FT.com posted an interesting article on how different types of corporate sustainability initiatives will continue to go strong even in this economic environment: Why sustainability is still going strong.
While I find their conclusions a bit too optimistic, this statement caught my attention.
The current economic crisis adds tension â€“ customers with less cash to spend may reduce demand for such products. However, this appears to be primarily a financing issue. The companies that succeed may well be those that can help their customers finance purchases so the timing of cash outlays and operational savings are brought closer together.
For many companies serving the bottom of the pyramid, economic crisis is a continuous state of being for their customers. Folks making $2-4 a day are always living paycheck to paycheck, always job to job, and always just a heartbeat/an accident/a sick day away from everything falling apart.
The types of products and services that AIDG is most interested in can be a tough sell for families and communities in this situation. Even if they are totally gung-ho about the product, getting the cash together for a purchase that represents a mid to large scale capital investment can be incredibly difficult. It’s tough to save and it’s tougher to borrow given that the choices range from family/friends, banks who probably won’t give you the time of day or loan sharks. Some of you might be thinking “But what about microfinance?” Purchases eligible for microloans typically are those that will make the borrower money, but NOT those that would save them money. [Note: Recognizing these limitations, many microfinance institutions are now trying to find ways to boost access to appropriate technology through microfinance initiatives.]
To enable sales to these BOP clients, innovative and sometimes old school financing methods are necessary. The suggestion made in the article about companies helping customers finance purchases such that payments roughly coincide with when operational savings are experienced is a really important one here.
A nice example of this idea in practice with renewable energy systems in the US is the work of … You pay them the difference between your electricity bill in previous years and your bill after the system is installed.