Preference, price, policy: Drawing from Lagos BRT

By Ekelem Airhihen

The Lagos BRT project has always been of interest to me. I have always kept an eye on the buses, especially the Agege – Ikeja route. It provides a good opportunity to study the economics that is playing out in the road transport sector.

Recently at peak period, the price was dropped to one hundred naira to Ikeja, the Lagos State capital with announcement being made beside the bus. However, customers still voted with their feet for the regular buses which charged the same price. This is a pointer to the market structure on that route. Consumers have a choice and the bus company faces a demand curve that is elastic. The major dissatisfier was when the last stop was moved from Medical Road park to Awolowo Way, beside the local government. Indeed, for a premium one would prefer to drop near the General Hospital than trek from Awolowo Way at a lower price.

But beyond the market structure is the question of preference. Where time is important to the customer, he would rather pay a premium to get to the office on time. Having an airconditioned bus that would take time to fill up during peak periods of traffic would not be the choice of a customer rushing to work. The long wait time to fill up compared to the smaller buses charging the same fare is a dissatisfier to the customer. After the rush hour, getting the bus to fill is not very challenging. Now comfort makes a difference between the BRT buses and other transport vehicles.

Knowing and understanding the needs and preferences of customers is vital for business success. It is a helpful knowledge for persuading customers to take up one’s product offering. It applies to product and service offerings. It applies too, whether it is transportation by air, by land or by sea.

Recently, an airport terminal rearranged ground transport. Customers would come out of the terminal and rather than be picked up in front of the terminal, they were now required to walk the distance or take a lift up to the car park to be picked up. Customers quietly moved outside the terminal to get picked up. The advantage to the customer is that it affords them an opportunity of using various alternative vehicles, including Uber out of the airport terminal. Once outside, there is increased bargaining power below what the car hire operators would have charged.

Policy by corporate organisations should look at not only the gains but also the alternatives that would be forgone. These should be brought into the calculations and forecasts to determine appropriate policy. It pays to also look at possible reactions from customers and how they in turn will affect the bottom line.

Hearing the voice of the customer should be a continuous process. It gives feedback from the customers about their experiences with and expectations for an organisation’s products or services. In the absence of alternatives customers will put up with and tolerate some of the failings or perceived failings in the customer experience but that may not last very long.

The voice of the customer helps an organisation gain insight on data collected. Some of the ways of hearing the voice of the customer involve the use of surveys, using social media to collect data online, holding interviews with customers, gathering focus groups, as well as measuring the loyalty of customers to the organisation using Net Promoter Score, among other techniques.

By listening to the voice of the customer businesses can fine tune their product or service into what the customer really wants and will invest time and money into. Assuming that the customer will continue to put up with just what a business thinks fit to offer, as well as not keeping an eye on product or service failing, with an aim to improve on it, will have dire consequences for an organisation’s bottomline.

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Ekelem Airhihen, a chartered accountant, is an airport customer experience specialist; and can be reached on +234 802 312 5396 (text only) or ekyair@yahoo.com