KYC

The term KYC is perceived as something very simple if you know what it stands for. If you dont know what it means, and you happen to hear it in a presentation or business meeting (just like me) from a guy dressed in a suit; after trying to decipher this seemingly complex acronym, you’ll most certainly feel a little silly once you find out what it means.

The application of KYC is very analogous to the above paragraph. Indeed so simple and basic to those who truly understand, a lot of businesses are in blissful ignorance. KYC simply stands for Know Your Customer (I know, right!). So the question is how well do you KYC?

Take a particular bar in Abuja, where I live (for differentiation purposes, we’ll call it “Bar A”) Now if success is turning over a healthy profit every week and being popular among a specific demographic, then whoa, Bar A is making an absolute killing! But what happens when a new “cooler” bar opens, in a location just as prime as Bar A’s. For starters, this market’s love for “new” is going to cause an instantaneous drop in Bar A’s traffic. Not to say they would not recover, but how can anyone justify leaving their recovery up to chance?

Now this is where KYC comes in: if Bar A knew their customers i.e. their core market, where they worked, what drinks they liked most etc; then they could do something about the drop in traffic. For instance, they could offer Bankers (their core market) in Wuse II (where they work), 10% discounts on Mojitos (what the Bankers drink most).

But should it really take a dire situation like serious competition opening shop, for a business to hold on to it’s customers? Absolutely not! Bar A should have experimented such strategies when business was good and there was much less risk

Now how does one get to know your customers? By doing 2 things - 1. asking them and 2. quantifying what they do. For demographic and some behavioural information (where they live, how old they are, etc) the most cost effective route to this knowledge is by simply asking. This information capture can be coupled with some promotional campaign or executed by getting some branded, good looking guys and girls to go round the tables and ask the customers while they fill forms. Whatever works for you.

Quantifying what your customers do (i.e how many times a week they visit, how many rounds they buy etc) is a little trickier. Technology, in the form of a semi advanced till system or a CRM (Customer Relationship Management) system, often takes a lot of the drudgery out of this work and also does cool stuff like plotting graphs and giving you great results at the click of a mouse button.

Getting the data is the first step , but now you must utilise it. A good approach I find is to start at the end i.e. the result you looking to get or ask the really important questions (who are my top 10 highest spending customers?) and the rest follows naturally from there.

Bar A was simply an example to succor the explanation of this idea. However, KYC is applicable to all businesses from FMCG retail (Fast Moving Consumer Goods, I know) to luxury service providers. If you are to build a great business, then you must know your core market, where they live, where they work, how much they earn, their favourite product/ service, how often they visit, how much they spend each they visit, etc, etc.

Treat your customers like something you care about and KYC.