Tuesday, November 3, 2009

Does Charity Put the Customer First?

Why is it that most organizations in the social sector ignore the very customers that they are trying to serve? Often times this critical business oversight is compounded by the fact that many organizations work in a vacuum, oblivious to other initiatives that may be partly of fully serving the very same need. I recently heard the story of a homeless person who actually gained weight after moving to the street. Most of us assume that food and shelter are the most critical services that the homeless need. Well in fact, they have other needs, such as access to laundry services, that may be even more important than food if enough good Samaritans have stepped forward to meet the market demand. Laundry Love Project (www.just4one.org/laundrylove.html) is one such initiative that was founded because someone actually sat down with the customer and realized that there was an unmet need that should be addressed.

Unfortunately, this lack of focus on the customer is not only a US-centric epidemic. In fact, it is one of the main reasons why billions of dollars of traditional aid to the developing world have simply disappeared. Too often aid agencies have looked at the governing elite as their customers instead of the poor, who are the ultimate recipients of the service. The poor are perceived not as customers, but rather as charity recipients.

Recently, I returned from spending nine months in Pakistan, where I worked for a drip irrigation company that targeted small farmers. As a for-profit start-up, we soon realized that our product offerings were not gaining the traction that we desired. As we dug deeper into the problem, we recognized that we were not doing a good job of putting the customer’s needs at the forefront of our business. Of course we would spend time in the field with customers listening to their concerns, but customer service was not a strategic part of our business. We found ourselves discussing our customers’ needs as if we knew exactly what they were when in fact we did not. The turn around came when we began to deploy IDEOs Human Centered Design approach in the field. We began to conduct in-depth interviews with customers to discern what influenced them and how they made decisions. We finally were really listening to the customer. Soon, we began to change our focus from more expensive systems to a cheaper system that only cost $12.

Social Entrepreneurship is different than traditional aid because it treats the poor as customers who have a choice, often for the first time. By selling a product or service to the poor instead of giving it away for free, social enterprises have the ability to use the market as a feedback loop to tell which goods and services are working and which are not. Just recently, D.Light Design, a for-profit company who is serving people without access to reliable electricity, listened to its customers and heard that their product offerings were still too expensive at a $15 price point. They went back to the drawing board and came up with an even cheaper solar light that is more user friendly for only $10.

When the poor pay for critical goods and services they become empowered. They can vote with their limited discretionary funds and demand a level of service that charity is hard pressed to replicate.

Joel Montgomery

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