Which Tools for Business at the Base of the Pyramid?
Guustaaf van de Mheen is an IBA-certified trainer and runs his own training and strategy development company, ‘Staff to Grow’. Guustaaf reflects on the use and relevance of IBA training tools as well as the need to approach the ‘Bottom of the Pyramid’ with a different perspective.
“At the end of March 2016, I had the opportunity to train a group of entrepreneurs in Rwanda. Entrepreneurs have my respect by default (assuming they are in the right business) and especially when they are targeting customers at the Base of the Pyramid (BoP).
The two days presented me with a beautiful combination of entrepreneurs in all the colours of the rainbow. Although the assignment was to let entrepreneurs appreciate the potential of the BoP, I decided to use the Inclusive Business Accelerator tools to create a structural way of thinking for the entrepreneur in their approach to reaching BoP consumers. The IBA tools really helped entrepreneurs think about their business as a structured process.
One of the challenges presented during the training was rethinking the targeted customer base or the concept being used to improve sales. The better entrepreneurs can organise their customer base and concepts offered, or identify any mismatch between the two, the better the conclusions will be, following the tools of IBA.
When an entrepreneur envisions a target audience as “poor people”, “the BoP” or “rural people” and describes the customer persona as: “a person between 20 and 40 that lives in a rural area”, it raises the question of segmentation. Can we segment the base of the pyramid?
If we look at Rwanda, we can make a rough estimate of 1-5 per cent of the population as part of the top of the pyramid, leaving the remaining 95-99 per cent at the BoP. But not all of these people are “poor” in the sense that they do not have money to spend. A first sub-segment that can be created therefore is BoP income groups. Also through the dialogue with the trainer, a discussion can be created on other aspects of this customer persona.
As a trainer, it is always rewarding to ask thought-provoking questions that challenge the participants and create new insights. Inviting them to think of their customer as a potential relative, as many entrepreneurs often have family in rural areas, forces them to refine the customer persona, integrating more nuanced and distinctive segments within their perception of the BoP.
For example, one of the entrepreneurs shared that in his attempt to target the BoP, he found that customers did not buy the product because it was too expensive, or when they bought it on credit, they stopped paying it back.
Other than the target being too generic (‘the BoP’), the other concern was that they were trying to sell a product no customer was buying. A challenging but rewarding conversation revealed that the product was too expensive for that customer segment. With that in mind, the entrepreneur came to realise that a number of additional services provided but not necessarily needed, were driving costs upwards and thereby slowing down sales. With renewed energy and vigour, the entrepreneur started a new business model canvas. Not only did the customer persona become more precise by including the profession and income groups, but the entrepreneur also started to rethink the service package offered.
Flying back the same evening, my conclusion was that IBA tools are helpful as they allow users to follow a logical order of thinking. But challenging the entrepreneur is key. Being able to run a sustainable company at the BoP is an innovation in itself as there is so much undiscovered territory.
Challenging the entrepreneur to segment the Base of the Pyramid and the concepts fitting those segments is a key step to make and a real added value of the trainer!”
This blog is part of the September 2016 series on Inclusive Business Development Services, in partnership with the Inclusive Business Accelerator. Don’t miss the whole series on support available to inclusive business from practitioners, donors and intermediaries including Afrilabs, DFID, Endeva, EY and many more…