Building Markets to Improve National Sanitation Coverage in Cambodia.
S A N I TAT I O N MARKETING S C A L E U P (SMSU)
CAMBODIA
SMSU aims to scale Sanitation Marketing on a national level in Cambodia across seven provinces, distilling principles, methods, and tools to support the replication of Sanitation Marketing globally.
SUMMARY REPORT
Building Markets to Improve National Sanitation Coverage in Cambodia. SMSU has demonstrated that developing markets for sanitation (a.k.a. Sanitation Marketing) is able to contribute to significant increases in latrine coverage. This summary focuses on SMSU 1.0, the first three years of SMSU. SMSU 1.0 produced important lessons on how to further stimulate both demand and supply for sanitation and engage the enabling environment to support rural sanitation. This summary report highlights a few key lessons in the hope that they will inform the design, implementation, and cost-effectiveness of future sanitation marketing projects.
iDE
|
INTERNATIONAL DEVELOPMENT ENTERPRISES |
SANITATIONMARKETS.IDEORG.ORG
BACKGROUND: The Sanitation Marketing Scale-Up (SMSU 1.0) project was designed as a three-year project (August 1, 2011-October 31, 2014) that built on the success of the Sanitation Marketing Pilot Project, both of which were implemented by iDE Cambodia. A sub-component of SMSU 1.0 included the “Going Deep” project (July 2011-December 2013), which was technically supported by the Water and Sanitation Program (WSP) of the World Bank. The SMSU 1.0 project was funded by the Bill & Melinda Gates Foundation and the Stone Family Foundation, both of which also provided supplementary funding to the Going Deep sub-component. SMSU 2.0 (November 2014 - October 2017) builds on the success of SMSU 1.0, with continued focus on growing sales, improving penetration of the poor, and continuous R&D.
S A N I TAT I O N MARKETING S C A L E U P (SMSU)
BUILDING MARKETS TO IMPROVE CA M NATIONAL B O DI A SANITATION COVERAGE IN CAMBODIA. Summary of Final Report
Data Highlights KEY ACHIEVEMENTS: SMSU 1.0
Measuring impact at every level: Kfrom E Y Aindividual C H I E V ELatrine Mbusinesses ESales N T S : S Mto S Unational 1.0 coverage. Below are a few key highlights from the SMSU monitoring and evaluation efforts from September 2011 – October 2014. 2014 For a complete analysis of results please visit SanitationMarkets.iDEorg.org.
Latrine Sales
Cumulative Latrine Sales
2013
Cumulative Latrine Sales 61,106
45% here a way to hammer 2012 29% me the message here 13,992 2014 Baseline coverage achieved 2.5 ually by showing that over 20 years years % is mroe than half of the 141,030 1992 2012 2015 % coverage, and we EXCELLENT TARGET: 140,000 hieved that in 1/8 the Cumulative me? That is, I think the time Latrine Coverage Among Poor Overall Coverage s is proportional, but the Sales 6.4% 2013 Actual Target 2012 2014 Rate of increase verage is not. I just over 2.5 years 61,106 SATISFACTORY TARGET: 70,000 onder if there's even a ore powerful vision to hit Poor households defined as Cambodian 2012 government classifications IDPoor 1 and 2 Improved latrines in 7 provinces me that the rate of 1.5% Is there a way to hammer Rate of increase over 20 years crease in coverage under 13,992 Percentage of poor households with an installed latrine byhome province the message here Inclusivity of Poor MSU is more than 4x the visually by showing that 1992 2012 2015 evious 20 years. [(16%/2.5 Poor households make up: 16% is mroe than half of the ars)/(29%/20 years)] coverage, and we 26% of the population The project surpassed 29% the topline “excellent” target with 141,131 latrines achievedbusinesses, that in 1/8 the sold through project-connected businesses that of SMSU 1.0 salesiDE has 22% time? That and is, I think the time directly engaged through training coaching. In addition to these sales, axis is proportional, but sold the by a project-connected we’ve also seen a ripple effect. For every latrine coverage I just business, another 1 latrine is soldisbynot. a non-project connected business, wonder if there's evenbut a has that has sold an improved latrine not experienced Coveragea business Among Poor Overall Coverage more direct engagement with iDE. powerful vision to hit home that the rate of Target Actual 2 012 2 014 increase in coverage under Ra te o f Chang e in Latr ine Cov er ag e iDE Cambodia Lat r i n e Sa le s to Da t e SMSU is more than 4x the Business Performance previous 20 years. [(16%/2.5 187,699 years)/(29%/20 years)] SATISFACTORY TARGET: 70,000
12%
12%
41% 45%
24%
24% 6.4%
Poor households defined asProfit Cambodian Rate of increase Operating Ratio over 2.5IDPoor yearsoperator government classifications 1 and 2 A latrine business earns
$0.26
Average Monthly187,699 Net Profit
Improved latrines in 7 provinces
Cumulative Sales
Average Selling Price
141,030
of Latrine
‘11
1992
61,106
13,992 $36
Unit *
$1,323
Highest Tier Performers
$51
2012 2015 *Not including sales commission or cost of transport.
