Friday, January 30, 2009

Lending to women

Issue #8 of UpSides magazine focuses on women's entrepreneurship, and how MFIs and banks can focus on the women's market. To download a copy, click here.

Thursday, January 29, 2009

"Pro-poor product development"

A good question which came up at the Nigerian Microfinance Conference was, “How do we ensure our new products are pro-poor?” This is exactly where the nexus between integrated marketing and social performance management systems occur.

Market research for product development and research for social performance should answer the following questions:

1. What do the clients need the product/service for?
2. What do the clients actually use the product/service for?
3. What benefits do the clients get or perceive they get from the product/service?

In an integrated marketing program, that data will flow throughout the company – downward to loan officers so they can sell the benefits of the product and upward to management to market the products properly. In a social performance management system the same data will also flow up and down the MFI’s hierarchy, but it will be used to ensure that the product serves the MFI’s mission. I.e., management will take that data to check that the uses, needs and benefits fulfilled by the new product are having the desired impact and loan officers will report back on their observations in the field.

One set of data – two different uses. With such synergies, it would be foolish for MFIs with social performance management systems not to get “double use” out of their data through integrated marketing, and vice versa.

Tuesday, January 27, 2009

The brand promise and client savings

Branding for MFIs: interesting in theory but not so necessary in practice? On the contrary! For commercial microfinance institutions that mobilize savings, branding is critical.

I just returned from a microfinance conference in Nigeria, where Mariama Ashcroft of Women’s World Banking discussed microfinance commercialization. An important point she raised was about trust. When an MFI makes a loan, it must trust the borrower. But when a microfinance bank (MFB) solicits savings, the clients must trust the MFB; this is why savings mobilization is a struggle for many commercial MFIs.

Building trust can be a challenge, and here lies the importance of the brand promise. Your savers must believe that your MFB (and their savings) is here to stay – that your bank is strong and reliable. This belief is created through your brand, which must promise to provide a secure place to keep savings and to pay interest on that savings.

How can an MFI build that brand promise?
  1. Consistency. This includes consistency in promotional messages, customer service, and in every interaction your MFI/MFB has with the public. Is your mission and vision communicated to clients and employees? Do your promotional materials look and “feel” alike, communicating the same message? Can clients expect the same type of service every time they interact with your employees?
  2. Keeping your promises. “But of course we keep our promises! After all, we have contracts, don’t we?” Of course you honor your contracts, but do your loan officers show up at meetings on time? When they say they’ll call a client back, do they? Are your policies communicated clearly, simply, and consistently in order to avoid misunderstandings? If your staff members don’t follow through on the “little” promises, clients will find it difficult to trust you to follow through on the big ones.
  3. Delivering excellence. Good customer service is to be expected. “Good” is a satisfactory grade – a bare minimum, if you will. However, an MFI with a brand promise that stands out from the crowd goes beyond “good” to “fabulous.” How can you delight your customers? How can your loan officers go above and beyond the call of duty to demonstrate that your MFB is worthy of holding the client’s savings?
If these steps sound simple, it’s because they are! However, it’s easy to start a brand campaign with high enthusiasm and good intentions, and then gradually forget about it over time, returning to old habits. MFBs need a marketing department (preferably an integrated one) that can ensure these practices continue over time. After all, in branding consistency is the key.

Action item:

Hold a roundtable with key loan officers and members of every department that interacts with the public (including tellers). Ask participants the above questions and develop a one-page, three point plan to deliver consistency, keep your promises, and deliver excellence. Integrate it into your marketing plan, and ensure someone is responsible for it.

Sunday, January 18, 2009

Nigerian Microfinance Conference

I'll be taking a week off from this blog to attend a microfinance conference in Nigeria, where I'll be presenting on commercial product development. After January 26th, I'll report back.
In the meantime, please feel free to comment on any of the below posts -- we'd like to hear about your marketing experiences!

