NextBillion.net - Development Through Enterprise - How To Succeed at the BoP: Know Your Customer - Comments

impact of post election violence in kenya

David Alogo — Mon, 25 Feb 2008 09:20:35 -0500

The recent eruption of post election violence has really disrupted the operations of most microfinance institutions in kenya. The effects of the violence is still being felt despite the fact that there is some relative calm- as a result of the Annan led peace negotiation talks going on. Luckily, most MFIs in Kenya are known to structure their lending programs to begin early in the year and close before the christmas festivities.So in this regard, it would be expected that the repayment of most microfinance loans were not affected but studies need to be carried out to confirm or disaprove this school of thought. I am a student at a local university, specializing in microfinance and am currently carrying out a research on the effects of violence on MFI operations. I therefore would welcome comments and suggestions! all are welcome! my email address is davalogo@yahoo.com

Catherine Casey on Committment to Customer

Rob Katz — Tue, 15 Jan 2008 10:59:22 -0500

An update on one of the businesses featured in your post. Catherine Casey, an Acumen Fund Fellow working with the Sustainable Healthcare Enterprise Foundation in Kenya, reports that franchisee Dorah Millicent not only knows her customers, but is committed to them:

Kibera has been one of the hardest hit areas in the post-election violence in Kenya. In the last two weeks, Dorah has faced a raid on her clinic by looters, fears for her own safety, and concerns about how to re-stock her supplies until vehicles can reach her. Yet she continues to operate with little disruption.
“We never know what will happen, day to day,” Dorah describes. “But I’ll be here as long as I can be.”
I am struck by two things as I listen to Dorah: 1) She is a remarkably strong, courageous and committed woman, and a reason for hope in the midst of all of this uncertainty. I wonder if I would continue my work, if I were in Dorah’s shoes? 2) There is something to the fact that Dorah is personally invested in Kibera. She doesn’t just work there; she owns a business there. She has something at stake, and she will fight for it.

A major benefit of the "know

Cat Laine — Sun, 06 Jan 2008 19:54:08 -0500

A major benefit of the "know your customer" approach is that customer feedback can help drive the design and innovation process. Companies then can make/sell products that better serve their clientele, edging out the competition even more. In many cases, being close to your customers can also boost word of mouth marketing, offsetting some of the up front costs.

Well said...

Mbwana Alliy — Thu, 03 Jan 2008 23:17:03 -0500

Thanks for this Abigail- I totally agree with you here. Being close to the customer and putting up the upfront investment to innovate and understand customers really pays dividends. I think you really hit the crux of the argument why MNCs will have a harder time tapping BOP with some notable exceptions which are now making more and more profits from the BOP and/or have distributed R&D or marketing teams- or at the least have greater regional autonomy or decision making (e.g. P&G or Cemex) Many MNCs are just too busy serving (and profiting) from their current customers to really allocate the time, cost and patience to invest in understanding BOP needs- they just don't depend on it enough to care. A small business however, can focus on filling a real need in niche from day one, without the risk of putting a customer base at risk and grow this into a real sustainable business, its success depends on it. This is not such an alien concept- my favorite example- low cost airlines: they filled a need that the big airlines thought was worthless since they were too busy focusing on international flights and serving business class passengers- look at them now. I think the best BOP business will succeed just like like Southwest airlines and other low cost airlines did- grounded in a solid understanding of customers from day one.

How To Succeed at the BoP: Know Your Customer

Abigail Keene-Babcock — Thu, 03 Jan 2008 12:31:26 -0500

Today I'd like to highlight what I see as a frequently occurring theme in BoP business models, and an element that could make it or break it for companies that look to target BoP markets. Entrepreneurship is often cited as the critical component for small and medium-scale enterprises, especially ones that employ a franchise model. Enterprises such as Scojo, Medicine Shoppe, Drishtee, HMX Sumaya, Florestas and Berni Labs are among many examples of business plans that rely on entrepreneurial individuals to take a model and make it work in their own communities.

Despite this impressive list, I think what underlies some of these entrepreneurs' success is not based on ‘entrepreneurship' per se. Rather, there is another, crucial element that explains why smaller enterprises often are the ones to find a successful BoP niche, and why larger corporations (even when they have greater economies of scale and resources available) do not always succeed in these same markets.

That element: KYC. No, not Colonel Sanders; KYC stands for know your customer. And in the BoP context, that doesn't just mean doing market research about consumer preferences and purchasing power (though that IS important). No, KYC means becoming a provider of personal attention and building an individualized connection with initial and potential customers. The importance of this for a BoP business model is

perfectly illustrated by Acumen Fund Fellow Catherine Casey in her recent blog post about rural SHEF Health Clinics in Kenya.

Casey describes the success of a for-profit rural health franchisee based on the personalized attention that customers receive and a willingness to tailor services to meet a variety of needs and comfort levels. Evidence from SHEF clinics in Kenya shows that BoP customers are willing to pay for these services, even where the alternative option of a free government clinic is available.

Is this specific to the BoP?

(This post continues past the break; click "Read More" to continue)