‘12
Inclusivity of$22 Poor
Lowest Tier Performers ‘13
‘14
‘15
Poor households make up:
29% 1992
16% 2012
Baseline coverage achieved over 20 years
2015
Additional coverage achieved in 2.5 years
45% improved (pour-flush) K E Y Alatrine C H coverage IEVEMENTS was achieved in the seven project provinces, surpassing the satisfactory project target and a substantial increase from 29% at baseline in 45% of 16% February 2012. This is a significant jump Latrine Sales0% 29% in coverage over a relatively short period of time coverage achieved 2.5 (essentiallyBaseline 2.5over years from baselineyears to endline). 20 years 1992
2012
2015
199
Rate ofEXCELLENT Change TARGET: 140,000 Cumulative Latrine Sales
6.4%
Rate of increase over 2.5 years
2013
61,106
SATISFACTORY TARGET: 70,000
2012
1.5%
Rate of increase over 20 years13,992 1992
2012
2015
The rate of increase in coverage under SMSU is more than 4x the previous 20 years.
Coverage Poor CoverageAmong Among Poor 2012
2014
12%
24%
4
Poor households defined as Cambodian government classifications IDPoor 1 and 2
The sales data and revenue suggest that the sanitation business is profitable. 187,699 of worked the population Out of the 329 Latrine Business Owners (LBOs) the project has with, 246 LBOs (75%) achieved breakeven with their latrine sales, which bodes Overall, there has been a doubling Percentage of poor households Cu mulativ e Lat r in e Sal e s v. Cost Pe r Un it Sol d 6.4% well for the latrine business in general, since the next stage is turning a profit. (12% increase) in IDPoor coverage since with an installed latrine by province Rate of increase Cumulative of SMSU 1.0 sales 187,699 overwere 2.5 years At the end of the project, 90% of active latrine businesses profitable. Sales the baseline in early 2012. 22% of SMSU 141,030 Cost/Unit (6 month ave.) Cumulative Sales Cumulative customers were classified as IDPoor. Sales 200,000 This equates to roughly 30,000 IDPoor 1.5% sales to date. 61,106 Rate of increase over 20 years
Cost Per Latrine $350 $300
13,992
$250
$100
45%
iD E Ca m b o d i a L a t r i n e Sa le s to Da t e
26% 22%
$150
0%
$157
Middle Tier Performers
Rat e of Chan g e in L a tr i n e Cove r a g e
$200
Ch ange Latrine Covera ge Change ininNational Coverage
41% 45%
26 cents of profit for every dollar of sale.
Percentage ofofpoor Latrine households Unit 1.5% Rate of increase 20 years latrine by province with anover installed Average Cost of Production
C A M BO D IA
141,030
EXCELLENT TARGET: 140,000
iDE
|
INTERNATIONAL DEVELOPMENT ENTERPRISES | 1992
SANITATIONMARKETS.IDEORG.ORG 2012 2015 100,000
‘11
‘12
‘13
‘14
‘15
2
S A N I TAT I O N MARKETING S C A L E U P (SMSU)
BUILDING MARKETS TO IMPROVE NATIONAL SANITATION COVERAGE IN CAMBODIA. Summary of Final Report
Lessons Learned
Strengthening Supply Through A Direct Sales Management Model. The project has seen an evolution from ‘Latrine Business Owner’ (LBO)- driven sales to sales agent-driven sales. LBOs have proven to be generally uninterested or incapable of effectively managing village level sales activities, necessitating a more active role by the project to support sales management to achieve the public health goals of rapid latrine uptake. The project decided to invest in sales management activities because achieving 100% latrine coverage is a finite goal that is foreseeably achieved in the near future; having a more hands-on approach means achieving the goals of hygienic sanitation access more quickly and effectively.
