This case study supports and illustrates the theoretic factsheet "Identifying the value proposition" with practical insights.
Home delivery of safe water to the BoP or how to create a unique value proposition
Spring Health is the first of three divisions of Windhorse International, a for-profit social venture firm founded in 2008 by social innovator Paul Polak to bring low-cost and innovative products to millions of people living on less than USD 2 per day. Spring Health’s central mission is to provide “safe and affordable drinking water to one and all.” The long-term goal is to bring this service to 20,000 villages across India and reach 2 million customers. Currently Spring Health is active in rural communities in the state of Odisha, India , indicated with the red arrow in the map below. Across Odisha, including the districts with Spring Health operations, the percentage of people with access to an improved drinking water source varies dramatically between 25% and over 75% (Odisha economic Survey 2011, p. 276.). To counteract these conditions Spring Health developed a network of water kiosks, based on a micro-entrepreneur sales model to offer daily delivery of 10 litre jerry cans of safe drinking water to local households. On the one hand are the jerry cans directly delivered to people’s doorstep and on the other are people able to purchase water directly at the kiosks.
With a cost, including delivery, of 7 Indian Rupees (USD 0.1) Spring Health’s 10 liter jerry cans are 15 times cheaper per volume than the cheapest brands of bottled water available. Today the social enterprise serves more than 280 villages, reaching out to over 150,000 people. To reach 2 million BoP customers there is still a way to go, but how did Spring Health manage to offer an attractive value proposition that people are willing to pay for?
When Spring Health initiated its water selling business, many potential customers were sceptical about the product. Reasons for this scepsis were that the brand was not recognized, there was no certification and no trust in place. In order to create its unique value proposition Spring Health had to identify the pains of the villagers associated with collecting and consuming unsafe water. A first entry point for selling safe water was the fact that in India waterborne diseases are widely spread, causing child mortality, income gaps and significant medical expenses. When customers drink safe water, their risk of falling sick declines and significantly reduces medical expenditures over time, as revealed by an internal Spring Health survey. Many of Spring Health’s customers are day labourers or independent workers for whom a sick day is not a paid day but a direct loss of income. Thus by providing safe water, Spring Health is indirectly supporting to increase their income over the year due to reduced medical expenditures and fewer sick days. To be able to address these pains and potential gains, these findings were directly included in Spring Health’s awareness raising campaigns. Once Spring Health linked these pains with the gains of Spring Health’s provided drinking water, customers were convinced more rapidly to purchase as they realised what the effect of drinking safe water has in their lives.
Over time the management team at Spring Health noticed that women collecting water from near-by wells would spend an average hour of their day simply to collect water. Spring Health thus experimented with distributing water to the customers’ doorstep, as demonstrated in the picture above. The delivery service became very popular. As the extra cost of delivery for the customer outweigh the daily one-hour cost for collection. By today more than 80% of safe water sales are through delivery, making the brand more and more known as trucks increase brand visibility by driving around. The additional value proposition of saving time allows Spring Health not only to reach more and more customers, it allows also to have increased margins to capture the value and help the company on its path to become a viable business.
Lessons learnt from Spring Health
- Clearly identifying what your value proposition has to address can take time. A company needs to invest time and resources in order to identify how a good product can shape its unique value proposition.
- By increasing the value proposition with the aspects of convenience and aspiration of home delivered safe drinking water, Spring Health had the chance to significantly increase its customer base and increase its margins.
- Communicating your findings on how to overcome pains and what gains your product is proposing are key in order to convince and reach more customers. Spring Health included their findings directly in their social marketing activities.
Recommendations for replicating Spring Health’s initiative
- Clearly identifying the pains of your customers and link it to your value proposition makes it much more likely to increase market penetration and sales.
- Investing resources to identify your unique value proposition pays off, as willingness to pay of customers is higher and allows a company to raise higher margins over time.
- Identify why people are purchasing your product and invest in communicating on it.