How do you profitably sell to a customer who earns less than $2 per day?
It is probably the most daunting business question in the world. As well as the most important, because that’s the earning power of nearly one third of humanity, the two billion people at the so-called « base of the pyramid. »
Business can be the great engine that lifts billions out of poverty, but it needs to be a new kind of values-driven business
The challenge is immense. The typical base-of-pyramid customer lives in a remote rural village, in a cramped hut with no clean running water, electricity or indoor toilet. The household is typically illiterate, unreachable by traditional marketing channels, has no savings or access to affordable credit, and is dangerously vulnerable at any moment to disease, injury, or natural disaster.
And yet a new kind of entrepreneur is springing up who sees things differently, for whom business is the best way to fight poverty. People such as:
- Sam Goldman, who founded his company d.light design while an engineering student at Stanford. d.light makes low-cost solar lanterns specifically designed for the needs of the $2-a-day customer – their lights have been used by more than 30 million people to date in over 40 countries.
- Jordan Kassalow, whose organization VisionSpring has successfully sold nearly 2 million affordable eye-glasses to poor people in developing countries.
- Prema Gopalan, who has built a network of women entrepreneurs across rural India selling everything from solar chargers for mobile phones to more efficient cook-stoves–all transformational products that can lift a rural household out of extreme poverty.
These social entrepreneurs view their customers–the world’s poorest people–as collectively comprising the world’s largest under-served market, with an annual purchasing power of over $1 trillion. For them, creating businesses to serve this market is both a massive opportunity as well as a moral duty.
So what’s their secret? Ashoka’s Globalizer initiative, in partnership with the eBay Foundation convened twenty of the world’s leading social entrepreneurs in Chennai, India, for three days in early March. The Ashoka Globalizer on Economic Inclusion provided a robust forum for sharing and improving their strategies to scale their impact.
The insights shared went well beyond the usual ideas for expanding market share–these folks are on a mission, and they want to change the world.
Here are some of the strategies they’re using to do just that:
1: RECRUIT AND EMPOWER LOCAL CHANGEMAKERS
Hire individuals with the entrepreneurialism and drive to create change on the ground. You can’t solve the problems of the « last mile » from a headquarters in Washington. It takes local entrepreneurs, empowered to adapt swiftly to the nuances of local markets, to succeed.
2: BUILD A MOVEMENT, NOT JUST MARKET SHARE
Social entrepreneurs don’t just want to make more sales, they want to change a whole system. That means thinking about how to turn your product or idea into a movement, so that the impact can go far beyond what one organization is doing.
Jordan Kassalow understands this. Kassalow is the founder of VisionSpring, a social enterprise which has sold more than 1.6 million affordable eye-glasses to low income visually impaired people in India, and is en route to doubling that within two years.
Last year, Kassalow stepped down as CEO of VisionSpring last year to focus on building a global movement for affordable eye-care.
« We realized after we had sold our first million eyeglasses that VisionSpring alone wasn’t going to make a dent on the problem, » says Kassalow. « There are 700 million visually impaired people in the developing world whose lives are blighted by lack of something as simple as a pair of eyeglasses. We’ve proven that access to affordable eye-care is one of the best ways to impact lives. If we can make vision part of the global development agenda, we have a real chance of reaching those 700 million people. »
3: EMBRACE COMPETITION
Social entrepreneurs actively welcome competition. It means there are more people trying to solve the problem.
In the hands of the right entrepreneur, price itself can become a weapon in the battle to scale impact. No one does this better than David Green, founder of multiple medical programs and device companies that provide radically lower cost products and services for low income people. In the early ’90s, when Aurolab, a company that Green founded, first began selling intraocular lenses for cataract surgery, the market price for such lenses was $300. Green’s company began selling them at $10, profitably.
« Our competitors were making huge margins on their products, and locking out the low income markets that couldn’t afford them, » says Green. « After we began showing that you could sell at $10 and that there was a profitable market serving the great unmet need, other new entrants got into the act, making lenses that were competitive on both price and quality. »
Price competition eventually drove down Aurolab pricing from $10 to $2. As a result of this price competitive industry in eye care, cataract surgeries in India increased more than five-fold over the ensuing decade. Today, Aurolab sells over 2 million lenses annually with approximately 9% of the global market share.
4:MOTIVATE WITH MISSION, NOTE MONEY
If you really want to succeed in the toughest market on earth, you need more than a sales plan and a profit motive–you need a mission.
People who are in this just for the money « simply won’t last the course, » says Greg Van Kirk, founder of Community Enterprise Solutions, which creates sales networks employing hundreds of women entrepreneurs in Latin America and the Caribbean in order to facilitate access to vital technologies in isolated communities.
5: MAXIMIZE DISTRIBUTION, NOT PROFITS
David Green calls this Empathetic Capitalism. « Business can be the great engine that lifts billions out of poverty, but it needs to be a new kind of values-driven business, where profit is the enabler, but not the sole motive. We’re demonstrating that companies can succeed which seek to serve as many customers as possible, while covering their costs, rather than maximizing profit for its own sake. »
These entrepreneurs are showing that mission-driven business can improve the lives of the world’s bottom billion. As one participant put it, « wouldn’t it be great if ‘billionaire’ was re-defined to mean someone who had improved 1 billion lives? »
Wouldn’t it indeed? Here’s to the billionaires serving the base of the pyramid.
Reblogged from FastCo.Exist.com