Know the Client!

Reading the last article for this week “From microfinance Into Microinsurance”, I actually had bad vibes. From finance to insurance, all the practitioners working in this field have a good intention—make financial service available to the poor (and make big bucks out of it). But the status quo is, lots of MFI find micro-finance not as profitable as before, then they look at each other and do a quick shift to new market—like micro-insurance. It is perfectly logical to explore a brand-new clientele given the claim that “both the insurance markets in developed countries and microfinance markets in developing countries are saturated. “

Nevertheless, have we done enough to refine the product we have? Do we create customized strategy of a new product to woo the customer we already have? The way I see the problem, within and without the article, is we do not know our client enough in the first place. It hardly occurs to many MFI that business strategy, especially marketing, plays a huge role in success.

When you check MFI profile online, 99% of the big-players in the market use joint-liability model, a prevailing model Yunus created 30 years ago. Marketing strategy is barely mentioned, and everyone reaches a forced unanimity. Otherwise, how can you justify an everlasting elixir for all such distinctly different people in India, in South Africa, and in Brazil?

The “joint-liability model” is like “Macdonald”, may work all over the world. But Macdonald provides spicy wingding in China, “Mac Veg” in India, Taco in Mexico—Macdonald has billions of sales still they do market research and make customized change. MFI should conduct more researches; create messages that work for the target market, and design training for the customer if necessary, rather than jumping around get into another market they are unfamiliar with.

I am in a Tepper student club and currently working on micro-insurance project for a MFI called “VEG”, in Ghana. Through tons of online research, talking to client and people from Ghana, we are staring to build a plausible marketing strategy. It composes of “message”, “medium”, “training”, and “budget”. If we do not reach out to survey the client, it would never occur to me after-death expense and education opportunity for children is the major concern among the target group (young mothers), and we will choose to sell credit life policy (a wrong product that does not meet the client need), instead of group life insurance policy. What I am trying to say is, a successful product is based on knowing your customer, and then you find a suitable way of selling it—which most MFI overlook.

The article talks lot about “micro insurance is the NEXT FRONTIER”,”HIGH GROWTH POTENTIAL”, just like 2006 when Muhammad Yunus won the Nobel Peace glory, thousands of hundreds of paper portrayed microfinance “the grand new future for the poor” ,”hope to transformation”.  I am deeply worried this is just the beginning of an unnecessary market shift, which many MFIs roll into micro-finance, without knowing that standing where they are, they could do much better by just knowing more about their client.


My only question is, is the marking strategy we use (“message”, “medium”, “training”, and “budget”) missing sth big? as there's no formalized pattern or tons of case study from business.