Social Performance Task Force

SPTF Newsletter

Special Edition - March 2018                  

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SPTF Annual Meeting 2018 

Last month, the SPTF welcomed 280 people to Mamallapuram, India for the 2018 Customer Centricity Learning Event, which also served as the SPTF Annual Meeting. The event was jointly organized by SPTF, CGAP, Dvara, and Leapfrog Investments. Spanning four days, the event focused on how customer centricity—a fundamental part of SPM —can benefit customers and providers.

This special edition newsletter provides highlights from the week’s workshops, plenaries, and trainings. Visit the event page for a full list of PowerPoint presentations, notes, and other resources from the event. Check out #SPTF2018 and #customercentricity to see what people are saying online and to share your favorite moments from the event. 

           Event Highlights

Digitizing Finance: Opportunities and Risks 

The event featured several sessions on how digital financial services (DFS) can be designed to benefit customers. Speakers noted that low- and no-touch delivery models are not without risks and limitations. What do humans do best and what does technology do best?

For example, one panelist noted that research from Kenya shows that customers still want human contact to verify the legitimacy of the financial service provider (FSP), fully understand the product, and resolve problems or complaints. South African Fintech JUMO agreed, noting that it has not been able to fully automate its customer information channels; it accepts needing to manage a certain volume of customer calls as part of regular business. 

Representatives from MicroSave demonstrated how “frictionless borrowing” and “push marketing” can lead to poor borrowing decisions followed by default and negative credit listing for customers. MicroSave also cautioned that many digital platforms are not intuitively designed for “oral people,” a fact that widens the digital divide.

While panelists largely agreed that most traditional providers should embrace technology, CGAP cautioned that FSPs must have a clear objective before investing in new technology. DFS can increase customer acquisition, improve the customer experience, lower costs, and create a host of other advantages, but if an FSP has not identified specifically why it is implementing the new technology, it will likely not experience benefits from the investment.

Speakers and audience members offered several solutions for creating customer-centric DFS. These include:

  • Using a thoughtful balance of technology and touch that keeps the human element a central part of the digital experience.
  • Using data and customer insights to understand how DFS can bring value to customers, not just providers. JUMO, for example, uses customer feedback to “co-create” its services.
  • Using technology to enhance customers’ financial capability.
  • Offering customers the benefit of building a digital footprint and credit history.
  • Protecting DFS users with greater transparency, reliability, and data security.

To view the event notes and presentations on this topic, check out the event website.  To read more about the work SPTF is doing at the intersection of social performance management (SPM) and Fintech, view the presentations and listen to the recordings from its webinar series on the topic. 

Customer Outcomes Management: Understanding the Data in Context

While we promote all aspects of SPM, SPTF is increasingly focused on the measurement and management of customer outcomes—the expected and actual changes in customers’ lives, connected to their use of financial services. Several sessions at the event centered on the recent work of the SPTF Outcomes Working Group, which aims to promote strong outcomes management.

This year, we focused on how FSPs can use the outcomes data they collect. Once “change” data is collected, how should providers interpret and use it to answer strategic and operational questions?

Event participants discussed how outcomes data are most powerful when combined with other data—particularly, profile and financial data. For example, in a study of customer data from 23 providers in India, Grameen Foundation India found that 39% of women were earning income from businesses, while the rest were taking loans to give to their husbands or sons. Additionally, not all women had access to a phone even if there was a phone in their household. These two pieces of information are critical for understanding the customer outcomes observed, and particularly so in cases where the desired outcome did not occur.

MicroFinanza Rating shared a recent finding that underscored the importance of outcomes data: 90% of customers expressed satisfaction with a particular FSP’s products and services, but a much smaller percentage actually experienced positive outcomes from using those products. Satisfaction data are insufficient to understand whether the use of products and services is contributing to positive changes in customers’ lives. MicroFinanza also reinforced point made by Grameen Foundation India on loan use, noting that its own research finds that customers commonly use a significant percentage of a loan for something other than investment in an income-generating activity. 

Arohan, an FSP in India, shared its own experience with outcomes management. One of its key lessons was that staff empathy for customers is critical to achieving good outcomes. For this reason, in addition to training staff on how to collect outcomes data, Arohan trains staff on why collecting those data are important and assesses how empathic staff are to customers as part of its staff evaluation process.

Speakers also stressed the value of outcomes data to decision-making. Calum Scott of Opportunity International said, “We promote outcomes management because we believe it leads to better decision making by our partners, and therefore better outcomes for clients.” Geeta Goel of the Michael and Susan Dell Foundation echoed this point, stating, “Whatever data we collect on outcomes is going to be useful for us, but it has to be helpful to the investee as well to provide meaningful insights.” She shared an example from Ujjivan, which analyzed changes in customers’ income and found increases overall, but segmented data revealed large differences in outcomes by poverty level. This showed Ujjivan which customer segments to focus on to improve performance.  

