Treating the Poor as Consumers

A couple of weeks ago, I accompanied Micah, EGG’s field operations manager, and Yohana, our sales manager, on a sales run.  We started at our charging station in Chanika and drove north.  After about 20 minutes, we noticed a group huddled around a game of checkers and decided to stop to do a demonstration.  Yohana proudly exhibited EGG’s batteries and their ability to power lights, a phone charger and a radio.  The group had many questions.  They wanted to know where they could swap batteries, if our batteries could power TVs and the price of an installation.  Yohana answered their questions and explained EGG’s pricing scheme.  Afterwards, those who were interested put their names on a list for Yohana to contact later in the week.

While this account might not seem like anything special, it made me think about what it means to treat the poor as consumers and the advantages of such an approach.  Thirty years ago, well-meaning development organizations used a very different strategy – they decided what was best for the population they served and offered it to them for an artificially low price (and sometimes for free).  That day in the field, Yohana treated the group as other producers in their lives treat them – as consumers who are capable of making their own purchasing decisions.

I see two major advantages to operating this way.  First, it increases the likelihood that the service we sell will be used and valued by our customers.  Like any for-profit business, we allow potential customers to decide for themselves how they value our service, instead of deciding for them that it suits their needs best.  Those who elect to purchase our service believe it will benefit them and are thus more likely to use, take care of and potentially improve our service.

Second, operating this way allows us to provide a higher-quality, more sustainable service to our customers.  We price our service above our cost.  If we instead sold it at an artificially low price, our ability to serve current and future customers would depend on the (sometimes unpredictable) availability of outside funding to fill the gap.  In addition, because we pay attention to our profits, we invest in increasing the quality, convenience and cost-efficiency of our service in order to remain competitive.

All in all, it makes sense to experiment with using for-profit models to provide socially valuable goods, keeping in mind that the limited wealth of our customers poses an impressive challenge to our operations, one that other for-profit companies might not face.  The key, however, is to use this challenge to become radically more cost-effective than we would be if we operated as a non-profit.