Saturday, January 17, 2009

Brand loyalty and client satisfaction

Brand loyalty is the level of a client's committment to repurchase the brand. For MFIs, profitability tends to come in later loan cycles, so committment to take another loan is critical. I've talked a bit about client satisfaction, but frequently clients who claim to be satisfied with the loan product switch to another MFI. Making clients feel "satisfied" isn't enough to retain clients, and it isn't enough to generate positive word of mouth, either.

Loyalty is created when MFIs go the "extra mile," for example with spectacular service. What do your loan officers do to make clients rave about your MFI? Comment below and let us know!

Action item:
Spend a day observing your top loan officers - the ones who produce the most loyal clientele. How do they create that "wow" factor that delights clients? Can their techniques be replicated?

Thursday, January 15, 2009

The elevator pitch

When your staff is introduced to someone new, one of the first questions they’re usually asked is, “So what do you do?” A career in microfinance is unusual, which should make for an interesting conversation. However, many people have no idea what microfinance is, and frequently this question is followed by a long, awkward explanation. Instead of wanting to learn more, the questioner wants to run in the other direction.

Your staff members are the face of your MFI – wouldn’t it be nice if they could answer this simple question in a way that was understandable and interesting? In a way that boosted your MFI’s brand image and made them feel good about their jobs?

Your staff are capable of shining when asked about their jobs, but this sort of "artful bragging" doesn't come naturally to everyone. The good news is that it can be learned, by practicing an "elevator pitch."

So called because it's short enough to be used when riding between floors, an elevator pitch is a 30 second answer to the question, “What do you do?” A well-crafted elevator pitch interests others because it allows the speaker to show what they feel passionate about. It's an authentic statement, rather than a shallow boast. Developing a pitch is easy... once you've figured out what excites you about your work!

Action item: Elevator pitch exercise

Time: 15-20 minutes

Purpose: Enable staff to verbally promote your MFI’s brand image and themselves.

Materials required: Paper and pens. White board or poster paper.

Step 1: Invite participants to individually write down the answers to the following questions:

1) What do you like/love about your current job?
2) How does your job use your skills and talents, and what projects are you working on right now that showcase them?
3) What successes are you most proud of from your current work?
4) What new skills have you learned in the past year?

Notice, these questions are about the staff member. Answering them will allow your staff members to speak authentically about what excites them about working for your MFI.

Step 2: Review with staff your MFI’s long tag line – a sentence or two which describes your MFI in 25 words or less (see prior post). Ask participants to list the key words/phrases from the tag line, and list on a white board or sheet of poster paper.

Step 3: Based upon the above, invite participants to write out their personal answers to these two questions:

1. What excites you about what do you do?
2. What excites you about what your MFI does?

Note that I’ve rephrased the questions. Though your new friend in the elevator might just ask you what you do, you should answer what excites you about what you do. This gives you a chance to shine (and to make the MFI look good too)!

Step 4: Ask a few volunteers to read their answers out loud and discuss them. Are the answers short? Interesting? Authentic? Do their answers about the MFI fit with its brand image?

Step 5: Invite staff to practice with each other, asking and answering the questions, “What do you do?” and, “What does your MFI do?” Make sure they keep the answers under 30 seconds each!
So, please join me in discussion -- what's your elevator pitch?

Tuesday, January 13, 2009

The brand promise: tag lines

In my last post, I wrote rather generically about branding. In this post I’d like to talk about a specific element of branding: tag lines. A tag line is a short, memorable phrase that summarizes the essence of your MFI – its brand promise. Tags communicate a positive feeling about the MFI through a simple slogan that is easily repeated (repetition is critical to successful branding).

FINCA International, for example, uses the tag, “Small loans — big changes.” It’s a brilliant tag line, explaining in four words what FINCA does (makes small loans) and what benefit the loans provide (big changes). What’s particularly effective about this tag is that the brand promise – big changes – can apply to all FINCA’s clients, regardless of country or target market.

