By 2022, the number of start-ups in Nigeria was more than 3 000 — the highest in Africa. Kenya and South Africa followed with 1 000 and 660 start-ups, respectively. It’s clear that African Founders and start-ups want to make their mark on the international stage.
But, like the rest of the world, start-up Founders in Africa face a number of local challenges. These include limited access to capital, market fragmentation, and the need for more technology adoption. Using innovative business development strategies, African start-up Founders can overcome these hurdles.
This article will equip you with practical tips and real-world examples to navigate through complex African markets and convert your exciting ideas into successful, sustainable ventures.
Business development refers to activities that can boost business growth. Growth can refer to any decision that enhances overall business performance such as improving lead generation, customer acquisition and retention, business expansion, etc.
A business’ market entry strategy is a comprehensive blueprint a company creates when entering a new market. This plan encompasses the company’s requisite actions to introduce its products or services into a new market.
There are a number of established and widely used market entry strategies you can adapt to the African market:
Once you come up with a market entry strategy that aligns with your goals, you can enter a relevant market area.
Regardless of the strategies you choose, if you are looking to enter the African market, the following market areas are particularly promising:
For example, a multinational retailer could collaborate with existing e-commerce start-ups like Jumia, which operates in several African countries, to expand its market presence.
Customer acquisition is the process by which a company finds and converts interested leads (individuals or companies) into new customers. It is crucial for start-ups to have a solid customer acquisition strategy in place before launching. This will allow you to cover the initial expenses, generate revenue for reinvestment, and demonstrate success to partners and investors.
Your customer acquisition strategy should be based on well-researched knowledge of your ideal customer. Once you know who you’re targeting, some of the common online customer acquisition strategies include:
Offline customer acquisition strategies include:
In addition to these standard practices, try to think of ways you can adapt your customer acquisition strategies to the unique African market.
Around 60% of Africa’s population lives in rural areas. Therefore, running rural outreach programmes to bring consumers from rural areas closer to your start-up is a highly relevant strategy. Mobile-based initiatives can help you reach remote places with limited access to physical infrastructure. You can use mobile apps, SMS campaigns, and interactive voice response (IVR) systems to engage potential users.
Another rural outreach strategy is the installation of screens on digital vans, turning them into mobile showrooms. These vans can travel across rural areas to spread educational content to inform your audience about your industry and showcase your products.
Moreover, you can place unmanned interactive kiosks throughout public places, marketplaces, and community centres in rural areas. Curious or interested individuals can get hands-on experience via these kiosks to learn about your products or services.
Influencer marketing has gained significant traction in Africa, just like in most places. Partnering with local influencers who have a strong following in specific niches or industries is a great way to reach your target audience through their mobile phones, amplifying your reach to the farthest corners of the continent.
Many influencers have a dedicated following from online users who trust their opinions and recommendations. Once they promote your brand, it can help to get you noticed quickly.
For example, in South Africa, Wian van den Berg is the most followed influencer on Tik Tok. Wian gained worldwide popularity by performing magic tricks online. Since Wian generates a lot of views among South Africans, getting influencers like him to advertise your brand can put you on the map.
Customer retention refers to assessing your customers’ satisfaction with your start-up’s product and service, and taking steps to ensure they stay with your brand. Ideally, every company wants a 100% customer retention rate. But realistically you should aim for at least the average for your industry. For example, median customer retention rate for the wholesaling industry is 44%, while IT services have a retention rate 88%.
Creating a feedback loop involves collecting and analysing customer feedback to continually improve your products, services, and customer experience. For start-ups with users who can access the Internet, you can send surveys via email and in-app links. With personalised marketing, you can engage users and collect their responses on their preferences, experiences, and recommendations.
However, considering the diversity of the African market, you can’t rely on the Internet alone. For areas with restricted access to the Internet, you have to think about alternative ways. You can use SMS-based surveys for users with basic phone connectivity. Customers who like to offer verbal feedback can be offered toll-free hotlines. This can be especially accessible for people who are limited by literacy barriers. Besides, it can also help start-ups cater to diverse linguistic communities across different regions in Africa.
For areas with limited Internet and phone connectivity conventional methods, like placing suggestion boxes at crowded locations such as community centres still works.
Customer loyalty programmes are designed to encourage your regular buyers to continue buying from you by making them feel valued. Four ways to do this include:
Product innovation is the development or launch of a novel product or service in a market. It also refers to an inventive or substantial advancement in the product. There are different ways to address product innovation, such as creating a new product, incremental changes of existing products or services, and adding new features.
Some examples of product innovation strategies for start-ups include the following:
JTBD is a framework to Identify customers' underlying needs and desires beyond stated preferences. It focuses on a deep analysis of the “job” that customers want a product or service to fulfil.
