Latest / Closing Sales in Nigeria - Sales For The Nigerian Business Person: The Sales and Marketing Blueprint / Conquering CAC: Cracking the Nigerian FinTech Market

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Conquering CAC: Cracking the Nigerian FinTech Market · Closing Sales in Nigeria - Sales For The Nigerian Business Person: The Sales and Marketing Blueprint

• 0:01
  Hello and welcome to the show. Before we begin, a little
• 0:05
  warning. Today we're going to look at
• 0:07
  some ideas that are actually more direct marketing or online
• 0:11
  marketing. And it's not my area, my area of
• 0:13
  speciality. And that's because today we're
• 0:16
  going to look at more challenges that people face when trying to
• 0:20
  promote the Fintech in Nigeria or any other part of the world.
• 0:23
  And that is in customer acquisition costs.
• 0:26
  Now remember I said that this is not my area of speciality
• 0:30
  because we're now talking direct marketing, online marketing, you
• 0:34
  know, all those sorts of stuff. And I'm more of a sales guy.
• 0:38
  But anyway, in trying to look at how can help customer and client
• 0:42
  businesses, these are some of the things that we run through
• 0:45
  anyway. So it's OK for us to give a
• 0:49
  brief overview of the kind of challenges that you're going to
• 0:51
  face in trying to promote your fintech if you're just deciding
• 0:55
  to start of fintech in Nigeria. So like I said, we're looking at
• 1:00
  customer acquisition costs and the typical kind of cost that if
• 1:04
  fintech is going to have. Remember we're talking about
• 1:07
  customer acquisition costs only because there are costs involved
• 1:10
  in doing other things, raising finance, product development,
• 1:15
  you know, blah, blah, blah. So there are different stages of
• 1:17
  trying to build a fintech. So there are costs involved in
• 1:21
  this other stages of trying to develop your fintech, but now
• 1:24
  we're only looking at customer acquisition costs, how much
• 1:28
  money you pay to get someone to become a customer or a client.
• 1:34
  Because it doesn't matter what business you're involved in,
• 1:36
  whether it's wedding photography or you sell flowers or you sell
• 1:40
  catfish or you sell cars, you're paying a certain amount of money
• 1:45
  to get people to become customers or clients.
• 1:49
  So for the wedding photography example and the florists back
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  while I was still in the game, we'd pay for Facebook
• 1:56
  advertising, Instagram advertising.
• 1:59
  You'd pay for Flyers, you'd pay to attend wedding shows like the
• 2:05
  Hilton Wedding Fair when that was still a thing.
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  Then there was the Nigerian Wedding Expo when that was the
• 2:13
  thing that's still in Lagos. They don't do Abuja anymore.
• 2:16
  And then there was brides and bear brides and not brides and
• 2:21
  babes, brides and brides and hmm, gosh, I can't remember
• 2:27
  brides on something was a bride on something wedding show.
• 2:30
  So you can see that these are the different avenues that a
• 2:33
  florist or a wedding photographer would have to be
• 2:36
  dropping money here and there because you're trying to get
• 2:38
  someone to become a customer. So there's no such thing as
• 2:41
  getting customers for free. It's either going to cost you
• 2:43
  time or it's going to cost you money.
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  Typically you're going to spend the one that you have the excess
• 2:49
  of. So if you feel like you're a
• 2:51
  Khashoggi, you have excess cash, like your flush of money, you
• 2:55
  spend the money. If you don't think you have
• 2:58
  enough cash, then typically you'll be investing lots of time
• 3:01
  to get people to become potential customers or clients.
• 3:05
  So now let's start looking at the factors that can affect the
• 3:09
  affect the cost of your customer acquisition cost or CAC or CAC
• 3:14
  as tech folks like to say. So if you've been interested, if
• 3:18
  you've been looking at this space, you've been listening to
• 3:20
  podcasts, you've been reading blogs and things like that
• 3:22
  because you're interested in the startup space and in the fintech
• 3:27
  space, I hear people saying our cock was this, our cock was
• 3:30
  that. That's just what they mean,
• 3:32
  customer acquisition costs. Oh, by the way, another thing,
• 3:36
  you fintech startup folks, I don't know, you guys love
• 3:38
  acronyms. You guys just can't say
• 3:40
  something. Anyway, let me stop and stop
• 3:45
  ripping on them. So anytime you hear CAC, that's
• 3:47
  what they mean. How much money does it cost?
