Product design
You should avoid the temptation to create a new product for the sake of it, or replicate a product that worked well somewhere else, without getting input from clients or field staff. Donors and support organisations often come in with their own ‘new idea’ for a product or high-tech delivery mechanism (e.g. use of SMART cards, etc.).
Before developing new products, consider how it aligns with your social objectives. You could conduct customer surveys to ensure that the product will be attractive to your target clients. Even with market research, some products fail to serve the real needs of the client. For this reason, it is important that you pilot new products before rolling out on a grand scale.
Some tips to help you apply a social lens when piloting or rolling out a new product:
1. Hire industry experts to design new product prototypes
They are more likely to be aware of the issues that arise, as well as the range of options for design and delivery features. In designing a new housing loan product in Serbia, for instance, MDF brought in mortgage experts, but staff input ensured that the design was appropriate for clients, with a lower rate and less paperwork than its business loans.
2. Prior to the pilot, clearly define criteria and evaluation intervals
These should be related to market demand, operational ease and financial feasibility. If, after a few rounds of adjusting the new product, those criteria are not met, then management must decide whether to continue with or discard the product.
3. Once a product has been successfully piloted, roll it out gradually
This includes testing how it is received in other geographic locations and with different target populations. For large, geographically dispersed MFIs, some customisation at the branch level should be allowed to accommodate local differences, as well as to create staff buy-in.
4. Collect feedback from staff and potential clients at each phase of new product development
Input from your clients is essential to improve the product’s chance of success. Collecting feedback is not, in itself, enough – you must act on it too. Remember:
- monitor the success of your products in terms of client satisfaction
- more importantly, monitor the social contribution the product makes to clients’ lives and/or livelihoods
- check that new products do not inadvertently create negative consequences.
This was the case for one MFI in Africa, which did not think through the effects of lending to fishermen from a lake with fish stocks that were nearly depleted; or another MFI in India, which inadvertently encouraged child labour by lending to certain fabric makers. Many MFIs have a policy that clearly states the activities its loans must not be used for, and this is something you may want to consider, depending on the context.