Lean Data in Action: A Case Study
By Kate Reid
In my last blog I discussed how Lean Experimentation Methodology could be applied to impact measurement to help social enterprises gather more meaningful impact data. To support this discussion further, let’s look at a case study to see lean data in action.
Solar Now is a Ugandan based energy company with a goal to light one of Africa’s most under-electrified regions. Just 5% of Ugandans are connected to the national grid, and those who aren’t make due with expensive or dangerous solutions such as Kerosene. Even those who are connected to the national grid experience consistent brownouts or blackouts. The electricity problem comes with a wide array of challenges such as: lack of awareness, low population density, and extremely low income (ability to pay) amongst target market consumers. Despite these issues, Solar Now believes they can successfully bring electricity to these rural areas through their innovations in solar technology and know-how gathered by the company’s CEO (who comes from a microfinance background).
Unlike other pre-established solar companies who concentrate on small solar devices like lanterns or small home systems, Solar Now sells a larger system that can be upgraded over time, allowing customers to start with a few lights and mobile chargers, moving to larger appliances like fans, radios, televisions and refrigerators over time. To help customers progress with the system, Solar Now offers financing at affordable rates over extensive periods of 18-24 months. The company has sold systems to more than 8,500 households to date, but despite this success, Solar Now desired greater quality data about their customers. As their business strategy relies heavily on word of mouth, better data on who was buying systems (and their experience with the systems), would allow Solar Now to provide more appropriate loans and services that could both increase their customer base and their impact on the social issue they hope to solve.
Implementing a Lean Data Approach
In partnership with Acumen, whose Lean Data Initiative invests patient capital in businesses whose products and services are enabling the poor to transform their lives, Solar Now instituted a Lean Data approach to impact measurement. Acumen decided, based on the nature of distribution of Solar Now’s customers, to use a phone center to conduct customer profiling, impact, and satisfaction interviews. The company’s field staff had regular interaction with customers to collect loan payments, but Acumen aimed to separate this type of data collection from the loan collection to prevent potential bias. Separation allows customers to feel more comfortable providing any critical feedback (which they might be less likely to provide if asked by a staff member in-person).
Acumen implemented the Progress out of Poverty Index (PPI) survey to better understand customer profiles. Solar Now would be able to use these surveys to assess penetration into rural markets (the majority of these customers live in poverty) and assess the effectiveness of their financing in reaching the poorest. To assess customer satisfaction, Acumen and Solar Now created a simple customer satisfaction survey, which solicited mainly qualitative feedback about Solar Now’s systems and their customer service but also included some short questions on household energy expenditure patterns.
Solar Now already had an active call center set up to receive incoming customer service calls, so Acumen stepped in and trained the call center staff to administer the previously-mentioned surveys to a random sample of Solar Now customers. As the PPI and customer satisfaction surveys are non-complex, Lean Data was able to save on time/costs of hiring external enumerators by using the company’s existing resources/systems.
Data and Changes in Process
Over a period of two months, Solar Now collected data from over 200 customers. Data showed that 49% of Solar Now customers are likely to be living on less than $2.50 per person per day, indicating a strong reach into even the poorest rural communities. The instituted surveys also captured basic information on how customers were using their systems. Nearly all customers reported an increase in hours of available lighting, the average customer experiencing an increase of 2 hours of light per day. Additionally, the data showed that customers were replacing other, dirtier fuels, with Solar Now’s clean energy. Data showed customers moving from 6 hours of light from non Solar Now sources, to just 1 hour per day.
Customers generally reported high regard for Solar Now’s products, but some customers reported experiencing problems with faulty parts and installation (news for Solar Now). Solar Now also learned that many customers would pay extra for more and varied types of appliances. This provided feedback and confirmation for Solar Now’s management team and their strategy to further expand the company’s product line.
After their first experience with Lean Data, Solar Now has since transformed its approach to data collection on customer profiling and feedback. They now repeat the customer service surveys designed by Acumen every quarter, and intend to track progress over time across their distribution network. Using Lean Data, SolarNow will, over time, be able to collect more targeted and specific information allowing them to better serve and understand customers’ needs, track their effectiveness at serving impoverished Ugandans, and collect increasing insights into the value (impact) customers gain from the Solar Now systems.
Solar Now was not the only one to learn through their Lean Data project process. By listening to customers, Acumen learnt that some preconceptions about the social value they aimed to create through their investment required fine-tuning. Their initial theory of change for investment majored on the health effects of switching away from traditional fuels, but when customers were asked about perceptions of what was meaningful to them, these majored on cost savings and also (to Acumen’s surprise) increased security and the brightness of light. Since then Acumen has focused carefully on what it takes to ask, and hear, from customers with respect to their own interpretations of “meaningful” impact. They have found that while asking about meaningfulness requires care, when asked the right way people are consistent in how they report what is meaningful to them, and these answers are highly correlated with changes in outcome based indicators of wellbeing.
For more Lean Data case studies check out Acumen’s report: Innovations in Impact Measurement