Encouraging small businesses to get to know their customers
Market research is important — especially for shops in the townships
THE days are long gone when businesses could ignore the need to understand their customers. It is a fact that the better you understand your market drivers and customer behaviour, the more you will earn.
In this tight economic environment, customer habits have changed significantly: spending is reprioritised and customers switch between competitors in search of better deals.
The businesses that survive will be those that continuously invest time and money in conducting market research and adjusting their product offerings as a result.
Unfortunately, insights from market research tend to be overlooked, especially by small businesses, which often go to the wall never knowing why their customers abandoned them.
Granted, the cost of market research can be prohibitively high — especially for small businesses. But the cost of not understanding your customer can be even higher.
And nowadays, there are various online sources of market research data that is free.
Mpho Mpofu, founder — in 2006 — and CEO of Masutane Consulting, which specialises in research from township-based customers in South Africa and various African countries, has established that insufficient market and customer knowledge was one of the main obstacles to the growth of small businesses in the informal economy.
And these are the businesses most exposed to the low- to middle-income and price-sensitive customers — those who are more likely to change their shopping habits in tough times.
Owners in this sector commonly cite lack of time and money as the primary reasons for not trying to understand their customers better.
When she discovered this, Mpofu began putting her profits into providing free workshops to the owners of small businesses in the townships, to spread the word about the importance of market research and to give them tools to conduct their own surveys.
Suggestions include making short questionnaires available in their shops and sending WhatsApps to customers to get feedback on the business and new products.
So far, these workshops have been run in Tembisa and Ekurhuleni, with plans for courses in Soweto and Mamelodi.
In the townships, most business owners interact with their customers in person every day, so they have plenty of opportunity to question them. These inquiries should not be restricted to existing customers — they are relevant for former customers and competitors’ clients.
Several spaza shop owners in Mamelodi, Pretoria, launched their own market research project, and discovered that their competitors were negotiating group supplier prices and setting up shared distribution points.
So the researchers formed the Mamelodi Innovators and followed their competitors’ example.
These sorts of steps are going to help them become better aligned with the changes in the competitive
BIG-BUSINESS THINKING: Spaza shops in Langa, Cape Town landscape and reduce their costs enough to be able to survive tough market conditions.
Mpofu’s drive to help these business owners comes from the lessons she learnt from her entrepreneurial grandmother.
Starting with just five oranges, Mpofu’s grandmother built several successful small township businesses, including a butchery, a pharmacy and a supermarket. However, these businesses did not survive her death.
Now Mpofu is determined to change the township from a place of despair to a place of opportunity and employment.
In this way, many more businesses can survive their owners and create much-needed employment.
These small-business owners will benefit by learning skills in addition to those of conducting market research.
The entrepreneurs need support in how to market their businesses, manage them financially, plan for succession, and balance family commitments with business needs.
We should all be sharing our skills with those who need them the most.
We all need to work together towards building ventures that will thrive and flourish for generations to come.
Starting with just five oranges, Mpofu’s grandmother built several successful small businesses
Sikhakhane is an international speaker, writer and retailer, with an honours degree in business science from the University of Cape Town and an MBA from Stanford University. She also advises and funds small businesses