Small and microenterprises showed low interest in actively selling. Initially, we focused on the Latrine Business Owner (LBO) as the main actor driving latrines sales in order to reach more market segments in the rural communities. The hypothesis was that the LBO, driven by the profit motive, would be interested and motivated to support active and direct sales. However, we observed that, for a variety of reasons, the LBOs have limited capacity and/or motivation to manage active sales and promotions of latrines. Most LBOs are concrete producers who are best at producing concrete products, but not so fluent in sales and sales management. In response to this learning, the project’s next iteration of market facilitation focused on directly recruiting and managing sales agents and coordinating with the LBO to match supply and demand.
iDE
|
Professionalized sales and sales management is critical for rapid uptake by households and replication across the project. SMSU entailed an intentional effort to professionalize sales, sales training, and sales management. With the support of Whitten & Roy Partnership (WRP), the project developed a sales approach that included systematic sales training and sales management processes and a package of supporting tools, which were developed in collaboration with 17 Triggers. While the training materials and process were developed as a package, project staff are trained and coached on how to deliver personalized coaching based on individual needs of the LBOs and sales agents. From this experience, professionalization of sales is a crucial investment for sanitation market development efforts to ensure that the critical activity of selling is deliberate and based on industry best practices.
INTERNATIONAL DEVELOPMENT ENTERPRISES |
SANITATIONMARKETS.IDEORG.ORG
Low prices may not be best for the consumer as it can undermine the sustainability of enterprise motivation. We learned that enterprise motivation to sell latrines is dependent not only on profit margin, but may also depend on the opportunity cost of other lines of business. A low profit margin—$5/latrine for the LBO and $2/sales agent—is not sufficient for maintaining sustained engagement. Accordingly, the project started advising LBOs to raise the price of latrines, which would contribute to a higher commission for sales agents. The project found that the most engaged LBOs were not necessarily the ones with the largest business. Rather, the highest selling LBOs were sometimes the smallest ones. It appeared that what mattered more in terms of LBO engagement had to do with the proportion that latrine sales comprised of their overall business; i.e., an LBO with fewer other lines of business, or whose other lines of business were less profitable than latrines, were more likely to be focused on selling latrines as the opportunity cost of doing so was not considered as high. 3
S A N I TAT I O N MARKETING S C A L E U P (SMSU)
BUILDING MARKETS TO IMPROVE NATIONAL SANITATION COVERAGE IN CAMBODIA. Summary of Final Report
Lessons Learned
Stimulating Demand Through Intensive Customer Engagement. We learned that if a customer has bought into the latrine as a solution, then they are likely to be more satisfied with the product and use the product properly and consistently, recommend their friends and family to buy, and be willing to pay a higher price, which will sustain LBOs’ and sales agents’ motivation to sell.
Intensive customer engagement is needed for effective promotions.
Human-centered sales approach: sell to the problem, not on price or product.
Promotional efforts that lead to direct, significant impact on latrine sales need to have concentrated engagement with potential customers, such as a group sales event or door-to-door sales.
The Human-Centered Sales approach helps sales agents focus on selling to a customer’s problem, rather than selling on product features or price.
Light-touch promotion initiatives, such as promotions to health center staff and religious leaders, can add points of exposure. But without intensive training and coaching, such channels do not directly target the individual needs and desires of non-owners. “Below the line” marketing is necessary for impact in rural village contexts, whereas “above the line” marketing is difficult to measure, and can be expensive.
iDE
|
Through a personalized conversation with the customer, the sales agent helps the customer identify all the problems he or she is encountering as a result of not having a latrine. Raising self-awareness about the problems of not owning a latrine intensifies the urgency and importance of resolving the problem(s) and helps the customer recognize the latrine as a viable solution to their problems. The sales agent is equipped with a “sight seller,” a flip-book style sales presentation tool that highlights the common drivers of latrine uptake as gleaned through the user insights research.