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  How much money do you have to show to get someone to become a
• 3:54
  customer? So the factors that affect your
• 3:57
  customer acquisition costs, the marketing strategy that you
• 4:00
  choose, for instance, the different channels that you
• 4:03
  choose, that's what will determine how much money that
• 4:05
  you're going to spend. Are you going to do organic
• 4:08
  social? Remember when I was talking
• 4:10
  about how you either spend time or money now organic just means
• 4:14
  you're leaving it up to the algorithms to do their thing.
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  As in you make it, you throw it out there, you let the algorithm
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  and you let natural engagement run wild.
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  So that will that will determine how fast you move.
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  So typically for people who are looking at organic social
• 4:31
  strategies is because you're not flush with cash, you don't have
• 4:35
  money, so you're starting the organic route.
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  But even for people that do have money, because there's one
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  potential customer that I'm going to be speaking with and
• 4:44
  they're involved in, they're involved in a paid social.
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  But generally, I recommend that before you jump all the way to
• 4:52
  paid social, you should do organic social first.
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  Because organic social gives you an idea of what it is that your
• 5:00
  target audience likes, what they resonate with, what they find
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  engaging. It's only when you know what the
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  target market really likes, what they engage with, that you can
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  now pour money behind it and just let the whole thing burn
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  again, as many customers as possible.
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  So my recommendation, even if you guys are flush with cash,
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  like you have plenty of money, still have an organic social
• 5:23
  component to the whole thing. So you can try and figure out
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  what exactly do people like. Once you have a core thesis of
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  what it is that people might be interested in, then you throw
• 5:34
  some money behind it and see how you can make that thing grow.
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  So organic social, if you choose that Channel.
• 5:41
  Then there's also content marketing.
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  Content marketing also the kind of thing that most folks should
• 5:47
  try out. If you don't have Pepe, you
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  know, if you don't have money. And that's when you're putting
• 5:50
  out content, engaging posts, things that people find.
• 5:58
  What's the word? Yeah.
• 5:59
  OK, well, engaging. Let's leave it on that people.
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  Things that people find engaging, that's when you're
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  putting out audios. What else?
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  Audio podcasts, posts, you know, things like that.
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  Usually talking about topical issues because the goal about
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  content marketing and organic social is to come up with
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  excuses to be in front of your potential customers or your
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  clients. You know, all the time without
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  trying to shout at them all the time.
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  Buy from me, buy from me, buy from me.
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  So you have fintech that is trying to cure the problem of
• 6:33
  sending money back from the UK here and you're constantly
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  putting our content about how folks in diaspora are working on
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  interesting projects back at home or changing family legacies
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  back at home or let's see what else you know, all those kinds
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  of things. And that is a way that you're
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  standing in front of, you're putting yourself in front of
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  potential customers without being preachy, without being
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  salesy. So you're not saying buy from
• 7:00
  me, buy from me, buy from me, download my app, download my
• 7:02
  app, sign up, sign up, sign up. But we have people who are based
• 7:07
  in the UK, in America or whatever, who think about
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  sending money home, money back home every now and then again.
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  And then there happens to be this player in that space who is
• 7:17
  putting out good content related to these sorts of things.
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  And what do you know, they fintech and they help, they
• 7:23
  happen to offer those kinds of services.
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  So that's the whole just behind content marketing.
• 7:27
  Then there's paid advertising online for most folks.
• 7:31
  You guys are thinking online, but like I mentioned two or
• 7:34
  three episodes ago offline is also not off limits because I
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  did mention that I had seen billboards from what was it
• 7:48
  called one of this transfer apps.
