Customer Behavior

Week 24.1 Customer (end user) Buying Behavior

The customer itself

Lot of customers heard a lot of news/comments/etc, some heard the same news, some heard similar news and some heard different news from various different sources. Some of the news/comments/etc they heard including Peak Oil, Fiat currency, Printing Press of Federal Reserve etc. All these lead to one message “Buy gold and silver”. So, initially customer will have some saving in Fixed Deposit, Shares, Unit Trust and other investment vehicle.  Normally, they will target a portion of their saving to be in Precious Metal. Some will be on gold and some will be on silver. Off course those who are no-buy-Back-Chicken will only buy gold. According to Jon Nadler KitcoMetal, one should have at least 15% of your wealth in Precious metal.

Thus, they will then buy from me or someone else. For some customer, the initial purchase may be very small 1oz or 10 oz because they don’t know me mah. Ok it’s fine. Later on when the trust is built, they will buy a lot, maybe 100 oz. Just refer to my ebay feedback, you can see some of the repeated purchase. Then they ran out of cash as they already converted part of their saving into precious metal. Bear in mind, they also invest in gold which I normally don’t sell. (how to compete with UOB?.)

So let cut it short after, the customer converted his saving into precious metal, it is very unlikely for him to buy some more as he run out of cash. 100 oz is RM13000 already. RM13K silver, RM20K gold, RM10K cash, property, car etc. You can make your own calculation depending on your net worth. Not everybody is rich ok.

Customer Network

For some customer they will buy only for themselves, even their wife doesn’t know much about it. Part of the reason is their wife will “Nee Ngor Nee Ngor Nee Ngor”, why you buy so many “besi buruk”? Who will buy back your thing ler?

Some will resell the silver to their network of people. Thus my sale is dependent on their sales. After a while, those resellers who are strong (tahan lasak) becomes my competitor + friend. Their customers become my customer then later become my competitor and most importantly remain as my friend. What a tough market? Maybe one day I become a customer of my competitor.

Depending on certain customer, some will manage to influence their wife, relatives to buy silver. Thus, the amount may be more or less equivalent to what the customer spent. Let said the customer budgeted 10K for silver, his relative++ will also have a budget of 10K. Thus, for some customer, you will get additional indirect sales from the customer relatives. In most case, I normally deal with the customer and they will deal with their relatives.

After that the sales will dried up, it‘s not professional for me to pester them for more sales even if there is a good offer because not everybody is rich. Thus, I seldom email them or call them. Nevertheless, if they call me I‘ll always respond back. Once a while when there is a crisis (when silver goes up to USD49++ last April May 2011) I will get many call-lah. For new business expansion I have to find new customer, if not I will have to close shop and look for something else.