Inclusive Business Hub team

Practitioner Hub Administrator

Piloting new ways to understand low income clients and suppliers

Several BIF clients are interested in understanding more about their suppliers or customers in the base of the pyramid (BoP). Are they getting out of poverty? What do they value – or want or dislike – from their involvement?

 

But understanding of the BOP is remarkably undeveloped, compared to the major investments in client feedback used by ‘conventional’ business. Last week a meeting of inclusive businesses supported by the International Finance Corporation (IFC) heard how one IFC client is piloting new approaches.

 

The first approach, poverty profiling, provides a short cut to answer the questions

  • ‘how many suppliers/customers are in poverty?’
  • and if repeated it can answer: ‘how many clients/suppliers have got better off and exited poverty?’

Better still, the data and the comparisons that can be drawn across geographies periods or types of client, can and should be used by managers to answer:

  • which levers can we use to reach more poor people, or help them exit poverty faster?

 

ECOM, for example, an agribusiness in Central America, has found that around half of its clients are below the national poverty line, but this varies widely by region, so geographic focus is a strong driver of poverty impact (results are provisional as analysis is ongoing).

 

It’s not a new approach; it’s well established in micro-finance, but is now being borrowed by inclusive businesses. Indeed, one BIF client, MicroVentures, already uses it, as explained in a post by Daniella Hawkins from MicroFund.

 

We think others may find it useful and affordable. Poverty profiling is easy and cheap because it uses existing poverty scorecards to ask around 10 simple questions that provide a poverty profile. The ten questions are quick for any extension worker, data assistant, field agent to do – the magic lies in the fact that they have been devised based on those 3-hour interviews that researchers like to do, and, even better, are publicly available for free for many countries. Click here for more.

 

The second IFC pilot focused on listening to the BOP rather than tracking them. ECOM and IFC worked with a non-profit, Keystone Accountability, to develop a suite of questions and data points with farmers to hear their voice. The results covered everything from immediate perceptions of service quality, to deeper questions of how confident they felt to engage with the company. Comparing what people like with what they got showed up gaps in services, for the company to tackle. ECOM had no doubt of the business value of these insights.

 

‘Constituency Voice’ is the general termed used for this. While in this pilot it has not yet reached the level of simplicity needed for uptake at scale, there is no doubt it is combining the best of business – client feedback – and best of development ‘ voices of the poor’. So expect to see more of it amongst those at the front of inclusive business.

 

Note: A summary of the inclusive business model adopted by ECOM, and 30 other IFC clients, is in a new IFC report.