INTERNATIONAL DEVELOPMENT ENTERPRISES |
SANITATIONMARKETS.IDEORG.ORG
Sanitation financing can significantly accelerate uptake, but requires significant field level coordination. Microfinance institutions (MFIs) are for-profit enterprises. Latrine loans, though demonstrating profitability, are still less profitable than MFIs’ other products because latrines are not income-generating assets nor high ticket items. Thus, latrine loans and other social-impact loans have been restricted to a minority percentage of an MFI’s total portfolio and are not considered a core part of the business. Sanitation financing (SanFin) is still a nascent field, and MFIs may be waiting for more proof of SanFin’s positive business impact. The limited capacity of the MFIs to do SanFin at scale begs the question of whether the efforts to engage them are indeed worth the cost-savings demonstrated in the “Willingness To Pay” research. This research showed that financing decreases the operational cost per latrine sold by 70%, by spreading fixed costs such as travel and marketing over more sales. In SMSU 2.0, iDE is testing an in-house credit facility that overcomes these operational and financial challenges.
4
BUILDING MARKETS TO IMPROVE NATIONAL SANITATION COVERAGE IN CAMBODIA. Summary of Final Report
S A N I TAT I O N MARKETING S C A L E U P (SMSU)
What’s next? | ONGOING INNOVATION IN SMSU 2.0
Including Installation Cost in the Service Offering In SMSU 1.0, latrines were sold and priced without an installation service. The program believed most households would install the latrines themselves. However, the team discovered that 37 percent of latrines remained uninstalled nine months after delivery. Customers delayed installation for two reasons. Some desired to hold off on installation until they could also afford a shelter. Proper installation of the underground component requires rudimentary masonry skills, which some users perceived as a need for expert services. To address the time gap between delivery and installation, SMSU 2.0 bundles installation services with the purchase of the latrine. an installation fee in the cost of the latrine. Potential customers may choose to opt-out from installation service, which represents a cost of about $10 USD. To date, more than 99% of the latrines sold in SMSU 2.0 have been purchased with the installation included.
Addressing Users’ Needs With A New Shelter Design Using human-centered design, the project identified users’ aspirational needs and wants to inform the shelter design. Key design elements include: • Two water basins instead of one: one inside and one outside of the shelter. These basins are connected through a valve. While inside the shelter, users can use the inside basin and draw water when needed from the outside basin. • A tiled area outside the latrine that enables family members to bathe or wash laundry even when the latrine is occupied. • A lightweight corrugated metal cover over the outside basin to protect water from dust, debris, and falling leaves. • A turnkey solution that is tiled, painted, and has smooth walls. • A modular system that allows users to easily build onto the existing design.
The Easy Shelter is designed to catalyze both manufacturer supply and user demand.
IMPLEMENTING PARTNERS
Designing and Commercializing a Hand Washing Device iDE is developing a hand washing device for after latrine use, which will be integrated into the new latrine shelters and aims to be affordable, desirable, and feasible for local manufacturers. SMSU 2.0 plans to conduct extensive qualitative field research to identify current practices, beliefs systems, potential behavior change triggers, and aspirations associated with hand hygiene in rural Cambodia. Through a series of device prototypes, we will solicit user feedback to test desirability and product functionality. The project will also develop a manufacturing manual and training materials for latrine business owners to produce the device.
Reaching the Poorest with a Targeted Subsidy Pilot iDE is testing an approach combining microfinance and smart subsidies to ensure latrines are sold to the poorest Cambodians, while avoiding the market-distorting effects associated with traditional subsidy programs. In this aproach, government-identified poor households are targeted through regular sales events and are able to purchase latrines at a discounted price. Unlike a standalone subsidy program, which can be inefficient and costly to administer, the pilot offers discounted latrines alongside market priced latrines with the option of financing for all approved purchasers. iDE is working in collaboration with Amplify Markets and Causal Design to test the program. Through this pilot, iDE hopes to develop a scalable strategy to serve the rural poor without compromising long-term engagement of the private sector.
iDE
|
INTERNATIONAL DEVELOPMENT ENTERPRISES |
SANITATIONMARKETS.IDEORG.ORG
CONTACT US
Email: Yi Wei, Global WASH Director [email protected] Visit: www.sanitationmarkets.ideorg.org
5
CAMBODIA
SMSU aims to scale Sanitation Marketing on a national level in Cambodia across seven provinces, distilling principles, methods, and tools to support the replication of Sanitation Marketing globally.