Typically, an MFI has a short tag, which is five words or less, as well as a longer tag – up to 25 words. The short tags can go just about anywhere – from business cards to letterhead to ad copy. Longer tags are frequently used in addition to the short tags, in brochures and other marketing materials where space isn’t as limited.

Action item – develop a short tag line:

To prepare, collect tag lines from other companies. Notice how they catch your attention. Are they easy to remember? Why? What do they communicate?

Next, determine your brand’s promise. Brainstorm the answers to these two questions:

  1. What need to we satisfy in our customers better than our competition?
  2. What benefit to we provide to our clients?

List the top 8 or 10 most important things you want to say about your MFI’s brand promise. Next eliminate repetition as well as items that don’t really communicate the benefits of your MFI or what makes you special. Whittle your list down to 3 or 4 central elements.

Based on the above, develop a five word or less tag line for your MFI, to be used in all your print materials (possibly beneath your MFI’s logo) – from letterhead to business cards to website to ads. Use simple, everyday language.

Finally, test your tag line. Is it short? Is it memorable? Is it distinctive? Does it communicate a positive feeling about your MFI? Does it communicate your brand promise?

Monday, January 12, 2009

Branding for MFIs

After years of abuse, my much-loved digital camera died. I needed a new one – something that was reliable and would enable me to take high-quality photos. As I am not a professional photographer, I hesitated for weeks, baffled by the wide selection of available camera functions and features. I haunted camera stores, poured over web reviews, and asked friends for recommendations.

Then I saw a new Kodak camera promoted on a television shopping channel and in 60 seconds, without ever handling the camera, I called the shopping channel and bought it, spending more than I’d planned. Why? I knew the Kodak name. One of the best cameras I’d ever owned was a Kodak, and I trusted this new camera would be just as good.

In short, I bought the Kodak brand (and so far am happy with my choice).

So what is branding? Philip Kotler, Professor of International Marketing at Kellogg University, describes it as “a seller’s promise to deliver a specific set of features, benefits and services consistently to the buyers.”

Companies make this promise through a consistent message delivered by their employees, in their promotions, and through their products and/or services. Consistency is critical to developing a memorable brand. We remember things through repetition. For this reason, it’s a bad idea to change your MFI’s colors or slogan on a regular basis. A changeable brand image is a forgettable or confusing one.

But what exactly is your brand remembered for? Kotler’s idea of a promise – of trust—is key to successful branding. Therefore, your MFI’s brand should stand for something real and true, rather than being another clever motto or tag line. (Your motto can be clever, but it should be REAL). This authenticity builds trust.

Is trust important to the clients of an MFI? You bet! MFIs are financial institutions and let’s face it – the interest rates aren’t cheap. Taking out a loan is a big decision, and though we MFI managers tend to focus on our risk as lenders, you’d better believe your borrowers are thinking about the risk to them as well. Is it worth taking on debt from an MFI, or should I just borrow from my Aunt Sally? What if business is bad and I don’t make a profit on this loan?

Clients need a certain comfort level to borrow. Your loan officers should provide this by making sure clients aren’t taking on more debt than they can afford. However, your MFI’s brand image stands behind your loan officers, helping or hurting their message.

What’s your brand saying?

Action item:

Review your promotional materials, including company letterhead, business cards, brochures, and any other advertisements. Is the message consistent? What sort of “personality” does your brand have? Are the colors, fonts, and graphics consistent across your materials? How frequently are your slogan and brand graphics repeated (and can you use them more)?

Saturday, January 10, 2009

Sales techniques for loan officers

Marketing studies have shown that while a product’s attributes are important to borrowers, what people really buy are the benefits of a product. However, too often loan officers focus on attributes – e.g. the interest rate, loan terms, etc. – when they’re selling the loan product.

These attributes are, of course, important and loan officers need to be clear and upfront about them for the benefit of the client and of the MFI. After all, these loans need to be repaid. But a strong loan officer informs the client of the product attribute while selling the benefits, (also known as the core product -- see slide 6 for more information on the core vs. actual vs. augmented product).