For example, if you create a car-hailing app in South Africa, then one of the jobs your customers would like it to do is to offer convenient and safe transportation. Urban areas in the country can be tricky to navigate due to traffic congestion and limited transport. A car-hailing app can do it efficiently and carry passengers safely throughout the city.
Continuous improvement involves refining and enhancing existing products based on customer feedback and market demands. You can use surveys, social media listening tools (e.g., Hootsuite), and customer relationship management (CRM) (e.g., Zendesk) systems to collect feedback. You can use feedback segmentation (e.g., new or returning customers), industry benchmarks, feedback metrics (e.g, NPS, CSAT), and quantitative/qualitative analysis to analyse user feedback.
For instance, a Nigerian automobile start-up received feedback from customers that while the overall vehicle performance was great, they found the seats less comfortable during long drives. The start-up’s engineering and design team then collaborated to redesign the seats by implementing ergonomic principles and adding cushioning and adjustable lumbar support.
Blue ocean strategy encourages exploring untapped market areas with lower competition and higher growth potential. For example, Instabug is an Egyptian start-up that provides in-app feedback and bug reporting tools for mobile apps. The start-up recognised that there are a lot of developers who would like to collect user feedback to fix app issues. The platform sends user custom surveys with various answers and asks the users questions at the right time while they use the app.
Forming strategic partnership is a type of collaborative business strategy where two or more companies combine their resources to achieve success in a market. Usually, these partners belong to different non-competing sectors and share both the rewards and risks coming from their joint decisions. Types of strategic partnerships include:
Adopting innovative technologies can improve market reach, enhance customer experience, and boost operational efficiency. As a result, you can set your start-up apart from your competitors. Here are some ways in which you can use technology to target the African market:
Agtech (or AgriTech) could revolutionise African agriculture. Precision farming technologies, including remote sensing and drones, empower African farmers to collect real-time data on crop health, weather patterns, and soil conditions. As a result, the farmers can make informed decisions on irrigation, fertilisation, and pest control, leading to optimised resource usage and increased yields.
Aerobotics, a South African start-up, is a great example. They use drones to capture aerial imagery. The start-up’s analytics platform assesses this data to identify nutrient deficiencies and look for early signs of crop disease. Farmers can then read these insights on water stress, pest infestations, and crop health. This enables farmers to take specific and timely actions to maximise their agricultural output.
Integrating AI and machine learning (ML) can help to personalise customer experience and optimise existing processes. AI and ML offer African startups opportunities to enhance efficiency, gain data-driven insights, and personalise customer experiences. These technologies can optimise agriculture, healthcare, education, finance, and energy sectors, boosting productivity and innovation. By utilising AI's predictive analytics and automation, startups can make informed decisions and operate more effectively in resource-constrained environments.
SweepSouth is a South African on-demand cleaning services start-up that allows customers to book domestic cleaning services. The platform uses AI and ML to match customers with cleaning professionals based on their preferences, past reviews, and location. Over time, the ML algorithms are refined through continuous user interactions, improving matches and thereby enhancing customer experience.
According to a McKinsey analysis, Africa's financial services market (excluding South Africa’s $150 billion market) has the potential to expand by approximately 10% annually, projecting revenues of around $230 billion by 2025.
The booming Fintech sector in Africa presents significant opportunities for start-ups to revolutionise financial services and promote financial inclusion. By leveraging technology, start-ups can offer innovative financial solutions to fulfil diverse customer and business needs across the continent.
Paga is a Nigerian fintech start-up that has done plenty of legwork to promote financial inclusion. It allows users to transfer money, pay bills, and conduct financial transactions from their smartphones. Not only is it available to the banked population but can also be used by people who don’t have a bank account, thereby making it a reliable and accessible solution for unbanked segments.
In September 2022, Paga achieved a milestone by processing over $13 billion in total transactions since its establishment in 2009. 2022 was also the third consecutive year in which Paga achieved triple-digit growth in active users.
Developing relevant and effective business development strategies is key for the success of African start-ups. You need a holistic approach that combines market understanding, adaptability, innovation, local partnerships, and digital platforms to pave the way for sustainable growth. Besides, working on customer-centric solutions and prioritising resolving local challenges is integral for market penetration.
If you are looking to implement new business development strategies into your start-ups, Founders Factory Africa can help you. Founders Factory Africa provides equity capital of $250 000 to start-ups that are currently at the idea, pre-Seed, and Seed stages. These are usually start-ups that are looking to address real-world issues in Africa and can be scaled up.
We also provide catalytic capital of $100 000-$300 000 to African start-ups. This capital empowers Founders to grow their ventures. You can apply here.
