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

Reflections on the India Fellows Seminar

Each year, the India Fellows Program brings together up to 20 emerging leaders from different regions, sectors, and socio-economic backgrounds in India. During the fellowship year, Fellows remain in their jobs and meet every 6-8 weeks throughout the year for 4 seminars and 2 collaborative projects, each about a week long. As the India Fellows Associate, Jacqui is responsible for supporting all aspects of the program recruitment, logistics, marketing and strategic planning. Below, Jacqui reflects on the first seminar, Foundations of Leadership. You can read more about the fellowship program here[Read More]

Adaptive Leadership in Action: Addressing Cultural Norms & Giving Women a Voice

In the fall of 2013, +Acumen launched the course Adaptive Leadership: Mobilizing for Change in partnership with the Cambridge Leadership Associates. This course is for anyone who wants to become more effective at leading their organization through change. Below, one of the course participants shared her story about how this course impacted her work and ability to affect change. [Read More]

Making Sense of Social Impact in Action: The Value of Educating Our Youth

At Acumen, one of the most common questions we get is how we measure social impact. Our newest +Acumen course – Making Sense of Social Impact: Acumen’s Building Blocks for Impact Analysis. – will provide an entry point for how to think about impact and we’ll share frameworks that help us define what to measure and why. Makoto Matsuura, founder of cobon a not-for-profit focused on youth education in Jakarta, Indonesia and Osaka, Japan, took a pilot version of this course and shared his reflections with us. [Read More]

Good news for philanthropists in the U.K. and Europe

We are excited to announce that Acumen now holds a CAF Charitable Trust in the United Kingdom. CAF, the Charities Aid Foundation, is a registered U.K. charity. By donating to Acumen through CAF, you can use Gift Aid if the amount of Income Tax and/or Capital Gains Tax you’ve paid for the tax year in which you make your donation is at least equal to the amount of basic rate tax  [the charity or Community Amateur Sports Clubs (CASCs) and any other charities or CASCs] you donate to will reclaim on your gift. CAF will reclaim 25% Gift Aid from HM Revenue & Customs and pass this through to Acumen.  The donor can claim higher rate tax relief (for more information, please refer to CAF’s online resource, What Is Gift Aid?). [Read More]

d.light Leaders Named 2014 Social Entrepreneurs of the Year

We are thrilled for our portfolio company d.light and Donn Tice, Chairman and CEO, along with cofounders Ned Tozun, President, and Sam Goldman, Chief Customer Officer, for being named Social Entrepreneurs of the year 2014 by the Schwab Foundation for Social Entrepreneurship. d.light is a for-profit social enterprise that manufactures and distributes solar lighting and power products with primary markets in the developing world, today announced that d.light, along with 37 other individuals and organizations in the 2014 class, will be fully integrated into the events and initiatives of the World Economic Forum. [Read More]