SUMMARY REPORT
Building Markets to Improve National Sanitation Coverage in Cambodia. SMSU has demonstrated that developing markets for sanitation (a.k.a. Sanitation Marketing) is able to contribute to significant increases in latrine coverage. This summary focuses on SMSU 1.0, the first three years of SMSU. SMSU 1.0 produced important lessons on how to further stimulate both demand and supply for sanitation and engage the enabling environment to support rural sanitation. This summary report highlights a few key lessons in the hope that they will inform the design, implementation, and cost-effectiveness of future sanitation marketing projects.
iDE
|
INTERNATIONAL DEVELOPMENT ENTERPRISES |
SANITATIONMARKETS.IDEORG.ORG
BACKGROUND: The Sanitation Marketing Scale-Up (SMSU 1.0) project was designed as a three-year project (August 1, 2011-October 31, 2014) that built on the success of the Sanitation Marketing Pilot Project, both of which were implemented by iDE Cambodia. A sub-component of SMSU 1.0 included the “Going Deep” project (July 2011-December 2013), which was technically supported by the Water and Sanitation Program (WSP) of the World Bank. The SMSU 1.0 project was funded by the Bill & Melinda Gates Foundation and the Stone Family Foundation, both of which also provided supplementary funding to the Going Deep sub-component. SMSU 2.0 (November 2014 - October 2017) builds on the success of SMSU 1.0, with continued focus on growing sales, improving penetration of the poor, and continuous R&D.
S A N I TAT I O N MARKETING S C A L E U P (SMSU)
BUILDING MARKETS TO IMPROVE CA M NATIONAL B O DI A SANITATION COVERAGE IN CAMBODIA. Summary of Final Report
Data Highlights KEY ACHIEVEMENTS: SMSU 1.0
Measuring impact at every level: Kfrom E Y Aindividual C H I E V ELatrine Mbusinesses ESales N T S : S Mto S Unational 1.0 coverage. Below are a few key highlights from the SMSU monitoring and evaluation efforts from September 2011 – October 2014. 2014 For a complete analysis of results please visit SanitationMarkets.iDEorg.org.
Latrine Sales
Cumulative Latrine Sales
2013
Cumulative Latrine Sales 61,106
45% here a way to hammer 2012 29% me the message here 13,992 2014 Baseline coverage achieved 2.5 ually by showing that over 20 years years % is mroe than half of the 141,030 1992 2012 2015 % coverage, and we EXCELLENT TARGET: 140,000 hieved that in 1/8 the Cumulative me? That is, I think the time Latrine Coverage Among Poor Overall Coverage s is proportional, but the Sales 6.4% 2013 Actual Target 2012 2014 Rate of increase verage is not. I just over 2.5 years 61,106 SATISFACTORY TARGET: 70,000 onder if there's even a ore powerful vision to hit Poor households defined as Cambodian 2012 government classifications IDPoor 1 and 2 Improved latrines in 7 provinces me that the rate of 1.5% Is there a way to hammer Rate of increase over 20 years crease in coverage under 13,992 Percentage of poor households with an installed latrine byhome province the message here Inclusivity of Poor MSU is more than 4x the visually by showing that 1992 2012 2015 evious 20 years. [(16%/2.5 Poor households make up: 16% is mroe than half of the ars)/(29%/20 years)] coverage, and we 26% of the population The project surpassed 29% the topline “excellent” target with 141,131 latrines achievedbusinesses, that in 1/8 the sold through project-connected businesses that of SMSU 1.0 salesiDE has 22% time? That and is, I think the time directly engaged through training coaching. In addition to these sales, axis is proportional, but sold the by a project-connected we’ve also seen a ripple effect. For every latrine coverage I just business, another 1 latrine is soldisbynot. a non-project connected business, wonder if there's evenbut a has that has sold an improved latrine not experienced Coveragea business Among Poor Overall Coverage more direct engagement with iDE. powerful vision to hit home that the rate of Target Actual 2 012 2 014 increase in coverage under Ra te o f Chang e in Latr ine Cov er ag e iDE Cambodia Lat r i n e Sa le s to Da t e SMSU is more than 4x the Business Performance previous 20 years. [(16%/2.5 187,699 years)/(29%/20 years)] SATISFACTORY TARGET: 70,000
12%
12%
41% 45%
24%
24% 6.4%
Poor households defined asProfit Cambodian Rate of increase Operating Ratio over 2.5IDPoor yearsoperator government classifications 1 and 2 A latrine business earns
$0.26
Average Monthly187,699 Net Profit
Improved latrines in 7 provinces
Cumulative Sales
Average Selling Price
141,030
of Latrine
‘11
1992
61,106
13,992 $36
Unit *
$1,323
Highest Tier Performers
$51
2012 2015 *Not including sales commission or cost of transport.
