Key Success Factors for ICT4D Solutions for Base of the Pyramid Consumers

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Over the past decade, many organizations have leveraged newly available broadband to set up sustainable projects that better include the base of the pyramid (BOP) in economic value chains as clients, producers, or employees.
 As a result, the Inter-American Development Bank (IDB) decided to commission a study to analyze the impact of broadband across value chains on the BOP.

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The Broadband Effect: Enhancing Market-based Solutions for the Base of the Pyramid draws on on Hystra’s Leveraging ICT for the Base of the Pyramid report, to identify and analyze 368 projects that provide financial, educational, agriculture, and health services to
the BOP via ICT. Two-thirds of these projects use data connectivity and/or broadband, while the last third are only voice- and SMS-based.
The report draws lessons from in-depth analysis of eight case studies in health, education, financial services, and agriculture in Mexico, India, Kenya, and for one project, in over 30 countries.
The case studies are representative of the market- based approaches in the three above-mentioned business models (direct-to-consumer, local agent and optimized internal process), which share some key success factors in terms of the design and delivery of a successful and affordable value proposition to their BOP clients.
Key Success Factors of Each Model

  • Pre-testing.
    First, the models offer a tested, comprehensive, and fully reliable value proposition to their users. Before commercial launch, these businesses test all aspects of their service with end-users to ensure that the service is fully reliable from day one and to holistically answer their client’s concerns.
  • Use of technology.
    Second, the models leverage technology to continuously improve services for end-users by standardizing processes, while constantly monitoring inputs and outputs and systematically acting on feedbacks.
  • Adaptation to infrastructure.
    Finally, the business models adapt the service to the available broadband infrastructure. Where high-speed broadband is available, these businesses upgrade their technologies and processes to take advantage of it. Yet many projects have to make do with data connectivity at low speed when broadband is not available or too expensive. Businesses that fundamentally need broadband but cannot access it either build their own infrastructure or get a third party to bear connectivity costs.

 
Model-specific Success Factors

  • Direct-to-consumer.
    Under the direct-to-consumer model, successful businesses get endorsements from well-known brands and leverage mass marketing (e.g., TV spots or large-scale SMS campaigns) to reach a sufficient number
of prospective consumers at acceptable costs. For optimal distribution, they adapt their service to broadband devices with the highest penetration rate. As these are rarely smartphones, this limits the extent of their service (and hence the price they can charge for it). In order to scale sustainably, this in turn forces the businesses to create services that can be easily transferred to other areas (e.g., with the same language) and leverage large existing client bases (e.g., from existing network operators), regardless of the sector in which those clients work.
  • Local agent.
    Under the local agent model, successful businesses leverage their network of intermediary agents, often chosen via recommendations from within the communities, to establish customers’ trust. In terms of distribution, such business models achieve success provided they build a dense enough network of trusted and performing agents, which requires building a highly attractive value proposition for the agents that ensures they earn attractive revenue. In order to sustainably scale their agent network, these businesses further need to find smart investment strategies to limit the technology costs per agent (e.g., by sharing costs with the agents themselves or with other organizations).
  • Optimized Internal Process.
    Businesses using the optimized internal processes model often offer a service in a completely new way for end-users, thanks to data-connectivity and broadband (e.g., private schools with connected teachers, or tele-medicine in low-income neighborhoods that have rarely seen a computer before). In terms of marketing, these businesses need to create trust via proximity marketing, quality certifications, and top-notch after-sales service. As capital-intensive businesses, optimized internal processes projects need to invest frugally and rely on modular growth in order to scale sustainably.