to define the customer loyalty philosophy in the company. The customer loyalty philosophy of a company is the set of ideas, facts and convictions of the company as it relates to customer loyalty. It is this philosophy that defines the dimensions of their commitment to securing and sustaining the loyalty of their customers. Not only should this be defined, it should also be clearly communicated to everyone in the company, not once but on a regular basis. This will help everyone in the company develop a customer loyalty attitude, a predisposition to think, talk and act in ways that will communicate optimal value to the customers. Imagine a company where everyone thinks in terms of the customers. What kind of organisation do you think that will be?
Finally, customer loyalty should be measured. It is sad that many organisation can’t really tell whether their customers are defecting or not. Customer loyalty works by the laws of economics and human behaviour, which means there are practical, objective, mathematical answers to questions such as: Just exactly how much value does loyalty create (and vice-versa)? How do we quantify the link between loyalty and profits? What’s the actual cash advantage of holding onto a good customer for one additional year, or five years, or 10? There are accounting methods, cash flow, net present value, and probability used in measuring customer loyalty. Although I can’t get into that in details here, there are available literature to help you.
No business without a customer loyalty culture can endure for so long. It is the core force behind growth and profitability.

By Brian Reuben.
Brian Reuben helps companies and individuals attain optimum performance and profitability. He is a global thought leader on business and leadership. @brianoreuben

What Next After The Oil Boom?

The international price of crude oil has plummeted, and oil dependent economies are all scrambling to find other avenues to replace their falling revenues. Oil prices, like other economic phenomena, are cyclical; they have their booms and busts. However, for most extractive economies like Nigeria which have been devastated by the ‘Dutch disease’, there is always doom hanging somewhere.

When oil prices were booming, we were faced with higher prices of refined products. Although an oil producing country, we do not have refining capacity. These higher prices are borne by the citizens either directly in a deregulated environment or indirectly through subsidy payments by the government, money which would have gone to other capital projects. Since the payments for subsidies are on consumption rather than expanding the economy, they only promote rent seeking. This further makes the oil sector an enclave and a drain on government resources. It also discourages capacity utilisation in the manufacturing sector, induces higher imports, diminishes the foreign reserves, puts pressure on the exchange rate and worsens the purchasing power parity of the people.

revenues which affect both capital and recurrent expenditures. Economies such as ours are highly dependent on public sector financing or government funds. The spiral effects are usually seen in abandoned projects, inability to pay salaries and falling revenues and incomes for banks and other private sector businesses. Declining government revenues lead to a fall in our foreign reserves and puts pressure on the local currency; the Nigerian naira (NGN) in this case. The monetary authority is now faced with either devaluating the currency or using the falling reserves to defend the naira. Both have serious effects on the economy. The fiscal authorities are compelled to increase taxes, thereby leading to a fall in the disposable income of the citizens.

While this is not the first time oil prices will go down, this bust is coming on the heels of a sustained boom. The first oil shock which came with the Israeli-Arab war of 1973 was a positive shock for the oil producing nations and a negative shock for oil importing nations. Oil rose from $3 per barrel to $12 per barrel. By the time of the second oil shock which was caused by the 1979 oil crisis, the price of crude oil nearly doubled to $39.5 per barrel. After 1980, oil prices began a 20-year fall, eventually reaching a 60 percent fall-off during the 1990s. Oil exporters such as Mexico, Nigeria and Venezuela expanded production. Surprisingly, despite the second oil windfall of 1979; Nigeria was badly hit when oil prices began a decline in 1980. Economically, we fallaciously speculated that oil prices will sustain the last unbeaten run. We did not have a policy to guard against sudden and even envisaged fall in the prices at all. One constant thing with an oil boom is that it makes the currency stronger, once the people have a higher purchasing power, imports rise. As imports rise, consumption and production of local products fall, and imports rise further. This causes a balance of payment disequilibrium and distorts the macro economy. However, a fall in crude oil prices do not automatically mean a fall in imports. Rather, there is more pressure on the falling foreign reserves to support the appetites of our imports.

From 2009 the price of crude oil for the first time remained around the $100 mark for about five years to the extent that we didn’t view it as an anomaly. It fuelled corruption, excessive importation and increased consumption based on emotions. There was no corresponding increase in local manufacturing and other industrial activities. The last windfall went to lubricate a political machinery, retail and services, and fuelled demands of all sorts. The direction was one way, capital was exported alongside jobs, while comfort and luxury were imported and loot was siphoned.

