Acumen Blog

Customer Relationship Management at the Base of the Pyramid

By Katie Hill and Biju Mohandas

The Acumen Fund India team is spending the day with three of our healthcare investees LifeSpring, 1298 and VisionSpring thinking critically about how to better understand and serve their customers through customer relationship management (CRM) strategies. In this case, the customers we are talking about are diverse — an expectant mother earning daily wages in Hyderabad; an accident victim on the streets of Mumbai who urgently needs medical care; a tailor in rural Andhra Pradesh who can no longer see her thread and, therefore, no longer earn her livelihood. For these social enterprises, understanding and delivering value to their customers is vital not only to achieving profitability, but also to ensuring social impact.

This two-day workshop is being led by Dr. Dipankar Chakravarti, the Ortloff Professor of Business at Leeds School of Business, University of Colorado, Boulder. He has generously dedicated his time and expertise to introducing frameworks for understanding various aspects of customer relationship management to these companies. Today, he led the group in real-time exercises that should result in a more strategic incorporation of CRM into their activities be they maternity & child healthcare, emergency ambulance services and the provision of quality eyecare products for low-income communities. Meanwhile, the Acumen Fund India team is fervently absorbing lessons that may be applicable to our other portfolio companies.

We will have much more to share in a few days, once we have seen the outputs of these CRM exercises. First, let me share a few initial insights:

Marketing Entropy
Dr. Chakravarti began with the provocative notion that, left to themselves, most firms priorities and processes tend to deteriorate toward treating their customers badly. Without even trying, firms put their priorities first and, in return, erect customer acquisition barriers, lower customer exit barriers, and dehumanize relationships. If this is indeed a trend, then our social enterprises need to be aware of this as they scale.

How is CRM different for social enterprises?
Traditional CRM strategy looks to measuring the lifetime economic value of a customer (through the net present value of the profits you will earn from that individual) and prioritize the highest value customers. Dr. Chakravarti challenged us to think about whether this is applicable to social enterprises that may have other priorities beyond profit maximization.

Anant Kumar, the CEO of LifeSpring, emphasized that we need to apply this same level of rigor to social enterprises, but evolve the analysis to think differently about the traditionally unprofitable customer. An expectant mother who cannot afford even the significantly reduced cost of childbirth in LifeSpring may be unprofitable by this analysis, but, has to be cared for by Life Spring and she may even lead to many profitable customers.

Are BoP customers different? Yes and no.
The CRM exercise rests entirely on understanding your customer. At Acumen Fund, we often emphasize that, in many ways, a base of the pyramid (BoP) customer is no different than you and me, in terms of what they value. They are aspirational. They value quality, status, and aesthetics. But, how is consumer psychology different when we are targeting the poor?

A few examples emerged today. First, BoP customers’ time-oriented thinking can be completely different, and he may not be able or willing to pay more today in order to save tomorrow (e.g., buy higher-quality, durable VisionSpring glasses and avoid paying for replacements in the future). Second, in BoP markets, the customer can be different from the person paying for the good/service. For LifeSpring or 1298, payment is often rendered by a husband or the collective family unit, which changes the dynamic of how the company targets its customers. These are two of many examples that should keep us thinking about what is universal to all consumers and what is a result of socio-economic and cultural factors.

In the next 36 hours, as LifeSpring, 1298 and VisionSpring go through rigorous exercises designed to understand and satisfy their customers better, we at Acumen also hope to learn and share some exciting insights. Watch this space for more.

Comments

Imagining the world as it could be

Christine Gitau is an East Africa Fellow and an enterprise coach at Craft Afrika, which provides business support services to craft entrepreneurs, enabling them build viable and thriving businesses in Kenya. At Acumen we often use the term “Moral Imagination” when talking about leadership. Christine wrote a reflection on how this concept has shifted her thinking. We could not be more proud of what she is building! [Read More]