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  So I can't remember anyway, but the the advertisement at least
• 7:56
  one that was close to my home anyway, it was a boner boy and I
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  was one of those companies that are supposed to make easy for
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  you to send dollars abroad or to receive dollars and pounds or
• 8:06
  yen or whatever if you're in Nigeria.
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  So paid advertising doesn't always have to be online.
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  You can also do billboards as well and some fintechs have done
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  that. Then another thing that's going
• 8:19
  to determine the the customer acquisition cost, how much money
• 8:22
  you're putting out to acquire customer is customer value.
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  What that means is if you're running after big fish, you know
• 8:29
  people who have big money, then you should be prepared to spend
• 8:34
  big money to acquire them as a client.
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  But then if you're chasing after small fish in quote, then you
• 8:42
  might not make sense for you to be spending big money to acquire
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  small fish. Now an example of that would be
• 8:48
  the wealth management space. So your fintech is about wealth
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  management, robo advising, blah, blah, blah.
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  Now people who are going to be bothered with wealth management
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  apps are going to be people who have wealth to begin with.
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  You're not going to have someone who is counting change.
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  Look at the wealth management app.
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  So in theory, wealth management, higher value customers, but then
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  if you're looking at basic needs, you know, mobile
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  payments, you know, stuff like that, like people making
• 9:18
  transfers in the market, there's high price sensitivity there.
• 9:21
  So like Wi-Fi sends me to the market, I go to go and buy
• 9:25
  stuff. I'm only looking at OP.
• 9:28
  What's it called? No ATMs, OPPOSS.
• 9:32
  Yes, POS is because the charges are alright, not that bad, at
• 9:37
  least in where I live in Abuja anyway.
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  The charges on the OP POS is I think is like 200 naira for 10K
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  or something like that, I can't remember.
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  So there's price sensitivity here.
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  So it's time to pay. Is it OP?
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  No problem. Is there another carrier?
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  I'm like Oh no, no, no, no, no, I'm not dealing with these
• 9:58
  people. And then we'll look around for
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  someone else that has OP. So you can see that there's
• 10:02
  price sensitivity there. So that's much more basic need.
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  So those are the kind of these are some of the factors, you
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  know, in the calculus that you have to be looking at how much
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  money am I going to spend to acquire customer?
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  So wealth management higher value customers then by all
• 10:17
  means, yes, let's look for expensive advertisements or
• 10:20
  let's look for those expensive billboards or let's register for
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  trade fairs where we're going to have high net worth individuals
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  and let's put a stand there and stuff like that.
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  That's for wealth management, high value clients.
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  But then when it comes to the basic stuff, maybe just run
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  those cheap online ads, you know, like banner ads or
• 10:41
  whatever, you know, things that are going to flash on Facebook
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  and all that because you're not running after a high, a segment
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  of customers that has some high value.
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  Then location might also be a factor because supposedly in
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  urban locations, you know, Abuja, Lagos cities basically
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  where they have higher smartphone penetration,
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  supposedly it's cheaper to acquire customers if you're
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  doing the whole online thing. But then in rural communities
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  with limited Internet access, if you're trying to target those
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  people, supposedly it is much more expensive.
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  And by that I say supposedly, those are just some opinions
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  that I've come across. It's not something I've been
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  able to verify myself and remember I said now we're
• 11:22
  discussing lots of things here that more in the realm of direct
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  marketing, online marketing and it's not my area of speciality.
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  So be sure to consult with a specialist when you are trying
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  to narrow down these things and make decisions.
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  Then some things are like us to consider when it comes to how
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  much are we going to spend to acquire a customer is we have to
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  look at conversion rate. Conversion rate is something
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  that you marketing folks like to call, what do they call it
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  effectiveness. But what we sales people call
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  conversion basically is getting people to take the next step.
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  So if I put out an advertisement and the advertisement is able to
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  get people to take the next step.
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  OK, let's say let me see. OK, let me stick to.
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  OK, let me go back to really old example that I used a couple of
• 12:08
  episodes ago about someone who came to my my son's school and
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  who had Flyers with phone numbers on it.
