Customer experience lessons from the kasi economy

Mongezi Mtati, brand strategist at Rogerwilco, unpacks some key learnings from the 2023 Township CX Report.

Mongezi-Mtati-Senior-Brand-Strategist-at-Rogerwilco

The relationship between brands and consumers has shifted with the dawning of the digital age. With people comparing, reviewing and sharing their brand interaction experiences across multiple platforms, customer experience (CX) is becoming the key differentiator for businesses in an increasingly competitive market environment. 

McKinsey defines CX as encapsulating “everything a business or an organisation does to put customers first, managing their journeys and serving their needs”, noting that not only is good CX the right thing to do, but it also increases shareholder returns threefold. 

This shift has been felt across all markets the world over, and townships are no exception. As the kasi economy evolves, the millions of consumers living in these areas – with their billions of rands in spending power – are looking to spend on products that match their specific needs and circumstances, and with businesses that understand these. 

Our 2023 Township CX Report unpacks these in greater detail, offering a wealth of insight into how township businesses are adapting to serve their customers better. Despite the incorrect perception that these are informal and unsophisticated businesses, their business adaptations provide some important CX lessons for brands across South Africa and beyond our borders.

Pay-as-you-go

Internet connectivity is transforming the lives of township dwellers. One prime example is the Kayamandi Fibre Project, led by isizwe.com, which delivers uncapped, high-speed internet to households in this township on the outskirts of Stellenbosch for R5 a day. This pay-as-you-go model may seem strange to those more accustomed to paying on a monthly or gigabyte package basis. But it represents a savvy strategy for a market to whom gigabytes may seem opaque, whereas a daily rate may make more sense. The project sees this as an opportunity not just to connect thousands of people to the digital economy but also for other businesses to learn and adapt their offerings for the diverse and unique kasi demographic. 

Weigh-and-pay

Similar to this is the weigh-and-pay model, whereby spaza shops allow customers to purchase exactly as much as they need that day rather than buying goods in pre-packaged quantities, which are either too expensive or can’t be stored appropriately. As noted by African Accent founder Bongani Mabuza, who operates as a spaza shop owner and product distributor in and around Katlehong. This shift, according to Mabuza, is a crucial response to increasing price sensitivity in a post-pandemic economy. By offering a flexible approach to quantity, spaza shops are proving themselves sensitive to their customers’ needs while ensuring regular in-store foot traffic and product turnover. 

Spend frequency

Regular turnover is linked to spend frequency at spaza shops, which has increased by 7% year-on-year. Survey54 CEO Stephan Eyeson sees this as a result of increased load shedding, driving people to buy perishables only when needed. Spaza shops can capitalise on this growth, which may pull consumers away from larger shops at supermarkets. Brands stand to benefit, too, with the potential to increase basket size by collaborating with spaza owners, who understand their customers’ needs and, crucially, know how to earn their trust and offer them value. 

Trust and value

Data from the report shows that consumer loyalty is shifting from brand to value, with price sensitivity becoming a significant deciding factor in purchasing decisions and competing products being chosen based on their affordability. 

Nevertheless, trust can be built through positive word of mouth and personal experiences with brands, with last year’s report noting that almost three-quarters of respondents trust locally produced products. Nielsen research has found that smaller local brands engender greater trust because they are seen as being more in tune with South Africa’s unique circumstances and challenges.

But it’s not just township dwellers who seek trust and value from the brands they choose to spend their money with. A better understanding of, and response to, customer circumstances allow businesses to anticipate needs better, provide tailored experiences, and foster long-term relationships to enhance customer satisfaction and differentiation in a competitive marketplace.

Delivery service

One of South Africa’s most unique challenges is service delivery, which may represent the worst of CX. While the massive growth in e-commerce adoption spurred by the pandemic benefited big players like Uber Eats, Mr D, Checkers and Pick n Pay, they battle to fulfil the last-mile needs of many township areas, so local options have mushroomed to step in.

Delivery platform Zulzi received praise for beating the big retailers on speed and basket price, for example. But it’s not just B2C players making waves – YeboFresh has established itself as a great aid to spaza shops and community organisations, leveraging its bulk buying power to offer them discounts, along with the convenience of WhatsApp order and a buy-now-pay-later option. This represents excellent CX for the spaza shops, which save time and money on wholesaler visits and can, in turn, provide consistent stock and service to their customers. These delivery services are also increasingly integrated with fintech payment solutions. 

Saving through stokvels

Fintech is also having an impact on that most South African of institutions: the stokvel. This community-based saving solution is on the up, with the latest report indicating a 10% increase in adoption from last year. The CX lesson here is also that of trust, with township residents trusting their friends and family to help manage their money. Stokvels are also increasingly operating as money lenders, rather than just savings vehicles. 

The digital stokvel represents the meeting of tradition and technology, with apps like StokFella offering a way for tech-savvy stokvel groups and members to manage, consolidate, communicate, visualise and analyse their stokvel activities. It’s just another example of a home-grown solution meeting kasi residents’ needs rather than making those needs come to them. 

Big brands take note: there are lessons to be learned from your smaller colleagues. They really know their customer and are agile enough to respond to their needs. They embrace some of the most important factors of excellent CX, including a customer-centric culture, customisation, and continuous improvement—lessons we all can learn from.

This story was published in News24 Business

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