So what are the benefits of your microfinance product? Does it enable the borrower to build assets? Increase income? Send her children to school?

It might do all of these things and more, but discussing these benefits will only have an impact on sales if they actually matter to your client. Someone who doesn’t have children probably won’t care much about being able to send kids to school. At an individual level, loan officers should be aware of product benefits and should pay attention to what the potential client responds to. In short, the loan officer should ask open questions to get a feel for what benefits the potential client actually cares about.

At an institutional level, the MFI should segment its borrowers, developing client profiles which address which benefits matter to the client.

Action item: Conduct the below sales training with your loan officers.

Training: Selling the benefits

Time: 20 - 30 minutes

Purpose: Enable loan officers to understand the difference between a product’s benefits and attributes, and how to sell the benefits of the MFI’s products.

Materials Required: White board/large paper and markers.

Notes to Trainer: Make sure the benefits listed are benefits to the CLIENT, not to the MFI!
One key benefit of a microloan should be an increase in the client’s income, however, loan officers should consider how this increase will positively change the client’s life – what the client really wants to do with the extra income. For example, some clients may think of the increased income in terms of better education for their children, the ability to improve their home, better healthcare, or the ability to expand their business.

Training Step 1: Explain: Over and over, marketing studies have shown that while attributes are important, what clients really respond to in marketing are benefits. Ask: What are benefits and attributes? Attributes are the physical features of the product, e.g. a laptop computer might weight 2 kilos. But the benefits are how those features make the client’s life better. E.g., the computer is light enough to easily carry to meetings.

Step 2: Display an object (e.g. a calculator) to participants. Ask what are its attributes? Its benefits?

Step 3: Ask: What are the attributes of our loan products (Note: discuss by type of loan product – loan products will offer different benefits!)

Draw a line down the middle of the board or large white paper. List responses down one side of the board or large white paper.

Step 4: Explain: Clients want to hear how our loan products will benefit THEM, how the loans will make their lives easier or better. Ask: How can we describe these attributes as benefits? List answers next to the attributes listed earlier, e.g. Delivery of the loan to the client’s business saves the borrower time.

Step 5: Ask: How can you find out what benefits matter to the client? I.e., how do you know what the client cares about? Discuss, listing answers on the white board.

Step 6: Emphasize to the credit staff that next time they are meeting with potential clients, they need to sell these benefits!

Customer service and the dissatisfied client

Here’s a short training for loan officers on how to deliver good customer service to unhappy clients. Consider it an action item.

Time: 15 - 20 minutes

Purpose: Enable loan officers to deal with dissatisfied clients in a positive manner.

Materials: White board/paper, pens

Trainer’s Note: Role-play the complaints in Step 3 with angry facial expressions and tones of voice. Also, be sure a response isn’t to just quote policy back to the client. That will only make them angrier!

Training Step 1:

Ask: What should you do when a client complains about the service she’s received?

Explain: We should Apologize, Acknowledge, and Correct!
Explain: When we complain about something, we need to feel that the person we’re complaining to takes us seriously. Otherwise, we'll just become more upset. That means as loan officers on the receiving end of a complaint, we need to do more than just say we’re sorry. We also need to acknowledge that the person has a valid reason for feeling unhappy. We need to empathize with our clients – i.e. let them know that we understand how they feel.
Finally, we need to let them know how we’ll correct the mistake. Remember, we're human so mistakes do happen. What’s important is that we deal with them correctly, by apologizing, acknowledging how the client is feeling, and correcting the error.

Step 2:

Ask: But what if the client is actually wrong? How do we handle it then?

Explain: if the client is in the wrong, we still need to show empathy and respect, even while we’re being firm about policy.

Step 3:

Review each complaint below and ask: How should a loan officer respond to this complaint?