The price of crude oil began declining in the middle of 2014 due to a significant increase in oil production in USA, and declining demand from the emerging countries. This oil bust is different from the other ones before it. China, the power house, has seen its growth rate slowed down.  Shale oil or fracking raised the threat to OPEC’s crude oil production to discourage this and for other reasons. Saudi Arabia has been pumping crude oil into the market. The United States has lifted the embargo on the exportation of Iran’s oil. More countries have discovered, explored and are now exporting crude oil. OPEC members cannot agree on a quota or to cut down production. And for the first time, Islamic state in Iraq and Syria (ISIS), a non-state actor, has control of oil fields and installations enabling them to sell cheap crude oil to fund their terrorism.

Goldman Sachs last year predicted crude oil will fall to as low as $20 per barrel, it is presently below $30. For reasons listed above and many more, we may be experiencing the end of oil. It doesn’t preclude the price of oil from rising again, but this is the end of oil as we know it. Hitherto, one of the easiest reasons for the rise of oil prices was the crisis in the Middle East. However, the Middle East is engulfed in a myriad of sustained crises which no longer result in oil shock. Global Warming is gradually reducing the need for energy which goes into heating. Again, the activities to curb greenhouse emission and protect the environment from degradation has led to increased research and expenditure on alternative sources of clean energy. There have been many successes in renewable energy development, so that crude oil and other fossil energy can no longer hold the world to ransom. Producers of crude oil can no longer determine the prices of oil any longer and its by-products are no longer inelastic. There are more non OPEC oil producing nations and new oil producing nations who will not want to join the OPEC cartel at a time that OPEC’s influence has nosedived.

However, the end of oil will not be the end of Nigeria’s economy. What the end of oil should do for us is to reverse all the negative effects of the ‘Dutch disease’. Other products should queue for exports; we must move away from the importation of primary goods. Nigeria has all it takes in terms of human and material resources to re-start the economy. Prudence and affirmative actions to wake up manufacturing will go a long way. Unless oil rises suddenly, the naira will someday be devalued. A devalued naira with an exporting capacity will help boost the economy, especially if the exports are non-oil. Nigeria as an oil producing country must as a matter of economic expediency have refining capacity. It no longer pays to export crude oil, worse still when we are importing refined products.

The end of crude oil as we know it is staring at us and we must not end with it.

Twitter: @sAMMYVARSITY

The rapid technological trends without an iota of doubt brought about unparalleled advancements in almost every aspects of our daily lives – from the way we eat, shop, transact, learn, teach, to the way we play, entertain, relate and get in touch with one another via unnumbered social media available at our disposals, among other cool stuffs!

It’s pertinent to mention that, in today’s globalised world, there are about 3.3 billion active internet users surfing more than 940 million websites with 40% (more than 1 billion) users engaged in online purchase.  Statista.com estimated that, in 2013 alone, a total of USD1.2 trillion was generated in e-commerce sales with a projection to rise in the future. Digital payments are not only convenient for the mobile shopping experience, but also for the increasingly available paid digital contents like streaming music, online video subscription and apps (yeah, including $1.99-SI Magazine’s app on Amazon.com)!

 

Though, the expansion of the internet worldwide has unanimously contributed to the transformation of trade and store transactions in terms of patronage, increase in revenue generation, customer-centricity and real-time pickups and delivery, but it’s still obviously common to see a group of people, mostly young chaps, debating on possibility of sharing their Debit/Credit Cards details with third party merchants (online shopping sites) conveniently. Those whom feel not to share mostly associates their phobia with security and identity theft issues. This category of digital phobic needs to note that with 940 million websites, only 40,320 were been hacked – just a fraction of number from the total websites, world-over.

Worth noting, if you are to search Google now for an online store, know that your search is among the 50,702 searches made on Google in one second, bringing to about 3.2 billion searches so far (as at GMT 18:02) made on Google website, ALONE. Reading a Blog on a product or service in order to explore and compare prizes from different stores (an advantage you don’t have while physically shopping) implies that you are reading 1 of the 3.1 million blogs posted today worldwide.

Save your time, energy, fuel and unavoidable waiting queues, buy and/or sell online, from anywhere at anytime, conveniently and securely, for unmatched shopping experience!

Stats from Internet Live Stat, Statista and Google.com.