Rising costs force many small businesses to cut corners, but customer loyalty key for survival
A benchmark study reveals that three-quarters of consumers who tried a new mass market retailer for the first time in the past six months, and were impressed, shopped there more than once.
In an economy where businesses are grappling with soaring operating costs, a good number often resort to drastic cost-cutting measures.
These include slashing of inventory and laying off staff in a desperate bid to stay afloat.
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A spot check by The Eastleigh Voice reveals a prevailing trend, as many small enterprises, particularly those in the service sector, are now prioritising short-term survival over long-term strategies such as customer satisfaction and retention.
Many service-oriented businesses we spoke to in various residential areas, such as Kasarani, Umoja, Kamukunji, and also the city’s central business district, said customer satisfaction and retention are not key focus areas in their business strategies under the current tough business environment.
Several of them emphasised that, at the moment, their top priorities are covering bills, paying salaries, and ensuring the business remains operational in the coming days and months.
Customer satisfaction
However, for a few select businesses, focusing on customer satisfaction and retention has become a crucial lifeline in the current environment.
Dan, a barber operating in Kasarani alongside three other barbers in the same shop, is one such example.
He says, given the current business environment, which has led some barbershops to reduce staff, a testimony he has heard from his close allies in the same space, he decided to focus on ensuring that every client leaves his chair not only groomed but also satisfied.
This marked a shift from his previous focus on simply meeting daily targets and earning his commission, regardless of who he served.
“Apparently, it’s all about the service my clients receive. This has cultivated the culture that even when I’m not around, they call or text to ask when I’ll be back. Some opt to wait for me so they don’t have to go elsewhere,” Dan said with a smile.
“Interestingly, this focus on customer satisfaction has eased my worries about potentially facing a termination notice, as clients often return to the shop specifically asking for me if they can’t find me.”
Dan said that when he is away, some clients tell his workers that they will only return for a haircut when he is back.
He thus boasts that the owner would find it difficult to let him go, especially now, as despite the tough times for businesses, he more or less guarantees her returning customers and, in turn, sustained inflows.
Building trust
Along Kangundo Road, we meet Esther, a salon owner and mother of three who echoes Dan’s sentiments.
She says over the years, building trust with her clients has transformed her business into more than just a service point, helping her navigate occasional economic hardships.
“Some of my clients are so loyal, they’re willing to wait for me even when I’m not available. They don’t want anyone else, and that’s something I hold very dearly,” Esther said.
She adds that customer referrals from the retained customers now do most of the marketing for her.
“When someone comes in and says, ‘So-and-so told me to find you,’ I know I’m doing something right. And the fact that some clients pre-pay for appointments shows just how much they trust me.”
“That trust has been a major boost for my cash flow even in tough times,” she said.
To achieve that level of customer satisfaction and trust, Esther, for instance, believes in striking a balance between cost management and genuinely considering her customers’ needs.
“I always say, don’t punish the customer because your rent went up. Be fair in pricing, and always find a way to improve your service,” she said.
Customer retention for retailers
Generally, a recent study has revealed that retailers increasingly struggle to retain customers due to the rising cost of living.
The report by US-based analytics company Verint Systems says the trend is often driven by consumers cutting back on their spending and becoming more cautious with their discretionary income.
The shift is also linked to declining consumer confidence in the economy, leading to reduced spending, ultimately resulting in fewer purchases from retailers.
Verint, therefore, says retailers must endeavour to maintain customer confidence as there is a need for enhancing the consumer experience during such times.
“Retail customer experience is key to earning shoppers’ extra discretionary spending in an era of high inflation, and creation of exceptional experiences should be at the heart of every retailer’s engagement strategy,” Verint says.
First-time shoppers
It adds that retailers should also target the first-time shoppers’ experience.
“A delight to them would benefit the retail business at large,” the report suggests.
A benchmark study reveals that three-quarters of consumers who tried a new mass market retailer for the first time in the past six months, and were impressed, shopped there more than once.
“Ninety per cent of first-time shoppers make purchases at least once a month thereafter,” it says.
“After having a good customer experience, 88 per cent are likely to make a repeat purchase and 82 per cent are likely to recommend it to friends or family.”
It also notes that 68 per cent of them are likely to join a loyalty program and 63 per cent are likely to write a positive review.
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