I think one big challenge is cultivating local leadership and skills that can support these businesses. Historically, investment in a qualified workforce in developing countries (especially from what we have seen in areas like Uganda) has nowhere near met the demand. We really rely on local staff to support our entrepreneurs and this can be expensive as it requires a lot of upfront investment in training and capacity building.
Hi this is Rob Mooney. I am the Director of Global Operations for the Clinton Foundation's "Chakipi" ID businesses.
Many companies often think initially that they want to use a 'freelance' village level entrepreneur: a local trusted person who can act as independent distributor. But quite alot find it doesn't work so well in practice and shift to their own sales force. Why doesn't it work? One is the level of risk: the freelance micro-entrepreneur will be reluctant to invest in too much working capital. The other is after sales service: for many durables this is critical, but a freelance seller is unlikely to provide it in the way that a company's own salesforce can. A third reason to shift is that some companies find they need to become financiers of their clients (eg for solar home systems). So they deploy a field force that does credit and sales.
This checklist was written a few years ago, but was written after we saw some of the mismatch of expectations about teh risk and return from the company and the village level entrepreneur. So is still useful! Checklist: Reaching the rural consumer http://bit.ly/2hje60H
Caroline Ashley said:
Salesforce churn is a huge problem, but takes slightly different forms depending on the network. Some companies deploy their own salesforce and invest hugely in their training and set-up costs. Then suffer when they leave. Others have more independent sellers, who take more of the risk, but might not have the incentives to remain.
Jessica Davis Pluess said:Thank you everyone for helping frame the conversation with some examples.
In the interest of time, let’s move on to our second question:
Q2. What are the most significant challenges to scale these models, and how do they vary across models, regions, and/or industries?
Thanks, Beth! What are some key things Mercado Fresco looks for when recruiting franchisees?
Beth Meadows said:
Hello - I can talk from experience on some of our challenges - we need more time to talk about them all :) -
Picking the right candidate and making sure their personal challenges don't conflict with the needs of the business.
Empowering them -supporting them - working to network to find partners that can meet the other challenges that they encounter such as domestic or emotional abuse. Earning their trust -
Finding the right provider that has quality and is reliable.
Welcome Rob1 It would be interesting to hear more about the Chakipi model in Peru and Haiti and what you've found to be some of the key challenges to scale.
Robert Mooney said:
Hi this is Rob Mooney. I am the Director of Global Operations for the Clinton Foundation's "Chakipi" ID businesses.
Hi Aminta - can you share some links to where people can find out more about SCALA and the different models?
Aminta Perez-Gold said:
Under SCALA we are supporting the scaling of 6 IDN models: three form corporations (Kiterias, Danone – World Vision Brazil; Plan Barrio, Nestle – ADOPEM; Shatki, Unilever –FUSAI) and three from social enterprises: Mercado Fresco – Supply Hope; Chakipi –Clinton Foundation, Red MANU-Nutrivida.
The interview process is two fold - the potential candidate first meets with our psychologist and we do an one hour interview - We learned that we had to go much deeper in our interview to learn the needs as well as the potential of the candidate - and then we do home visit - and make sure that they are well liked in their neighborhood the home is clean - and to meet the family in the home.
Jessica Davis Pluess said:
Thanks, Beth! What are some key things Mercado Fresco looks for when recruiting franchisees?
Beth Meadows said:Hello - I can talk from experience on some of our challenges - we need more time to talk about them all :) -
Picking the right candidate and making sure their personal challenges don't conflict with the needs of the business.
Empowering them -supporting them - working to network to find partners that can meet the other challenges that they encounter such as domestic or emotional abuse. Earning their trust -
Finding the right provider that has quality and is reliable.
Good afternoon everyone. I thinks the best way to to scale distribution and sales networks is to use networks of independent business persons / entrepreneurs by default. They are in it for profit and sustainability and are more likely to stay on. I come from such a network that empowers pharmacy professionals to practice as a community.
Another challenge is thinking through the different options and tailoring them to the right product and market context. It's important not just to jump to the first way of structuring local distribution. On our KnowHow page on Last Mile Distribution, on the Practitioner Hub for Inclusive Business, we have 6 different options. The right one depends on whether the area is urban or rural and whether customers need finance or not. Alot of this work comes from Hystra who have looked at how they are used in different setting. http://www.inclusivebusinesshub.org/know-how-last-mile-distribution/
I would be interested in hearing about how microcredit is extended to entrepreneurs, who provides the microcredit and if anyone, such as Solar sister are using microcredit financing to make it easier for customers to purchase larger lighting units or other ways credit is offered to customers. (I know I'm asking two different questions here).
Nestle and Danone have data that demonstrates the impact of the IDN in their business. That is why they moved their models from CSR to core and have defined strategies to continue expanding their networks
We've heard that as well from a number of social enterprises establishing their own networks. Have you been working with existing networks in these countries to help with the costs? Also curious to hear what kind of skills sales staff need to have to effectively engage solar sister entrepreneurs?
Abby Mackey said:
I think one big challenge is cultivating local leadership and skills that can support these businesses. Historically, investment in a qualified workforce in developing countries (especially from what we have seen in areas like Uganda) has nowhere near met the demand. We really rely on local staff to support our entrepreneurs and this can be expensive as it requires a lot of upfront investment in training and capacity building.