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  And they were selling books, shoes and bags, you know, for
• 12:19
  children in school. So you have a flyer, you take
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  500 of those Flyers and you go to a school, you give out 500.
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  If out of those 500 Flyers that you dropped 100 parents called,
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  then the conversion rate is OK, No, How do you express it in
• 12:41
  mathematical terms? OK, let me not show that I
• 12:44
  failed mathematics in junior secondary school, but you get
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  the whole point. You put out 500 Flyers, 100
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  parents call That is, there's there's been conversion.
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  People have taken the next step. However, it is that you express
• 12:58
  that in mathematical terms. So if you express that in
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  mathematical terms, that is your conversion rate.
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  Now of the 100 that call, let's say your next step is you're
• 13:08
  trying to get them to pinpoint exactly what they want.
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  So you can give them a quote or an estimate.
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  So 100 parents call, you're able to get 20 parents to tell you
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  exactly what they need. So you give a quote, you can see
• 13:21
  that out of the 100 they're called, 20 took another step.
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  So there's an element of conversion there expressed in
• 13:29
  mathematical terms. However, it is that you're
• 13:31
  supposed to express it. By the way, if you know these
• 13:33
  things, please hit me up WhatsApp or LinkedIn so I can
• 13:39
  show over here on the podcast that this is how you put it in
• 13:42
  mathematical terms. Now of the 20 that tell you
• 13:46
  exactly what they need and they give a quote, maybe I'll try to
• 13:48
  get people to come to the store so that they can actually have a
• 13:51
  look at the bags or the shoes or you know, whatever.
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  And out of those twenty, you're able to get 5 to come to the
• 13:59
  store. So you can see now there's
• 14:02
  another element of conversion. 20 people were able to say this
• 14:06
  is what I want. You gave a figure, you tried to
• 14:09
  get them to the store. Five came from 20 to five.
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  That is also conversion as well. Now the five that come to the
• 14:17
  store, let's say four of them pick up items and pay.
• 14:22
  There's also another element of conversion there because people
• 14:25
  took the next step. Five people came and then four
• 14:27
  paid. Overall, when you're looking at
• 14:30
  conversion, the conversion rate along the whole thing, you'll
• 14:33
  notice that you started off with 500 Flyers and at the end of the
• 14:36
  day, four people bought. So we should be trying to get
• 14:41
  better at optimizing our conversion rate or getting
• 14:46
  people to take the next step at every single point of the stage.
• 14:49
  Because if you're dropping 500 Flyers to get 4 clients, think
• 14:55
  of what will happen if you drop 500 Flyers and you get 10
• 15:00
  clients. You can see now that you are
• 15:04
  spending less to get more customers because you have a
• 15:09
  good conversion rate. OK Anyway, I just hope you guys
• 15:15
  are following me on the whole thing.
• 15:17
  Maybe this is one of those things that you have to
• 15:18
  demonstrate by writing on the board or something.
• 15:21
  But bottom line, if you spend, if you spend money to create 500
• 15:25
  Flyers and I give 4 customers, maybe that's not bad.
• 15:28
  If on average every parent spends, I don't know, 100 grand
• 15:32
  or something, maybe that's not bad.
• 15:34
  But if you spend, if you spend the money to make 500 Flyers and
• 15:39
  from that you get 10 customers, it's even better.
• 15:43
  If you produce 500 Flyers and after that you get 20 customers,
• 15:48
  even better. And as you can see, the amount
• 15:52
  of money that will spend to produce the 500 flowers is going
• 15:55
  to be the same, but the money that you can collect on the back
• 15:59
  end when people pay is going to increase.
• 16:01
  That's what's making it cheaper and cheaper.
• 16:03
  So if you have a good conversion rate, you're going to be
• 16:05
  spending less, more, sorry, spending less money to get
• 16:09
  customers. If you have bad conversion
• 16:12
  rates, it just means you're just wasting money.
