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