While bringing new women into Solar Sister’s network is critical for reaching more people with clean energy, we know that our goals for impact and sustainability cannot be achieved without existing entrepreneurs growing their businesses.
In March and April 2018, our Nigeria team tested different types of incentives to assess effective means for encouraging sales growth, and to evaluate how such incentives can boost returns on investment for Solar Sister.
Solar Sister rolled out three different kinds of incentives to regions in Nigeria (three regions per incentive). The incentives were communicated through local meetings, an SMS campaign, phone calls and by word of mouth. Incentives piloted included:
- Phone Credit — If an entrepreneur reached a certain sales level, they received phone credit directly to their mobile device (over 1 month).
- Cookstoves — If an entrepreneur reached a certain sales level, they received a clean cookstove (over 2 months).
- Solar TV — The entrepreneur with the top sales from each region received a solar TV (over 2 months).
Incentivizing
All three incentives catalyzed individual entrepreneur growth, with the Solar TV producing the highest average growth (456%). Entrepreneurs in regions with incentives grew their average monthly sales during the testing period. It is important to note that baseline sales of entrepreneurs who won the Solar TV were double that of other entrepreneurs, indicating that this incentive attracted already high performing entrepreneurs.
Calculating returns
Return on Investment (ROI) is calculated by comparing the costs of running each incentive (including marketing) to the additional profit generated by that incentive. The Social Return on Investment (SROI) is calculated the same way but looks at changes to entrepreneur income during that period. Phone credits produced the highest ROI and SROI, followed by cookstoves. While the Solar TV produced the highest growth rates in sales during the incentive period, it actually had the lowest Return on Investment. That is primarily because the costs of the Solar TV were more than 4 times higher as the other incentives tested.
In conclusion, data shows that incentives are very strong tools in encouraging business growth among women entrepreneurs. However, lower cost incentives tied to meeting sales thresholds offer the highest return on investment. Prizes for top entrepreneurs can lead to huge gains in growth but costs of those individual prizes need to be lowered in the future to maximize the overall return on investment.
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Last Mile Learning is a monthly blog series by Grants and Impact Manager, Abby Mackey. The series shares Solar Sister’s experiences, data and learning from our work with women-run renewable energy businesses in Nigeria, Tanzania and Uganda.