• 16:13
  Anyhow. Another thing to consider is
• 16:16
  brand awareness. As you build a better brand over
• 16:21
  time, your customer acquisition costs goes down.
• 16:24
  It's because people know you, they like you, they trust you,
• 16:26
  it's no problem. They'll do business with you.
• 16:29
  If you're not a well known brand in the beginning, and of course,
• 16:31
  nobody starts off by being a well known brand brand.
• 16:34
  Your cost, your customer acquisition cost is going to be
• 16:36
  high. Let me give an example.
• 16:39
  You go out with your kids, it's hot, you will need something to
• 16:43
  drink. Somebody walks by Coca-Cola, you
• 16:46
  don't even think twice. You tell the guy, give me 3
• 16:50
  bottles of Coke. OK, maybe 4 bottles of Coke.
• 16:53
  One for you, one for Madame, one for the kids or you know, the
• 16:56
  other way, one for you, one for your husband, one each for the
• 16:59
  kids. You guys don't even think twice.
• 17:01
  Coca-Cola. But if the guy is sending
• 17:03
  Biggie, Biggie is one of those cola brands.
• 17:07
  Been seeing them in Abuja. I don't know, you know,
• 17:09
  nationwide if they're popular in Lagos or in the east on other
• 17:12
  parts of Nigeria. So if it's Biggie, some people
• 17:15
  are like Biggie, no, don't worry, just give me water now
• 17:21
  because Biggie is not a well known brand.
• 17:23
  Biggie is spending a lot of money on the radio, on the TV,
• 17:28
  advertising, on social media to get people to buy Biggie.
• 17:31
  Coca-Cola can spend less because they are a well known brand.
• 17:34
  They don't have to push that much.
• 17:36
  So if it is Coca-Cola, you will think twice.
• 17:39
  See, Gimme Fanta, Gimme Coke, Gimme Sprite.
• 17:42
  If it is Biggie, you say which one is this?
• 17:46
  No, don't worry, just bring water.
• 17:47
  In fact, I've seen a place where somebody looked at it and I was
• 17:52
  like, which one is this Biggie? After the back and forth, the
• 17:54
  person said give me pure water. Person rather take pure water
• 17:57
  than take Biggie, which was a brand that he didn't know.
• 18:01
  So brand awareness also plays well into this whole thing.
• 18:04
  So don't worry. As you build a better brand over
• 18:06
  time, the cost of acquiring a customer is going to go down.
• 18:09
  So let me bring it to a stop here.
• 18:11
  Especially since this is not mere or specialty, so it's not
• 18:15
  something I should be giving advice on anyway.
• 18:17
  But these are things part of the calculus that you have to run
• 18:19
  through when it comes to acquiring your customers.
• 18:23
  What marketing strategy are you going to use?
• 18:24
  What kind of channels are you guys going to use?
• 18:27
  Are you guys chasing big fish or small fish?
• 18:29
  If it's big fish, alright, let's spend this money because
• 18:31
  customers are worth more. If it is Tacharya customers, if
• 18:34
  it's a small fish, then maybe we shouldn't be spending that much.
• 18:37
  Then are we looking at Lagos, Abuja, Potacot?
• 18:40
  Are we looking at small, small communities?
• 18:44
  Let's see what else. OK, Then paying attention to
• 18:47
  conversion rate. Over time, as our conversion
• 18:51
  rate gets better, we'll be spending less money.
• 18:53
  And then we also don't worry because there's a multiple
• 18:56
  effect of brand awareness. As the brand awareness improves,
• 18:59
  it should be getting cheaper to acquire customers.
• 19:02
  So thanks for your time and attention.
• 19:03
  Connect with me on LinkedIn. My name is Tavishima Ayede, I'm
• 19:08
  the host of the show. You can confirm the spelling of
• 19:11
  my name from the link. We're listening to this episode.
• 19:13
  Also, find me on WhatsApp. The phone number 08064662140.
• 19:20
  The country code is +234. For those of you who are not
• 19:22
  Nigerian, thanks for your time and attention.
• 19:24
  I'll catch you guys at the next episode.