Some days ago we started this series and I am glad by the number of discussion and feedback it generated. Here is the second part for your reading pleasure. but if you are yet to read part 1 here is the link https://www.lawrenceobi.com/general/how-banks-make-billions-how-you-can-leverage-their-strategy-part-1/
What I have shared is not just a story, but a practical experience and what I am currently applying in my business, and I have also helped so many businesses to accept some of this concept to grow their businesses.
I have seen several arguments and responses that this concept might not apply to most businesses, yes, it’s true but it depends on where you are and where you want to be per time. I have reviewed several businesses both local and global and I have seen some of this strategy work for them, including the top global revenue generators like Amazon, Walmart, Amazon, google, Facebook, Apple.
People say some products are premium like apple, yes, I agree, but the truth is because of our exchange rate, standard of living strength of our currency, it now looks like some foreign products are out of reach to most Africans. Apple is a value product properly priced for their market.
The average minimum wage earner in the US can afford an iPhone which is the mass market, while in Africa or Nigeria you must be in the middle class and earn a minimum of N400k to be able to afford a brand-new iPhone, add to the fact that no telco’s will even give you a plan, so you repay little by little which is very common in the western world. In 2017 alone apple sold over 200million phones and targeted 300 million in 2018, that’s about the population of west Africa and they sold 77million in first quarter of 2018.
Having a lean customer base, no matter the type of product you sell, can never cut it for you. Even some Oil companies don’t go for countries with low population they want to import refined products into Nigeria where the consumption rate is high in a month.
Straight to the second things Banks do:
2. Banks create products for every potential customers:
Banks segment their customers and create value products that will suite them. You know why they do this? So, they can increase their customer and cash deposit base because they call it cheap funds. So the ultimate goal is to have as much as they can get from these cheap deposits. There is no customer discrimination if the person is bringing money.
They always work tirelessly to create a product for any identified customer segment if there is a market and crowd for it. The crowd factor is key here, the product might be similar and the same with every other high valued product, but the entry point will just be made easy.
So those who think they are enjoying the banks premium product, stop deceiving yourself you are just paying higher than most people, but everything is same, if they say you have access to lounges when you use a card, just know you are the one paying for that lounge and the drinks you enjoy there. In business nothing comes free to the customer you pay for it one way or the other, they gather all the thing you like put it together as a package and you pay for it based on the amount you can afford. For example see GTbank Nigeria report https://www.gtbank.com/media-centre/press-releases/gtbank-releases-2018-full-year-audited-results-reports-profit-before-tax-of-215-6-billion
They have a customer deposit base of N2.247Thrillion ($6.1Billion USD) as at December 2018 this is mostly made of cheap funds from the customers. if you go dip into the full report you will see their deposit mix and how it impacts on their revenue.
It is also very important to note why you should segment your customer especially in Africa, the rich want to have something the poor can’t afford, and the poor wants to have what looks like that thing the rich is holding, so you create a balance on your product.
so as an entrepreneur or business, segment your customer base and create product for each of the customer categories. ensure proper pricing to suite each of the segments.
If you find this informative and valuable, please drop a comment, while we wait for the Part 3.
To your Success
Lawrence Obi
