LAS VEGAS -- In the business of serving emerging markets, the scenario is certainly not "build it and they will come."
In the session Untapped: Creating Value in Underserved Markets at the CUNA America's Credit Union Conference & Expo, John Weiser explained that with a bit of research and creativity, serving underserved markets can be profitable.
Take credit union competitor Citibank for example. Citibank wanted to get in on the potential income of all the wire remittance services used by immigrants by offering low-cost service, Weiser said. "So what does Citibank do? The created an account special to these folks." The account includes all online and ATM services so it is low-cost to the bank as well.
To start with though they had a hard time attracting customers so they went out in the community and worked with churches and community organizations and other places that the immigrants already trusted to help boost usage.
It took a while for the product to catch on, but three years later Citibank's account has 170,000 users and they are adding about 8,000 more each month, according to Weiser.
Cemex, one of Mexico's largest cement manufacturers, had a similar story of adding onto their services, only this time it was survival. The company was hard hit by the currency devaluation in the mid-1990s, but instead of throwing in the towel they spread it out. They began marketing directly to consumers, which helped, but wasn't enough.
What they found was that customers were building cement block homes and they were using "tanda"--an informal money pooling plan--to save for these long-term projects. So Cemex began Patrimonio Hoy Clubs where everyone pays in $14 a week for 70 weeks and participants get consultations and inspections by Cemex architects, scheduled deliveries of materials beyond cement, fixed pricing for materials, and social support.
Weiser noted five success factors for building relationships in underserved
1. Mine and translate local market information.
2. Adapt business model to community realities.
3. Change internal incentives and challenge cultural assumptions.
4. Create partnerships and strategic alliances.
5. Improve the enabling environment.
"You have to understand the people. You have to speak their language,"