How two Acumen Fellows are disrupting the education model in India

Whether its running youth soccer programs, providing vocational training services, or transforming the education system in India, Acumen India Fellows are driving real change in their communities.  Abbas Dadla and Abhilasha Sinha are India Fellows who are addressing the teacher shortage in India through the use of technology and peer collaboration. Find out what they are building below.  If you have grit, resilience and a commitment to creating change in your community in India, East Africa or Pakistan, we encourage you to apply for the Regional Fellowship Program! [Read More]

Meet Manjushree Patil, Founder of Aatman Academy

This month saw violent tragedies in Pakistan and Kenya, regions where Acumen works and which five classes of Acumen regional fellows call home. Among them there are dedicated teachers like Acumen India Fellow Manjushree Patil, crusaders against sex trafficking, builders of government, creators of liberating mobile medical technologies, and curators of slum sports programs. The need for strengthening the connections between those who are working for positive change against seemingly impossible odds has never been greater. We at Acumen have never been prouder to be the thread tying together these courageous individuals. Read more about Manjushree and how she is changing her community in India below! [Read More]

No, not silence again!

The Acumen Fellowship’s Cambridge Leadership Associates (CLA) training is notorious for digging deep, breaking Fellows down to reveal their deepest fears, identifying the sources of resilience that will fuel them with the tenacity to continue along the path to social change. Kahabi G. Isangula is an East Africa Regional Fellow living in Tanzania and recently participated in our CLA training. Get an idea of what it is like, below!  [Read More]

Announcing the Class of 2015 Acumen Global Fellows

Acumen Global Fellows are architects for the impact sector. They are innovators, game changers, visionaries, with various professional experiences looking to make substantial change in the world. They have thrived in companies such as Google; they have started their own companies in Sri Lanka, Canada and Malaysia.  They are choosing the challenge of working alongside our portfolio companies and immersing themselves in a rigorous leadership training. [Read More]

Welcoming Ajit Mahadevan as Acumen India Country Director

We are pleased to announce that Ajit Mahadevan will be joining Acumen as India Country Director. Ajit joins Acumen from Ernst & Young, where he has served as Advisory Partner & Leader (Life Sciences) for the past six years.  At EY, he was a strategic advisor to the leadership of some of the leading Indian and global life science and healthcare players with the focus being business transformation and growth.  Prior to his time at E&Y, Ajit was President of Piramal Healthcare, one of the leading pharmaceuticals companies in India, where he built the international business from inception in 2002 to $300M by the end of 2008. Ajit held multiple leadership roles across strategy, M&A and business leadership. During his tenure at Accenture’s Strategic Services practice in UK and India, he led the development of one of the firm’s largest and most successful internal projects – the Offshore Development Centre in 2001, which has now grown to about 100,000 people across multiple cities in India. Ajit has worked in an advisory capacity to Acumen in the past, most recently participating in Regional Fellows selection panels in Mumbai. [Read More]

Why We All Need A ‘Rikki’

Caren Wakoli is an emerging leader in East Africa who has launched a foundation to support the next generation of female leaders for Africa. Caren applied twice for the fellowship and was not accepted, but she did not give up. Her resilience and grit allowed her to persevere, and this year we are proud to have her as an East Africa Fellow. Below she shares her story on why everyone needs a ‘Rikki,’ and failure is never final.  [Read More]

Acumen Joins Beyond the Grid as Founding Partner

Acumen is proud to be a founding partner of Beyond the Grid, an innovative framework under President Obama’s Power Africa initiative to increase energy access for underserved populations across sub-Saharan Africa. Beyond the Grid will leverage partnerships with investors and practitioners committing to invest over $1 billion into off-grid and small scale solutions for this underserved market. [Read More]

Life after Lean

In May 2013, Sabrina Natasha Premji & Afzal Habib participated in +Acumen’s inaugural Lean for Social Change course based on Lean Start-Up principles. Enrollment for the next session of the Lean for Social Change course is open now. If you are working on a social issue in your community, are interested in pursuing your own social venture, or are just interested in creating an impact in this world…Register today! Sabrina & Afzal joined the course with a simple idea and the passion to transform the childcare crisis in East Africa’s informal settlements. Seven weeks later, they had developed a customer-tested business model ready to pilot in Kenya’s densest slums. Read their story below. [Read More]