Wednesday, March 25, 2009

Donor marketing: Just one thing

When I was managing an MFI, something I struggled with was donor marketing. Okay - let's be honest. What I struggled with was getting new donor funding. A colleague of mine operating in another country seemed to have no trouble, however. Donors funded him on a regular basis. Finally, I swallowed my pride and asked him what his secret was.

He talked to them.

Yes, it was that simple. On a quarterly or bi-annual basis he'd make an appointment, sit down with the donor, tell him or her what his MFI was doing and then ask what was happening in the donor world. Invariably, when funding came available for microfinance, they would think of him and his MFI.

Should you fear that your sales skills aren't good enough to "shmooze" a donor, let me tell you that neither were my colleague's. He's not a "shmoozer", not a smooth salesperson by any means. What he is, however, is open, honest, and in general a very nice person.

You don't need glitzy sales skills to have a successful donor meeting. What you need is a genuine passion for your MFI, understanding of your environment (donors want to hear about your challenges too), and the ability to tell your MFI's story: the facts, the figures, trials and successes.

Donors want to meet with you. Sometimes it seems that their whole job is to have meetings - trust me, they won't mind spending thirty minutes with you. They'll be happy to be able to report upward on what they learned about your MFI and the industry in your region.

Action item:
Write out a short agenda for a donor meeting. What will you tell them about your MFI? The state of the industry? Now, pick up the phone and make some appointments!

Tuesday, March 17, 2009

Marketing the informal economy

I was going to start a series of posts on donor marketing, and then I saw this article in the March 14-15th edition of the Wall St. Journal: "The Rise of the Underground," by Patrick Barta.

The article starts:

"Economists have long thought the underground economy -- the vast, unregulated market encompassing everything from street vendors to unlicensed cab drivers -- was bad news for the world economy."

Yes, and donors have thought so too. How many times have you, as an MFI manager, heard a donor asking how many of your borrowers had moved into the formal economy after taking out a loan? Or government officials demanding that formal licensing be a condition of a loan?

In my opinion, the "problem" with the underground economy is that it doesn't pay taxes (formally) at least to the state. That isn't the fault of the business people within it, however. In my opinion it points to a failure on the part of the state -- to provide clear and understandable ways to formalize one's business, and to make a case that the benefits to registration outweight the advantages of going "informal."

So how should MFIs address this issue when a donor or government official laments about our informal borrowers? This article makes a good case for the informal economy, but I'm curious to hear your thoughts. Let me know in the comments section!

Wednesday, March 11, 2009

Internal and external marketing

Before I talk about marketing to donors, I'd like to back up a bit and organize our thoughts on marketing. There are two sets of folks an MFI should be marketing to - no, not donors and clients - internal and external customers.
External customers are those outside your MFI who benefit from or should hear about your services. This group includes your borrowers, donors, investors, and opinion leaders (such as government officials). If you're lucky, you've got an MFI association or umbrella agency which handles "industry marketing" to the latter. If you're not - well, their opinions can affect your business so it's helpful to communicate with them.
Internal customers are the folks inside your MFI who you should be communicating with.
"Huh? But my employees know about my MFI!"
Do they? Most people know their jobs, but unless management makes an effort to circulate information within a company (or MFI), it usually doesn't happen. Finance doesn't know why Credit wants to change a policy and resists. Loan officers don't understand the benefits of a change to the clients, and so they can't sell as effectively. Branch managers don't hear about the latest satisfaction research findings, so they can't apply them.
Action item:
Analyze the information flow between departments. Is it formal, or does it rely upon personal relationships (e.g. the Finance manager is friends with the Credit manager, so they understand each other's needs well, but Credit doesn't know audit so...)? What systems can be implemented to ensure regular flow of data between departments?

Saturday, March 7, 2009

Study exchange

Okay, this has nothing to do with marketing, but I need help!

I'm trying to set up a study tour for an MFI in Palestine to visit an MFI in Eastern Europe. Like Eastern Europe, Palestine's West Bank has a highly educated populace, larger loan sizes, and relatively high wage costs.

If you know of any MFIs in East or Central Europe which might be willing to host them (not pay for them - just let 2-3 of their managers spend time with their operations), please let me know!


Monday, March 2, 2009

The Five Touch System

While working on a business plan for my new financial planning business, I came across a concept called the "Five Touch System." The idea is that for someone to put their faith (and finances) in your hands, they usually need to have five contacts with the financial planner before committing. In financial planning, like microfinance, direct sales is a key component. However, the "five touches" or contacts don't have to be face-to-face, they can include advertising, newspaper articles, or other promotional activities that get one's name in front of the public.

It reminded me of marketing for microfinance.

In microfinance, the customer is taking a risk when they take out a loan. Most of us don't want to become over-indebted, we want to be able to pay our loans on time, and the idea that we might not be able to handle the interest and principal payments is a source of stress. This is just one of the reasons why loan officers have to spend so much time with clients before they take out the loan - to make the clients comfortable with the MFI and with the borrowing concept. (Other reasons of course include underwriting, ensuring the client understands her obligations, etc., but part of it is, yes, sales and hand holding.)

A good campaign which puts your MFI's brand or products in front of the public can shorten the time it takes for a loan officer to sell the product - to make the client comfortable with your MFI. With advertising, promotion, and branding, you can reduce the number of contacts your loan officers have to make to sell the product. This makes them more efficient, can drive down costs, and increase sustainability.

Sunday, March 1, 2009

Customer service and Ghandi?

Found at Andy Sernovitz's blog, "Damn, I wish I'd Thought of That!" It stands in the lobby of the Chicago Tribune newspaper -- something we should all remember about customer service.

Commercialization: the "final" stage in product development?

The pilot test is a success! We roll out the product and we're done - right?


Not really.

First, remember that product development is a cycle - once the new loan product is "out there" the smart MFI will continue to gather client feedback on it, for example through exit surveys and regular client satisfaction research. If the MFI has an integrated marketing program, then that data can be used to further refine the product or get ideas for new financial products and services.

Next, remember that new products effect more than just the credit department. Their administration will impact MIS, human resources, finance, and perhaps even general office management. Staff in all departments may need training in how to cope with the new product. Generally, the sooner you can bring other departments into the product development process, the better (i.e. during the pilot test phase), but typically product roll-out will require an extra "push".

On a final note, the commercialization phase is also the time to implement a promotional program for the new product. I can hear the chorus of shrieks from microfinance managers already -- we don't need advertising, we use word of mouth, or direct sales. Direct sales has proven to be effective in microfinance, and word of mouth is great (if you cultivate it -- it doesn't just happen), but both direct sales and word of mouth can be more effective (i.e. you can increase your clients per loan officer) when backed by a promotional program and a strong brand name.