Peter Drucker, one of the most influential management experts ever, says that a business exists to create customers. The truth in that statement is founded on the fact that it is only by creating customers consistently that a company can guarantee its continued existence. A business must make conscious and consistent creation of customers its core business because the current customers may die, lose their sources of income or get pissed off with the company.
If any of these happens, it results in a reduction in patronage and a decline in the bottom line which may make it extremely difficult for the company to stay afloat. Therefore, the only way a company can perpetuate itself in business is through continued creation of customers. This is achieved through the expansion of its territory.
NIPOST’s faux pas
In the 1970s, 1980s and early part of the 1990s, the Nigeria Postal Service (NIPOST) was very involved in financial transactions in the country through its money and postal orders. The orders were as good as bank cheques. In the days before the advent of electronic money transfer, individuals with relations in remote parts of the country where there were no banks would buy postal or money orders and mail same to their relations in the villages. On getting the orders, the recipient would take them to the nearest post office or postal agency where the orders would be converted to money. The sender would have paid a commission to NIPOST for the service. Organisations that were running mail order businesses too depended on NIPOST’s postal and money orders, customers would identify what they wanted to purchase in a brochure that was posted to them, and then send money or postal orders to the company. On receipt of the postal order, the company would send the stuff ordered to the customers. This was not limited to the country as those who had payments to make outside Nigeria could buy money orders and mail to the country where they needed to make the payment.
Even examination bodies like the West African Examination Council (WAEC) and the Joint Admissions and Matriculation Board (JAMB) relied on NIPOST for the sale of their forms as postal order from NIPOST was regarded as payment for forms. Through this, NIPOST was not just making real money, it became a community centre as nearly everyone in the country had one thing or the other to do with the government agency. The agency was so prosperous then that it did not need government’s subvention for its sustenance.
But the tide has since changed. NIPOST, the erstwhile self-sustaining federal government agency, now looks up to the government for support to pay staff salaries and execute capital projects.
What was NIPOST’s faux pas? It did not do anything to grow its customer base when there were incursions into its territory. While other service providers were making inroad into its territory, the agency did nothing to extend its frontiers. When electronic money transfer started, the agency did not key into it. It kept on doing what it had been doing the same old way while the opportunities in money and postal orders kept narrowing until there was no longer any business for it in that regard. Though it made an attempt much later to get into fund transfer through the introduction of Post Cash, there was no demonstrable commitment to make it work; it was a futile attempt that was not meant to launch the organisation into lasting prosperity. NIPOST, through its failure to extend its frontiers, lost a major business to competition and now gasps for breath.
Success as failure
Atrophy sets in for any organisation which believes that after achieving a measure of success there is no need to aim any higher. Truth is, there is no stand still in nature; those who do not advance are bound to retreat. No company must get to a level that it thinks it does not need to get any better. Nothing destroys a company more than complacency. In the business world, there is no time to slow down. If you choose to take a break after recording a huge success, you will find out that by the time you get back others have made mincemeat of the success you recorded. Every organisation must realise that opportunity is never lost, it only changes habitation. The opportunity a company does not seize will be utilized by another, the success a company does not record will be achieved by another, and the profit a company does not make will go to another. In the business world, being on the go is the rule. There is no organisation that is too big to fail. The only antidote to contraction in business is deliberate extension of territory.
Why businesses must have expansionist mentality
A business must deliberately inculcate in its system the expansionist mentality for the following reasons.
The customer base that is not consciously expanded will contract unconsciously
What is in the power of a company to do is to grow its business by expanding its market; it cannot force its current customers to retain their patronage. So, if a company fails to do that which is within its power to do, it will be powerless to stop the occurrence of that which is not within its control. No matter how good a company is in its service delivery or customer service, customers may still decide to try another product which will affect how much sales a company makes. The only way to mitigate the effect of that is to have new customers that will replace the exiting ones. So, to hold on to its territory, a business must extend its frontiers.
Competition will always go after your customers
One reality no company can wish away is that competition will always make overtures to its customers and some of them may make a switch which will result in a decline in its patronage. A company that keeps losing customers without making any effort to get new ones will head south and may eventually go under. Since no company can stop another from reaching out to its customers, the only option left is for it to also reach out to new customers so that it can remain in business.
Customer loyalty is unreliable
Variety is the spice of life, so goes a saying. This is what makes customer loyalty undependable. No company can consistently count on a particular customer’s loyalty because the customer reserves the right to deploy his patronage as he deems fit. While no effort should be spared in satisfying current customers, no wise company will build its hope on the patronage of its current customers, it has to create a new customer base to guarantee its continued existence. Though current customers have a role to play in determining the prosperity and future of a company, the greater role is with customers that are currently not within its fold. A company’s best customer ever is the one who has yet to identify with it.
Old money will disappear
Economies run in cycles and every cycle produces new realities. New realities throw up a new order and the new order will produce a new set of people with influence and affluence. This will, in effect, deprive some people of their erstwhile resources that positioned them to make certain purchase decisions. A business must identify these and tailor its service provision as well as productive activities to meet the needs of those just coming into influence and affluence. A business that is not always on the go and willing to extend beyond its known territory will find it a bit difficult to reap the benefit of a new order.
Moving to new territories unveils new opportunities
If a company stays on the same spot, it limits itself to the opportunities available within its vicinity. By extending its frontiers, it opens itself to new opportunities which it would have never experienced had it held on to its old territory.
Nokia, the telecommunication company, started in 1865 as a paper mill. By 1871 it had extended its operations to include rubber boots manufacturing. Over the years, the company has been involved in cable manufacturing, tyres and telecommunications infrastructure equipment, among other ventures. The company grew so well that by 2007 it produced more than half of all mobile phones sold on planet earth, and its Symbian mobile operating system commanded a 65.6 per cent global market share. Today, the company, which started as a small sole proprietorship in Finland, is a global brand. Nokia has grown this much because right from its onset it set its eyes on conquering new territories.
Last line
A business that does not consistently keep extending its frontiers will lose even that which it tries to hold on to.
and then