‘12
Inclusivity of$22 Poor
Lowest Tier Performers ‘13
‘14
‘15
Poor households make up:
29% 1992
16% 2012
Baseline coverage achieved over 20 years
2015
Additional coverage achieved in 2.5 years
45% improved (pour-flush) K E Y Alatrine C H coverage IEVEMENTS was achieved in the seven project provinces, surpassing the satisfactory project target and a substantial increase from 29% at baseline in 45% of 16% February 2012. This is a significant jump Latrine Sales0% 29% in coverage over a relatively short period of time coverage achieved 2.5 (essentiallyBaseline 2.5over years from baselineyears to endline). 20 years 1992
2012
2015
199
Rate ofEXCELLENT Change TARGET: 140,000 Cumulative Latrine Sales
6.4%
Rate of increase over 2.5 years
2013
61,106
SATISFACTORY TARGET: 70,000
2012
1.5%
Rate of increase over 20 years13,992 1992
2012
2015
The rate of increase in coverage under SMSU is more than 4x the previous 20 years.
Coverage Poor CoverageAmong Among Poor 2012
2014
12%
24%
4
Poor households defined as Cambodian government classifications IDPoor 1 and 2
The sales data and revenue suggest that the sanitation business is profitable. 187,699 of worked the population Out of the 329 Latrine Business Owners (LBOs) the project has with, 246 LBOs (75%) achieved breakeven with their latrine sales, which bodes Overall, there has been a doubling Percentage of poor households Cu mulativ e Lat r in e Sal e s v. Cost Pe r Un it Sol d 6.4% well for the latrine business in general, since the next stage is turning a profit. (12% increase) in IDPoor coverage since with an installed latrine by province Rate of increase Cumulative of SMSU 1.0 sales 187,699 overwere 2.5 years At the end of the project, 90% of active latrine businesses profitable. Sales the baseline in early 2012. 22% of SMSU 141,030 Cost/Unit (6 month ave.) Cumulative Sales Cumulative customers were classified as IDPoor. Sales 200,000 This equates to roughly 30,000 IDPoor 1.5% sales to date. 61,106 Rate of increase over 20 years
Cost Per Latrine $350 $300
13,992
$250
$100
45%
iD E Ca m b o d i a L a t r i n e Sa le s to Da t e
26% 22%
$150
0%
$157
Middle Tier Performers
Rat e of Chan g e in L a tr i n e Cove r a g e
$200
Ch ange Latrine Covera ge Change ininNational Coverage
41% 45%
26 cents of profit for every dollar of sale.
Percentage ofofpoor Latrine households Unit 1.5% Rate of increase 20 years latrine by province with anover installed Average Cost of Production
C A M BO D IA
141,030
EXCELLENT TARGET: 140,000
iDE
|
INTERNATIONAL DEVELOPMENT ENTERPRISES | 1992
SANITATIONMARKETS.IDEORG.ORG 2012 2015 100,000
‘11
‘12
‘13
‘14
‘15
2
S A N I TAT I O N MARKETING S C A L E U P (SMSU)
BUILDING MARKETS TO IMPROVE NATIONAL SANITATION COVERAGE IN CAMBODIA. Summary of Final Report
Lessons Learned
Strengthening Supply Through A Direct Sales Management Model. The project has seen an evolution from ‘Latrine Business Owner’ (LBO)- driven sales to sales agent-driven sales. LBOs have proven to be generally uninterested or incapable of effectively managing village level sales activities, necessitating a more active role by the project to support sales management to achieve the public health goals of rapid latrine uptake. The project decided to invest in sales management activities because achieving 100% latrine coverage is a finite goal that is foreseeably achieved in the near future; having a more hands-on approach means achieving the goals of hygienic sanitation access more quickly and effectively.
