What Can We Learn From Selling Soap?

Some managers just aren’t interested in innovation. They see being on the leading edge as being on the bleeding edge. “Let someone else fail and then I’ll copy the successes.” Quite reasonable, if you can afford to be second.

For those who cannot, where can they turn for help crafting breakthrough products and services? Standard market research tools and data mining often fail to deliver the kind of unique insights needed to identify new growth opportunities. Several new approaches are in pilot in the microfinance field: randomized controlled trials, financial diaries, behavioral economics. These have already expanded our foundational knowledge about the financial lives of the poor. But they’ll need adaptation to fit the rapid timeframes preferred by the private sector.

To find better tools we looked at 5 industries that overlap with branchless banking: either they sell financial services (traditional banking, the microfinance sector), have low-income consumers as a target segment (microfinance, fast moving consumer goods), or use electronic channels (the mobile industry, Silicon Valley). We looked at 23 firms in total. The powerpoint here includes further details.

The common connection across most success stories was observing consumers rather than asking them. In interviews or focus group discussions consumers aren’t always honest, don’t remember accurately, may believe one thing but actually do otherwise, or may simply be of several minds about a topic but only tell you one facet of their viewpoint. Observing their lives and behavior allows us to pierce the fog cloaking unstated opinions and deeply-felt needs. That’s the space where breakthrough products evolve from. We’ll give an example:

In the early 2000s, global consumer goods giant P&G was looking at low market share for its fabric softener products in Mexico. Surveys showed more than 90% of Mexican housewives were using fabric softener, but P&G was baffled by why consumers weren’t buying their product.

Insights didn’t come until brand manager Antonio Hidalgo spent several days living with a low-income family as part of a new P&G “consumer immersion” policy. Following the wife around was an eye-opening experience that showed that P&G’s fabric softener was ill-designed for the bulk of Mexican consumers who do not own washing machines. Hand-washing laundry with their current product was a laborious, six-step process: wash, rinse, rinse, add softener, rinse, rinse. A process compounded by the fact that many consumers walked half a mile or more to get the copious quantities of water needed.

The fix was not hard: engineer the softener’s chemical composition to cut out three of the rinse steps altogether. The result was Downy Single Rinse, which boosted sales by 62 percent in 6 months and P&G’s market share by 52 percent.

The same ethic of observation underpins financial service success stories that we studied.

  • IDEO helped Bank of America design its Keep the Change saving product by observing middle-aged women customers in their daily lives. The product has led to 12 million newly opened accounts and brought USD 3.1 billion in deposits into the bank. Some of the world’s biggest banks operate a variety of labs and prototype branches including Citi, HSBC, Standard Chartered, and Wells Fargo.
  • KGFS wealth managers visit poor Indian families in their homes to work out a portfolio of financial services that protect against financial shocks, grow assets and save for future investments.
  • As mentioned earlier in this series, today’s M-PESA success is actually the second incarnation of the service. It was redesigned after an unsuccessful first pilot gave Vodafone the opportunity to observe how Kenyans moved money.

Direct consumer observation is one pillar on which CGAP’s partners will operate the Product Labs. In practical terms, this means every lab will include a systematic period of consumer observation. Labs will have their own field team skilled in using one or more of the emerging tools and instruments we’ve seen or we will bring in an external team with a track record in this kind of rapid needs-finding. We won’t be relying primarily or even very much on surveys or focus groups. It may look much more like our insights earlier this year showing how a motorcycle in Uganda can help us design better saving products.

But this is just step one for the Labs. 


- Sarah Fathallah, Toru Mino, Mark Pickens


27 August 2012 Submitted by Anonymous (not verified)

I had to laugh, a bit ruefully, at the notion that observing people’s lives is actually going to “pierce the fog cloaking unstated opinions and deeply felt needs.” I’ve done a lot of customer research in the past 30 years, both open-ended ethnographies and the less noble, more commercial kind with specific sales and marketing objectives

Most of this research has been about money and phones, Technology is not so difficult. Soap isn’t either. Most people have no problem being forthright about what works and what doesn’t work for them. Personal finance, however, is not so simple.

The notion that “observing their lives” is going to lead to “breakthrough products” ignores human nature and the constraints under which most financial institutions operate. No matter how invisible observers attempt to be be, respondents are, alas. just as likely to be dishonest about money and not act normally and hide what they would prefer not be seen.

Moreover, most banks are not the World Bank. To guarantee deposits, save and lend money at acceptable rates, record transactions, and ensure automatic and human tellers function properly are the priorities–and the fundamental user needs. Research is an extra. Working backwards and inductively from a morass of lengthy field observations is a luxury very few can afford.

The focus groups and interviews I have seen in rural and urban India are also a far remove from the one-way mirrors and sterile world of “user labs” in Europe and the US. The opportunities for first-hand observation are pretty unavoidable. No real need to seek them out and label it something that sounds loftier and more important than “market research.”

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