Market Research Competitive Positioning, Customer Satisfaction Final Presentation October 28, 2013 Benjamin Shell, Glaphyra Guillaume FINCA Haiti Agenda Market research objectives and scope Methodology and timeline Analysis overview IL market + mystery shopping findings VB market findings recommendations for future research, lessons learned List of related documents provided Objectives and Scope Main Objectives Understand the most important factors for the target market in deciding to become FINCA clients Understand the most important factors for clients in deciding to remain FINCA clients Measuring current customer satisfaction with the major aspects of the loan process/client journey Understand comparative perceptions of FINCA and its main competitors Scope Focus on IL clients, include VB, all branches, representative sample Mainly qualitative study, non-statistically significant sample size Timeline Jul 17: Kick-off Jul 19: Presentation and approval of research proposal Jul 22 Aug 7: Guide preparation, researcher selection, scheduling Aug 7 8: Researcher training Aug 9: FGD test in Delmas Aug 12:interview testing in Croix des Bouquets Aug 13 20: Croix des Bouquets, Delmas research Sept 2 6:Cap Haitien research Sept 9 13:Les Cayes research Sept 16 20: Jacmel research Oct 14 27:Analysis Oct 28: Final presentation of research findings Research Team Benjamin Shell (external consultant) led the team, designed the study, wrote the guides, and analyzed the results Glaphyra Guillaume provided close support and input into all aspects of the study, logistics, translation and coaching and monitoring of researchers Daphnee Voltaire facilitated FGDs in all branches and provided logistics support and coaching in Croix des Bouquets and Delmas Benjamin led and participated in Delmas, C. des B. research; Glaphyra led research in other 3 branches Branch staff performed participant recruitment, led researchers to participants, organized FGDs, organized lodging for head office team Research Sample Segmentation Research participants chosen from the following groups: IL clients further segmented by loan size (< or 150k) Attempted to further segment VB clients by location (urban, semi-urban) but did not work ~85% of VB sample, ~60% of IL sample = women FGDs contained only existing FINCA clients Former clients (non-write-offs) - Last loan payment made between Dec April 2013 New clients (made at least 1 repayment) Repeat clients (2 nd or 3 rd loan) Research Sample Plan and Performance PlanPerformance % Individual Interviews % FGDs9 FGDs 100% Mystery Shopping504284% Branch Interviews23939% Research Sample Plan and Performance IL Plan Actual Former clients New clients Repeat clients FemMaleTotal =150k FGDs-25 =150k FGDs TOTAL Research Sample Plan and Performance VB Former clients New clients Repeat clients FemMaleTotal Urban Semi- urban FGDs-20 28-- Plan Actual Urban Semi- urban FGDs TOTAL Research Sample Plan and Performance Other Plan Actual Branch manager Loan supervisors Loan officers Interviews599 Branch manager Loan supervisors Loan officers Interviews-9- Notes on Research Execution Methodology During first week of interviews (CDB + Delmas branches), HQ team accompanied researchers to monitor and coach. 3 of 6 researchers required constant coaching to improve and reach an acceptable level of competence All researchers interviewed both VB and IL clients despite plan to specialize Two best researchers did all mystery shopping In rural branches HQ team (only Glaphyra) did no direct monitoring but checked with LOs to confirm researchers were honest. No problems with fake interviews encountered or suspected Challenges to Participant Recruitment Despite efforts to plan ahead, HQ team had to coordinate LOs, with assistance from supervisors, on first day of research at each branch and beginning of each day thereafter Since branches assign large IL clients to one loan officer - generally the most experienced one - that loan officer had significantly more recruitment work than other loan officers more difficult to get target # of large IL clients In some branches, internal control was also present and visiting clients at the same time difficult for branch staff, clients Former clients were very difficult to get (apparently one popular reason for dropping out was too many visits from FINCA staff) Notes on Participant Recruitment In every branch, details of preparatory conversations and instructions with branch managers / loan supervisors did not get passed down to loan officers Many loan officers were not ready to provide the right clients in an efficient manner The less properly prepared the loan officers were, the more significant was the time burden on loan officers made dedicated trips to introduce researchers to 1-2 clients Well-prepared loan officers typically took 1-2 dedicated hours to provide 6 research participants Branches often did not divide recruitment work evenly among loan officers Notes on Participant Recruitment VB interviews were most efficiently organized around the time and place of group meetings IL interviews had to be organized one by one (took more time from IL loan officers) Because of these problems and limited time spent by research team in rural branches, actual sample size was significantly lower than target (77%) Methodology Lessons Learned Ideal IL interview organization: 1-2 researchers go with IL officer to area of high concentration of clients; LO shows researcher(s) location of 5-8 clients each, briefly introduces researcher, then leaves Ideal VB interview organization: 2 researchers go with VB loan officers to area where VB group meeting(s) taking place where other clients are also located; LO introduces researcher(s) to clients in area, researchers also interview VB group members after group meeting During a well-organized day, researcher could do 6-7 IL interviews, 8-10 VB interviews, or 4-6 interviews and 3 mystery shopping trips Budget Plan and Performance Budget (HTG)Actual (HTG) Training, FGD refreshments 11,8004,610 Researchers60,000 Inter-city travel15,00023,600 Hotel150,000114,178 Per diem + transport allowance 68,10459,900 TOTAL304,904262,288 ~USD 6,000 Notes on Limitations to Research Of 6 researchers: One had 3 years of experience and was very good immediately Three required 2-3 days of practice to become good Two required 4 days of practice to become acceptable Results from Croix des Bouquets (first branch) can be considered less complete clients provided less information than they might otherwise have done with more skilled researchers; Some participants had not made a repayment yet Analysis Overview Main parameters Desire to get another loan Likelihood of recommending FINCA to others Experience with competitors, if any Qualitative summary of positive and negative comments about FINCA, competitors (with special section just about experience in branches) Rating for parts of the loan process (easy, normal, difficult) for FINCA and competitors Advice for FINCA Notes on Limitations to Analysis *Important* Analysis does not provide exact numbers or percentages on purpose, but is meant to show orders of magnitude, comparisons and trends Reason: Research was qualitative; research sample was not rigorously representative, recruitment was not randomized, and sample sizes were not statistically significant. Notes on Limitations to Analysis Some commentary on competitors have very low n (some 3- 5) Data parameters not analyzed: Age Business type How clients heard about FINCA, where they generally get information about loans Group qualitative summaries of commentary into broader categories Testing assumptions of branch staff Reason: lack of time, resources Overall Research Findings 245 IL respondents 132 VB respondents Overall Finding #1: Clients likely to recommend FINCA to others; VB report higher satisfaction than IL What is likelihood that you will recommend FINCA Haiti to friends or family who are looking for a loan? Do you plan to apply for another loan from FINCA Haiti in the future? Loan process: VB clients report higher satisfaction, especially with monitoring and recovery Satisfied Dissatisfied Neutral Top positive and negative comments about FINCA Positive comments made about FINCA Negative comments made about FINCA Overall Finding #2: Men seem slightly more interest rate sensitive Satisfied Dissatisfied Neutral Women and Men equally likely to report wanting another loan, as well as recommend FINCA to others, no difference in VB vs. IL Overall Finding #3: New clients report slightly higher satisfaction than repeat clients (IL & VB) What is likelihood that you will recommend FINCA Haiti to friends or family who are looking for a loan? Do you plan to apply for another loan from FINCA Haiti in the future? Overall Finding #4: IL Clients report more competitor borrowing experience than VB New IL clients have just as much borrowing experience as repeat IL clients Repeat VB clients report more experience than new VB clients (but very few reported another loan currently outstanding) Suggests more experienced VB clients prefer to stay with FINCA Overall Finding #5: VB clients with more competitor experience report being more satisfied; IL clients with more competitor experience report being less satisfied Whether a client had borrowing experience or not, and how many different competitors they had experience with, did not affect satisfaction level VB Clients IL Clients IL Clients Get another loan? Recommend FINCA? Overall Finding #6: FINCA doing best at repayment and monitoring; struggling with pricing and recovery Satisfied Dissatisfied Neutral ID (6) and Capital Bank (4) were other most common competitors Sample Size: FINCA (372), ACME (42), MCN (23), Sogesol (34), Fonkoze (19) MCN most expensive, followed by FINCA Competitor commentary analysis Positive thingsNegative things ACME MCN Competitor commentary analysis Positive thingsNegative things Sogesol Fonkoze Overall Finding #7: A significant number of clients reported currently have another loan outstanding 32 of 385 (8%) new and repeat clients reported currently having another loan outstanding (5% of VB clients, 11% of IL clients) IL Market Research Findings Surveys 165 new clients 78 repeat clients 2 former clients 245 total clients 5 FGDs 42 mystery shopping trips 6 branch staff interviews Review of Research Sample About half of customers had experience with competitors, almost all with IL loans IL Finding #1: Clients most attracted to FINCA by interest rate Why did you decide to become a FINCA borrower? IL Finding #1: comparative dissatisfaction with analysis, pricing and recovery correlate with perception that client will not get another loan Satisfied Dissatisfied Neutral Positive things about FINCA Negative things about FINCA IL Finding #2: Repeat clients not satisfied with analysis, pricing and recovery Recovery new client N = 27 Recovery repeat client N = 27 Satisfied Dissatisfied Neutral Aspects / stages of the loan process Negative things about FINCA Repeat clients seem to be less interest rate- sensitive, but more dissatisfied with fees, loan analysis and monitoring visits IL Finding #3: Similar reported overall satisfaction of large IL clients and small IL clients What is likelihood that you will recommend FINCA Haiti to friends or family who are looking for a loan? Do you plan to apply for another loan from FINCA Haiti in the future? But large IL clients less satisfied with pricing, recovery than small IL clients Satisfied Dissatisfied Neutral IL Finding #4: SogeSol seems the competitor to beat Satisfied Dissatisfied Neutral ACME is better in pricing, but difficult monitoring and recovery MCN is seen as having bad pricing (like FINCA) and monitoring, best recovery SogeSol (winner?) is seen as having best pricing, better analysis NOTE: results are clients own reported perceptions, not checked against reality IL Former Client Analysis Sample size: 2 former clients in Jacmel (both had loans