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  • Get to Know Your Non-Customer

    August 14, 2012 Editor 0

    The U.S. economy is sluggish, Europe is in a crisis, and emerging markets have slower rates of growth than in the past. In a slow-growth world, the new growth norm has to be about satisfying the needs of non-customers. But which non-customers do you target? And how do you get to know them?

    One such opportunity is at the bottom of the economic pyramid. And the challenge, first posed on this site, to design a $300 house provides a good example of how to engage and better understand the specific needs of the non-consumer.

    The starting point for tackling this problem is to first identify who they are, and then to accurately diagnose their pain points.

    For the $300 House project, we identified one non-consumer/future customer segment — rural India. We then tried to observe, engage and collaborate with a subset of this potential future customer base to understand their pain points. We began by identifying sample customer communities and randomly selected fifteen families in fifteen villages in three of the poorest states in India — Jharkhand, Bihar and Uttar Pradesh.

    We used a survey instrument to structure the qualitative customer research in the fifteen families. We made sure to ask a broad range of questions, including several open-ended ones, designed to learn more about the context of the potential customer. Additional data was collected through interviews, focus groups and, most importantly, through observation.

    The goal of the survey was to understand the needs of the future customer. And, just as importantly, we knew that we could not treat this customer as a “case study” for charity. Rather, it was critical for us to find out how willing the customer was to pay for the $300 house and associated services such as water, electricity, basic health, and education.

    Among the many findings, five of them stood out:

    • All respondents agree that lack of clean, safe housing, good education and employment were the most important challenges faced by the community.
    • All respondents were willing to pay $300 for a good house and were ready to borrow the money to pay for it.
    • All respondents were willing to pay for electricity. For other basic services like water, education, and healthcare, the response was mixed.
    • Respondents outlined four critical requirements for good housing — at least two rooms, private toilet, electricity and small land for farming / livestock.
    • The “ideal” house would be 400 sq.ft. in size with a height of 9-10 ft. and built on a 500-550 sq.ft. piece of land.

    The findings also confirmed a key assumption of the $300 House project: Rural Indian consumers — the future customers — are willing to pay for services as well as the house. This is a real business opportunity.

    This is only a start and we’ve a long way to go before we build the $300 house, but with this data, we understand better what “affordable” housing means for the world’s poorest people. By engaging directly with them, we’re learning how to convert non-consumers into customers, with products and services that meet their needs, at a price they can afford to pay.

    Businesses looking to grow in today’s slow growth economy must do the same and learn how to listen to the voice of the non-consumer. Ask yourself:

    • What opportunities are we missing?
    • How can we listen to our future customer?
    • Can we involve them in creating the product? How?
    • Are their aspirations and hopes integrated into our design process?

    Above all, our advice to businesses looking to create new products and services at the bottom of the pyramid is that they must treat these future customers with respect, not as a charity case.


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    Categories: Insights

    Tags: 300 house, consumer, future customer, non-consumer, Non-Customer

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