A lot of countries were faced with degenerating economic conditions before Covid 19 pandemic, including Nigeria. The economy has started to show promising signs of recovery but the pandemic will slow this progress. Nigeria still depends on oil, so the current fall in oil prices is adding to the lockdown effect, where people stopped spending. The Nigeria government has projected revenue flow from oil to decline immensely, so we have a sudden financial crisis in Nigerian which presents some serious economic challenges.
Financial commentators suggested that so many sectors will be severely impacted whilst also pointing out the steps the government is taking to vitalize the economy, some of the steps cited were reversal on fuel subsidy policy, talk on the market–based tariffs, and central bank driving credit to sectors for the production of raw materials which will, in turn, lead economic growth.
Insurance Institutions need to navigate this period of distress and proactively evaluate their ability to withstand more disruption from both an operational and financial standpoint, in order to navigate this change there are some steps to follow in order to come back stronger.
Institutions should ensure trading and cash flow forecasts are integrated and model a downside scenario, review cash flow forecast for a few months to determine the action that can be taken to preserve cash and also understand that it is of utmost importance that they stay in regular communication with stakeholders, including lenders and investors, in order to retain their confidence and support.
Having discussed the financial aspect, let’s look at how reimagining your business model will help in coming back stronger and position institutions for sustainable growth. Business needs to identify revenue opportunities and prioritize them to reflect their impact on earnings, they need to rebuild operations and appropriate operational resilience. Businesses need to redesign their method of operation reflecting on lessons learned in the past months, they need to discern the value of taking swift actions and also build new standards, and should never be afraid to reimagine business goals.
Another step that can be taken is for institutions to understand how digital adoption can be harnessed for the benefit of businesses. Businesses should accelerate the development of digital solutions which increase efficiency. In conclusion, businesses need to maximize customer’s product and service experience. Institutions need to analyze, plan and implement a well-articulated customer strategy that focuses on maintaining profitable and loyal customers, it is important to know that acquiring new customers is more difficult and expensive than retaining existing customers, institutions should make use of net promoter scores to help them discover their customer’s loyalty by asking simple question “Based on your experience with us, how likely are you to recommend your friend or colleagues?”. The customer’s answers with a number between 1and 10, another strategy when hoping for a long-term relationship with customers is to consider customer lifetime value (CLV). The CLV helps to calculate the customer relationship and this can be done by totaling the income of customers over the years and discounting by the cost of acquisition, this will help businesses understand why it is important in retaining customers while doing this don’t just look at the revenue perspective also look at it from value perspective by asking yourself “what value am adding to a customer”. It is important to know that customer-centered business is the holy grail towards unlocking the true potential of customer value, customer-centricity is putting your customer first and at the core of your business. Because without your customer you have no business, the aim of this is to provide a positive experience for your customer and build a long-term business relationship.
Steve White, CEO, BIBA (2020). Rebuilding Institutions Post Covid-19. Insurance Brokers Journal