Street-level entrepreneurs across Africa have mastered the art of customer retention through trust, personalisation and community, offering powerful lessons for startups chasing loyalty in the digital age.
Why Informal Businesses Deserve Attention
Walk through any bustling market in Lagos, Nairobi or Accra and you’ll find something striking, stall owners who know their customers by name, extend credit without paperwork, and still retain fierce loyalty. These are informal businesses often unregistered, sometimes cash-only, always close to the people. And while they may lack corporate polish, they excel in something that many formal startups struggle to master: customer loyalty.
Informal businesses thrive on trust. A customer buys on credit, promises to pay on Friday, and the trader agrees without hesitation. This isn’t just kindness; it’s a form of social contract embedded in the local economy. Formal startups, especially in fintech or e-commerce, spend millions building platforms and onboarding tools to simulate this same level of trust.
Lessons in Hyper-Personalisation
Your neighbourhood cobbler or fruit seller knows when you travel, what your preferences are, and even what time of day you’re likely to stop by. This level of personalisation drives repeat visits not because of algorithms but because of authentic human interaction. Formal startups can learn to collect and use customer data to mirror this experience, focusing less on volume and more on depth.
In the informal economy, poor service equals lost business instantly. There’s no buffer of branding or PR to fall back on. For example, GSMA reports that mobile money agents, many operating in informal setups, often outperform bank branches in customer satisfaction because they’re accessible, human, and efficient.
Informal traders are masters of flexibility. Prices can shift with your mood, credit can be extended without forms, and services are adjusted to suit the customer. This responsiveness builds emotional loyalty. Startups often build rigid systems that scale but forget that early loyalty is formed through adaptability.
Word of Mouth Still Rules
Most informal businesses grow without marketing budgets. Their reputation is their collateral. According to the International Labour Organization, word-of-mouth is a key growth driver for these businesses. Startups should take note: loyalty is not just about referral codes but about giving people something memorable to talk about.
The Cost of Over-Engineering Loyalty
Formal startups sometimes fall into the trap of over-engineering loyalty: CRM systems, loyalty points, gamification layers. These are tools, not strategies. Informal businesses remind us that loyalty stems from emotional bonds, consistency, and reliability not dashboards.
Blending Informal Wisdom into Formal Systems
There’s a lot to gain from integrating informal business tactics into formal startup playbooks. Think WhatsApp-based order fulfilment before full-blown app development. Think about having actual people respond to customer queries in the early days instead of bots. Think of building a community before user base.
Loyalty is Local First
Customer loyalty, at its core, is about relevance, trust, and memory. Informal businesses may not scale in traditional ways, but they scale emotionally. For formal startups hoping to build brands that endure, learning from street-level entrepreneurs might just be the most undervalued strategy on the table.
