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.

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