Well, I just assumed I could use your loan for myself, and not just for my business. Nobody told me that I couldn’t.
Possible response: I can tell that you’re upset, Mrs. Ghaffar.

Your interest rates are too high for me! I have a limited income.
Possible response: I can appreciate your need to save money.

Your report said my group had a B rating, but it actually has a AA rating!
Possible response: Oh no! I’m sorry for the mistake!

We’ve been waiting four weeks to get this loan and now you want to delay it again!
Possible response: I’m sorry for the delay. I know it must be frustrating for you.

Step 4:

Ask: What complaints have you received from clients?
List answers on board. Go through each complaint and ask, “how can a loan officer best respond to this?” Discuss.

Friday, January 9, 2009

Customer service

In my last post I mentioned the importance of having excellent customer service in order to drive positive word of mouth marketing. Customer service is a big topic, and is based upon fair, open and honest dealing with clients – something your MFI’s policies and procedures should aspire to.

However, though your MFI’s policies may be strong, and your loan officers might have the best intentions towards their customers, creating a friendly and open relationship with clients is a skill. The good news is that it is a skill that can be taught. Loan officers can and should be trained to:

· Smile;
· Greet the customer;
· Use the client’s name;
· Use positive body language;
· Make eye contact; and
· Thank the customer.

Just remember: SGUUMT!

(I’m joking. It’s a ridiculous acronym.)

But do remember that roughly 55% of our communication is non-verbal, i.e. through our gestures, facial expressions, and posture. So it’s important that our body language is positive and in sync what we say.

“Positive” body language is open, e.g. the head is up, arms are uncrossed, eye contact is being made, and the loan officer has a friendly, genuine expression on his or her face (see photos of closed body language on the left, and open on the right).

Thirty eight percent of our communication is through tone of voice. Yes, it’s not just what you say – it’s how you say it! That leaves a tiny 7% of communication flowing through our words. Only 7%! So while it's helpful to drill loan officers on what to say to clients, don’t forget to work with them on their body language and tone of voice as well.

Action item:

Hire students to pose as potential clients of your MFI and report back on the service they receive (this is called being a “mystery shopper”). Sometimes we think our customer service is better than it actually is. Are your loan officers hitting the bullet points above? If not, it may be time for more training.

Thursday, January 8, 2009

Word of mouth: Is it all MFIs need?

“We don’t need to do marketing – we use word of mouth.”

I hear this all the time from MFI managers. Word of mouth (or referrals) is a great way to get clients. However, too often managers simply assume word of mouth is happening, and that it’s positive. “Word of mouth” then becomes an excuse not to do anything.

But did you know that you can actually generate positive word of mouth? Here’s how:

Step 1: Make sure you’ve got a great product and are delivering good service! Unfortunately, bad experiences tend to get more “word of mouth” than good service, so you need to make sure that your products and customer service is as good as you think it is.

Step 2: Identify and cultivate influential people in your markets. Who do your clients listen to? Who do they get their information from? These could be village leaders, well-respected businesswomen, or even local celebrities. Spend time telling them about the benefits of your product, and give them your brochures, business cards, or other materials to help them get the word out.

Step 3: When a new client comes to you, ask how they heard about you and record their answer. Again, this is where an integrated marketing program can be of help. This sort of information is most useful when it’s spread around – enabling the branch manager and loan officers to understand exactly where the referrals are coming from, and enabling upper management and marketing to understand just how effective the word of mouth campaign really is.

Step 4: The group solidarity lending methodology lends itself to referrals – it’s up to the clients to find others to join the group. However, once a group is active the referrals may stop unless loan officers get in the habit of asking existing clients to keep spreading the word. A good time to do this is when they receive a compliment about your MFI’s product or service. Loan officers should be trained to follow up with a “Thank you! Who can you tell about our…?” to prompt good word of mouth marketing.

Action item:

Ask your branch managers to identify opinion leaders in their communities. Work with the branch managers to develop a plan to reach out to these opinion leaders.