Customer Segmentation

Gayatri Murthy of CGAP led a workshop on customer segmentation, which highlighted several lessons:

  • First, the poor are not a monolith; at the very bottom of the pyramid, there is a large variation in demands and needs.
  • There is much more to segmentation than demographics, since demographics are not predictive of behavior and not always relevant to product development. She shared an example of a FSP that was segmenting customers by gender, youth, and whether they worked in agriculture, and it found that customers were dissatisfied with its financial literacy training. It realized that a much better way to segment customers to determine who needed what type of training was to consider the maturity of the business, not the age or the gender of the business owner. 
  • Segmentation does not always mean develop more products. It could lead to that, but could also suggest changes to marketing strategies or delivery channels for the same products.

To view the presentations from this and other workshops, visit the event webpage

MIMOSA: India reports

In its workshop, MIMOSA shared the results of its recently published reports on India with a group of local stakeholders and MIMOSA subscribers. 

The launch of the India reports marks a major development for MIMOSA, which published four separate reports -- one each for the states Uttar Pradesh, Maharashtra, and Tamil Nadu, and an all-India report. Doing so entailed developing an entirely new dataset of lending penetration in India, based on CRIF High Mark data, as well as state- and national-level demographic information that allowed MIMOSA to calculate saturation levels in over 140 districts, representing nearly one-third of the country's population. 

The findings show a country with huge variation in financial inclusion: ​​​​​​At the high end, there are areas with penetration levels higher than anywhere else in the world, including the most competitive areas of Peru -- commonly seen as among the most competitive and developed markets in financial inclusion. Meanwhile, other areas remain underserved, though for the large part, only moderately so. Some areas show an unusual decorrelation between penetration and levels of multiple borrowing, suggesting a high degree of competition for a relatively small population segment.

The field survey also captured a few instances of aggressive collections, where FSP loan officers were relying on the joint-liability group system to deliver high repayments, even at the risk of pushing families into destitution. In other areas, an increasing trend towards emerging competition between FSPs (including those that recently transformed into Small Finance Banks) and commercial banks. Growth in FSP loan sizes was likewise noted as a major recent development.

The MIMOSA reports on India were received as a welcome addition to the market analytics needed in India, and discussion ensued on expanding this methodology to other parts of the country. 

            SPM Connections

Intersection of SPM and Customer Centricity

After many years of collaboration and shared learning, the SPTF was delighted to partner with CGAP for the 2018 Customer Centricity Learning Event. Social performance management (SPM) and customer centricity intersect in many ways, and our event partnership with CGAP served to highlight how SPM and customer centricity — as management strategies — can reinforce one another.

Customer centricity describes a way of conducting business such that generating value for customers is viewed as the best way to achieve the dual goals of commercial success and financial inclusion. It focuses on knowing what customers want and delivering it, so that customers benefit from access to better services and the provider benefits from customer retention, acquisition, and expansion. It is commonly described as a ‘win-win’ for providers and customers.

SPM places a strong emphasis on customer centricity — particularly in product design and delivery — but describes additional ways in which a provider can achieve impact, namely through client protection, responsible treatment of employees, and management of customer outcome data. Industry standards for SPM call on providers not only to create products and experiences around the needs of customers, but also to establish and manage a clear social strategy that underpins all aspects of the business.

There are more similarities than differences between customer centricity and SPM. Both strategies emphasize that: 

  • The right leadership is crucial for creating an organizational culture that is committed to customer well-being.
  • Customer-centric products depend entirely on an in-depth understanding of customers’ lives — their motivations, challenges, financial strategies, and context.
  • Customer data are important means for building this understanding, and they should be carefully protected and used to the benefit of the customer.
  • Focusing on customers is not the job of a person or department. It is a management style that should affect every aspect of a provider's operations.
  • Any new and emerging business models — such as digital financial services — are only as good as their ability to generate additional value for customers.  

Providers of all kinds can benefit from resources — guides, templates, videos, and webinars — on SPM and customer centricity, and can choose how to combine these resources in a way that suits their needs. Several of the most notable resources include:

  • The Universal Standards Implementation Guide (SPTF) is a how-to resource that explains every aspect of SPM in practical terms, offers dozens of examples of SPM in the field, and describes (with links) over 100 resources for additional learning. Available in English, Spanish, French.
  • The Customer Centric Guide (CGAP) is a collection of hands-on toolkits and experiments that help providers design and deliver effective financial services for low-income customers. The guidance and activities are based on extensive field testing and include case studies of providers who benefitted from customer centric innovations. Available in English.
 

Resources and References

Explore the resources below for tools and guidance to help strengthen your social performance management and achieve your social and financial goals.

Universal Standards for Social Performance Management Technical Assistance Database  Universal Standards Implementation Guide
SPI4 Tool SPTF Guidance Notes SPTF Resource Center
 
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