February 25, 2012

The customer is the king; the beneficiary will remain a pauper


We weren't beholden to our customers until we starting thinking like a business.

We didn't hold ourselves accountable until we started treating our 'beneficiaries' as customers.

No investor took us seriously until we dropped the 'social enterprise' label.

~ Ben Lyon, Founder, KopoKopo, Nairobi, Kenya

When I wrote "Why so much 'BoP' marketing fails in the developing world" recently, I had sensed that there was a more fundamental problem - either one of implicit assumptions or basic premises - than those which I'd identified through observations in the marketplace. It took these three powerful statements from Ben Lyon, founder of Kenyan startup KopoKopo, to throw light on the issue.

Were these social enterprises treating their customers like kings or were they dealing with them like the beneficiaries of development aid?

Identifying this distinction, we believe, is critical and can make the difference between success and failure. In fact, taking the thought a step further, I now wonder whether this underlying premise might not be the reason why so many social entreprenuers are unable to scale.

The lens through which you percieve your intended customer base and thus, evaluate their needs, purchasing power, wants and wishes becomes the focal point around which your product or service, its business model and distribution strategy as well marketing communications will revolve.

When we seek to serve a very demanding customer who just happens to manage within an extremely challenging environment, we raise the bar on our own performance and metrics of success. For no one will spend good money on something that offers little value or return on investment.

But as long as social enterprises continue to perceive the target audience for their goods or services as 'beneficiaries', with all the attendant baggage of assumptions and perceptions, they will never quite be able to address the challenges of creating a market for a profitable and thus sustainable, enterprise.

Maximizing profits alone may not always be the right answer, but even the triple bottom line approach embraced by European businesses can offer a more valuable orientation than simply "doing good", which may overwhelm critical considerations of "does this actually make sense and does the market actually want it". I'd written this snippet earlier, before I'd identified where the seed of the confusion seemed to lie.
Because the demand being addressed by these messages is not that of the target audience, who are ultimately the ones for whom these products are made.
Everyday, research shows that the barriers to adoption include:
Improved cookstoves rank poorly on all three dimensions: their benefits are rarely valued highly by customers at the outset, they are expensive, and they require a significant change in lifestyle to be put into use.
Lets start with benefits alone – which is where the topic of identifying the correct value propositions for the target audience comes in. If your messaging and marketing is all about the best selling drill addressing an audience of home improvement contractors but what your actual customers need is a hole in the wall, how will you manage to bridge this gap in communication when you face your customers directly?
By focusing on the value propositions – be they environmental, healthcare related or otherwise – meant for every other stakeholder but the end users aka the customers of the product themselves – organizations may never quite identify nor refine the benefits as they relate to the poor customer, in the context of their lives, and their decision to purchase and use the said products.

And this conflation - of marketing messages meant for shareholders (in formal business terms) being sent to the end customers - will continue to create a barrier to sales and demand creation unless we start taking this demographic seriously as a paying customer. The roots of this challenge are also embedded in the way the concept of "the BoP" has evolved away from Prahalad's original vision of a vast new market and opportunity into a catchall label for the poor, the downtrodden and the precepts of poverty alleviation.