Quickly, Pharmnet is a network of Independent pharmacy professionals in Kenya that predominantly serve the low income communities. Network members provide quality assured essential medicines through the network using a key component of pooled purchases. We have discovered that this helps the public to identify the legitimate pharmacies from the illegal pharmacies and incrementally improve on the foot falls.
Yes, salesforce turnover is a key challenge. The way we have approached this challenge is by designing the model so that its really very attractive for them. We design our model thinking of our network of microentrepreneurs as end users, so we have to design something attractive for them with enough benfits for them to keep on the program, we call this the front end. First we need to have a strong front end, then we will build a backend (delivery, etc) to support the front end.
Jessica Davis Pluess said:
That's very interesting. As Caroline noted, salesforce turnover has been raised as a key challenge in many inclusive distribution models Have you found this to be an issue?
Juan Céspedes said:Hello Jessica! We started one year ago to build a network of microentreprenuers in rural areas of Colombia and El Salvador. The microentrepreneurs, most of them women, sell unilever products in their communities. We´ve been developing skill building courses for our microentrepreneurs, so they can get their businesss stronger. We've as well developed courses on nutrition and health.
Jessica Davis Pluess said:Welcome Juan! It would be great to learn more about how Unilever is engaging micro-entrepreneurs in their downstream value chain in Latin America?
Juan Céspedes said:Hello! this is Juan, from Unilever. I work as Social Channels Manager for the Andean Region and Central America
Hi Jessica
One of our major challenges to scale is technology. In order to be profitable, we need to operate at a very low cost. There is a scale point where we cannot handle the volume of transactions manually, therefore all invoicing/credit management and control/payment receipts, etc. need to be managed digitally in order for us to grow in a controlled manner. However, there aren't many technology solutions out there that are tailored for the environments we're operating in and the type of transactions. In addition, cash collection is extremely expensive - and high risk for our both our entrepreneurs and our staff.
Jessica Davis Pluess said:
Welcome Rob1 It would be interesting to hear more about the Chakipi model in Peru and Haiti and what you've found to be some of the key challenges to scale.
Robert Mooney said:Hi this is Rob Mooney. I am the Director of Global Operations for the Clinton Foundation's "Chakipi" ID businesses.
One word of caution. We had a webinar with Willem Nolans of Solar Now a few months ago. He explained in no uncertain terms how they had shifted from a micro-entrepreneur model to their own salesforce. I have heard others say the same, particularly in solar. While I totally agree with the principle of piggy-backing on entrepreneurs that are already operating, I just think it needs thinking through in each situation.
It was the second webinar in this series on marketing: Webinar series: how to viably market and distribute beneficial products at the BOP http://bit.ly/2geDLYf
It sounds like we are starting to identify some good lessons and solutions. On that point, let’s move to our last question:
Q3. What are some emerging lessons and solutions on achieving scale, and where are there opportunities for more partnerships?
We network with many organization to help us with our selection - we call them our people partners - This help us build community with the other organization that are working with our same target. We also partner with organization like Unilever - Cargill - Proctor and Gamble - for products for our stores - and they are very helpful with training and pricing support.
Jessica Davis Pluess said:
We've heard that as well from a number of social enterprises establishing their own networks. Have you been working with existing networks in these countries to help with the costs? Also curious to hear what kind of skills sales staff need to have to effectively engage solar sister entrepreneurs?
Abby Mackey said:I think one big challenge is cultivating local leadership and skills that can support these businesses. Historically, investment in a qualified workforce in developing countries (especially from what we have seen in areas like Uganda) has nowhere near met the demand. We really rely on local staff to support our entrepreneurs and this can be expensive as it requires a lot of upfront investment in training and capacity building.
Well there are two things here (1) recruitment of staff and (2) recruitment of entrepreneurs. Our staff need to be able to fully support entrepreneurs when it comes to business training, leadership development, product supply, customer care, and local community engagement. So traditional salespeople typically do not have the needed background in business development and supporting women while NGO workers tend to not have the sales drive and skills. For us it takes both which is where training is so key. Also, our staff work remotely and are dispersed throughout our different countries of operation so this requires people who can work independently and have the motivation to do so.
In terms of recruiting entrepreneurs, we work largely through existing networks of women. For example, we work with our local partners like Project Concern International, AWF and Mercy Corps who are already engaging women to introduce them to our business opportunity.
Jessica Davis Pluess said:
We've heard that as well from a number of social enterprises establishing their own networks. Have you been working with existing networks in these countries to help with the costs? Also curious to hear what kind of skills sales staff need to have to effectively engage solar sister entrepreneurs?
Abby Mackey said:I think one big challenge is cultivating local leadership and skills that can support these businesses. Historically, investment in a qualified workforce in developing countries (especially from what we have seen in areas like Uganda) has nowhere near met the demand. We really rely on local staff to support our entrepreneurs and this can be expensive as it requires a lot of upfront investment in training and capacity building.
Hystra did some great research on what reduces salesforce churn across different last mile examples. This is a slide from the webinar we did with them, which shows 3 key factors: competition, partly fixed compensation (part flex) and close management.
The full presentation is here and really rich: http://www.inclusivebusinesshub.org/wp-content/uploads/2016/05/M4bop-insights-Practitioners-Hub-2.pdf
Jessica Davis Pluess said:
It sounds like we are starting to identify some good lessons and solutions. On that point, let’s move to our last question:
Q3. What are some emerging lessons and solutions on achieving scale, and where are there opportunities for more partnerships?