Small and microenterprises showed low interest in actively selling. Initially, we focused on the Latrine Business Owner (LBO) as the main actor driving latrines sales in order to reach more market segments in the rural communities. The hypothesis was that the LBO, driven by the profit motive, would be interested and motivated to support active and direct sales. However, we observed that, for a variety of reasons, the LBOs have limited capacity and/or motivation to manage active sales and promotions of latrines. Most LBOs are concrete producers who are best at producing concrete products, but not so fluent in sales and sales management. In response to this learning, the project’s next iteration of market facilitation focused on directly recruiting and managing sales agents and coordinating with the LBO to match supply and demand.
iDE
|
Professionalized sales and sales management is critical for rapid uptake by households and replication across the project. SMSU entailed an intentional effort to professionalize sales, sales training, and sales management. With the support of Whitten & Roy Partnership (WRP), the project developed a sales approach that included systematic sales training and sales management processes and a package of supporting tools, which were developed in collaboration with 17 Triggers. While the training materials and process were developed as a package, project staff are trained and coached on how to deliver personalized coaching based on individual needs of the LBOs and sales agents. From this experience, professionalization of sales is a crucial investment for sanitation market development efforts to ensure that the critical activity of selling is deliberate and based on industry best practices.
INTERNATIONAL DEVELOPMENT ENTERPRISES |
SANITATIONMARKETS.IDEORG.ORG
Low prices may not be best for the consumer as it can undermine the sustainability of enterprise motivation. We learned that enterprise motivation to sell latrines is dependent not only on profit margin, but may also depend on the opportunity cost of other lines of business. A low profit margin—$5/latrine for the LBO and $2/sales agent—is not sufficient for maintaining sustained engagement. Accordingly, the project started advising LBOs to raise the price of latrines, which would contribute to a higher commission for sales agents. The project found that the most engaged LBOs were not necessarily the ones with the largest business. Rather, the highest selling LBOs were sometimes the smallest ones. It appeared that what mattered more in terms of LBO engagement had to do with the proportion that latrine sales comprised of their overall business; i.e., an LBO with fewer other lines of business, or whose other lines of business were less profitable than latrines, were more likely to be focused on selling latrines as the opportunity cost of doing so was not considered as high. 3
S A N I TAT I O N MARKETING S C A L E U P (SMSU)
BUILDING MARKETS TO IMPROVE NATIONAL SANITATION COVERAGE IN CAMBODIA. Summary of Final Report
Lessons Learned
Stimulating Demand Through Intensive Customer Engagement. We learned that if a customer has bought into the latrine as a solution, then they are likely to be more satisfied with the product and use the product properly and consistently, recommend their friends and family to buy, and be willing to pay a higher price, which will sustain LBOs’ and sales agents’ motivation to sell.
Intensive customer engagement is needed for effective promotions.
Human-centered sales approach: sell to the problem, not on price or product.
Promotional efforts that lead to direct, significant impact on latrine sales need to have concentrated engagement with potential customers, such as a group sales event or door-to-door sales.
The Human-Centered Sales approach helps sales agents focus on selling to a customer’s problem, rather than selling on product features or price.
Light-touch promotion initiatives, such as promotions to health center staff and religious leaders, can add points of exposure. But without intensive training and coaching, such channels do not directly target the individual needs and desires of non-owners. “Below the line” marketing is necessary for impact in rural village contexts, whereas “above the line” marketing is difficult to measure, and can be expensive.
iDE
|
Through a personalized conversation with the customer, the sales agent helps the customer identify all the problems he or she is encountering as a result of not having a latrine. Raising self-awareness about the problems of not owning a latrine intensifies the urgency and importance of resolving the problem(s) and helps the customer recognize the latrine as a viable solution to their problems. The sales agent is equipped with a “sight seller,” a flip-book style sales presentation tool that highlights the common drivers of latrine uptake as gleaned through the user insights research.
