Entry Points
An MFI’s interest in SPM will depend on their goals and the circumstances in which they work. There are many entry points to SPM:
1. Desire to improve overall social performance or social responsibility
For example, the executive management team of Agroinvest (Serbia and Montenegro) had always addressed social issues. But they decided to make their social performance efforts more systematic. So they carried out a comprehensive mission review to see how they could do more to alleviate poverty, especially for children. Read more about mission reviews here>
2. Concern over mission drift
By using a new poverty assessment tool (Grameen Foundation’s Progress out of Poverty Index – PPI), Negros Women for Tomorrow Foundation (NWTF) (Philippines) found that they were not serving as many poor clients as they thought. So they changed some operational procedures to ensure they reached out to poor clients in the communities they serve. Read more about strengthening information systems here>
3. Concern for lost and dissatisfied clients
Cordial (Argentina) became interested in SPM because they wanted to understand why clients were leaving. By making a few small changes in response to a simple exit study, they were able to improve client retention. At the same time, they raised staff awareness of the value of SPM and the need to treat clients fairly. Researching clients’ exit can tell you a lot about how well you are treating or serving your clients. Read more about client service issues here>
4. Need to understand and better serve clients’ needs
Meeting your clients’ needs is one of the major tenets of SPM. It is, in part, a market research or customer service issue. But it goes beyond that. Understanding clients will ensure that you can make strategic decisions about how to meet their needs through your range of products and services, or linkages you make with other organisations. For example, Enda (Tunisia) recently applied the MFC’s Quality Audit Tool to better align its mission with its clients. As a result, Enda restructured many of its programmes and services to be more inclusive, by offering smaller loans and easier access. Read more about product design here>
5. Desire to expand outreach
The President of EDPYME Confianza (Peru) worked with Freedom from Hunger (FFH) and executive management staff to expand outreach to rural, poor women, reinforcing its original mission focus. To do so, they needed a typical business solution – i.e. developing a new product and appropriate procedures for their clients. But it also took time to convince staff that this new focus would not divert Confianza away from another important goal: self-sufficiency.
If you want to expand outreach to poor clients:
- Offer attractive products, with low initial loan sizes and low transaction costs, linked to character or group guarantees rather than collateral guarantees.
- Avoid referring to clients as ‘poor’; consider creating more positive terms of reference.
- Consider using a poverty assessment tool to regularly monitor impact and adjust programmes as needed.
If you want to expand outreach to women:
- Recognise that women have different needs and constraints.
- Conduct research to find out how best to address these needs and constraints, and market your products to them.
- Consider targeting female-dominated sectors, such as textiles, crafts, and food production and services.
6. Desire to establish a market niche
Some MFIs undertake SPM in order to differentiate themselves, or to build client loyalty, within the marketplace. AMK, in Cambodia, has chosen to stay focused on rural clients while its competitors target urban and peri-urban areas. Whilst this is not the only reason (or even one of the main reasons) for this decision, AMK does see its market position as an advantage.
7. Need to prove social performance to donors and investors
Many donors and social investors require MFIs to demonstrate their social outcomes. Additionally, more and more MFIs are reporting on their social performance to the MiX.