INTERNATIONAL DEVELOPMENT ENTERPRISES |
SANITATIONMARKETS.IDEORG.ORG
Sanitation financing can significantly accelerate uptake, but requires significant field level coordination. Microfinance institutions (MFIs) are for-profit enterprises. Latrine loans, though demonstrating profitability, are still less profitable than MFIs’ other products because latrines are not income-generating assets nor high ticket items. Thus, latrine loans and other social-impact loans have been restricted to a minority percentage of an MFI’s total portfolio and are not considered a core part of the business. Sanitation financing (SanFin) is still a nascent field, and MFIs may be waiting for more proof of SanFin’s positive business impact. The limited capacity of the MFIs to do SanFin at scale begs the question of whether the efforts to engage them are indeed worth the cost-savings demonstrated in the “Willingness To Pay” research. This research showed that financing decreases the operational cost per latrine sold by 70%, by spreading fixed costs such as travel and marketing over more sales. In SMSU 2.0, iDE is testing an in-house credit facility that overcomes these operational and financial challenges.
4
BUILDING MARKETS TO IMPROVE NATIONAL SANITATION COVERAGE IN CAMBODIA. Summary of Final Report
S A N I TAT I O N MARKETING S C A L E U P (SMSU)
What’s next? | ONGOING INNOVATION IN SMSU 2.0
Including Installation Cost in the Service Offering In SMSU 1.0, latrines were sold and priced without an installation service. The program believed most households would install the latrines themselves. However, the team discovered that 37 percent of latrines remained uninstalled nine months after delivery. Customers delayed installation for two reasons. Some desired to hold off on installation until they could also afford a shelter. Proper installation of the underground component requires rudimentary masonry skills, which some users perceived as a need for expert services. To address the time gap between delivery and installation, SMSU 2.0 bundles installation services with the purchase of the latrine. an installation fee in the cost of the latrine. Potential customers may choose to opt-out from installation service, which represents a cost of about $10 USD. To date, more than 99% of the latrines sold in SMSU 2.0 have been purchased with the installation included.
Addressing Users’ Needs With A New Shelter Design Using human-centered design, the project identified users’ aspirational needs and wants to inform the shelter design. Key design elements include: • Two water basins instead of one: one inside and one outside of the shelter. These basins are connected through a valve. While inside the shelter, users can use the inside basin and draw water when needed from the outside basin. • A tiled area outside the latrine that enables family members to bathe or wash laundry even when the latrine is occupied. • A lightweight corrugated metal cover over the outside basin to protect water from dust, debris, and falling leaves. • A turnkey solution that is tiled, painted, and has smooth walls. • A modular system that allows users to easily build onto the existing design.
The Easy Shelter is designed to catalyze both manufacturer supply and user demand.
IMPLEMENTING PARTNERS
Designing and Commercializing a Hand Washing Device iDE is developing a hand washing device for after latrine use, which will be integrated into the new latrine shelters and aims to be affordable, desirable, and feasible for local manufacturers. SMSU 2.0 plans to conduct extensive qualitative field research to identify current practices, beliefs systems, potential behavior change triggers, and aspirations associated with hand hygiene in rural Cambodia. Through a series of device prototypes, we will solicit user feedback to test desirability and product functionality. The project will also develop a manufacturing manual and training materials for latrine business owners to produce the device.
Reaching the Poorest with a Targeted Subsidy Pilot iDE is testing an approach combining microfinance and smart subsidies to ensure latrines are sold to the poorest Cambodians, while avoiding the market-distorting effects associated with traditional subsidy programs. In this aproach, government-identified poor households are targeted through regular sales events and are able to purchase latrines at a discounted price. Unlike a standalone subsidy program, which can be inefficient and costly to administer, the pilot offers discounted latrines alongside market priced latrines with the option of financing for all approved purchasers. iDE is working in collaboration with Amplify Markets and Causal Design to test the program. Through this pilot, iDE hopes to develop a scalable strategy to serve the rural poor without compromising long-term engagement of the private sector.
iDE
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INTERNATIONAL DEVELOPMENT ENTERPRISES |
SANITATIONMARKETS.IDEORG.ORG
CONTACT US
Email: Yi Wei, Global WASH Director [email protected] Visit: www.sanitationmarkets.ideorg.org
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