projecteverest

Experiment adopted

[Experiment Adopted]: Loan Structures Fiji December 2018

by
Rose Martin
Rose Martin | 6 months ago | in Fiji - Social Consulting

Lean Phase: Solution

Assumption: Rocket stove loan customers prefer a loan structure with the following attributes:

  • Prepayments available
  • Fixed interest rate
  • Individual loan
  • 4 weeks
  • Weekly repayments

Time Box: 1 week.

Success Metric:

We are measuring what percentage of this segment prefers the above loan structure.

The assumption above will be validated if rocket stove loan customers preference the above five attributes over the others mentioned in the research above.

The rocket stove loan customers (past or present) will choose between alternatives from the following attributes (for more information on defining these attributes, please see this document - https://docs.google.com/document/d/1oARwz2Med...t?usp=sharing);

  1. Prepayment available
  2. Rate of interest
  3. Individual vs. collective
  4. Frequency of repayments
  5. Time period of loan

This survey will be undertaken with at least 30 people in this segment.

Green Light- Green light if segment is found to preference the above loan structure comprised of all attributes. If so, proceed to testing whether this structure can reduce the risk of default.

Success point - Success if 50% of segment preferences this loan structure.

Orange Light- Iterate experiment by adding additional attributes available for surveying, or expanding on current attributes.

Failure Point - Failure if 20% or less of segment preferences this loan structure.

Red Light- If failure point is reached, it must be identified which loan structure attributes are preferred by this segment.

Experiment build:

  1. Build survey. The survey must include questions for each attribute, asking the consumer to choose which attribute they would prefer if they were to take out a loan for a rocket stove. Survey must be built in accordance to data collection methodologies found on crowdicity.
  2. Set up meetings in surrounding Sigatoka villages for this customer segment. To do this, we can utilise the contact database already created by the fuel team for sales.
  3. Prepare meeting script.
  4. Survey 30 rocket stove loan customers.
  5. Collate data and determine if the experiment is at success or failure point before proceeding.
Tagged users
edited on 19th October 2018, 00:10 by Rose Martin

Andrew Vild 6 months ago

Status label added: Experiment adopted

Reply 0

Caleb Bernard 5 months ago

Good, easy experiment. One suggestion I have is to include a third option “No Preference”. It might provide more insight into what is important to the customers.

Reply 1

Rose Martin 5 months ago

Yep that's a great idea will definitely add it!

Reply 0

Alexander Teicher 4 months ago

Hey Rose, Im interested as to the reasoning behind choosing 4 weeks as the time period. Was this indicated over July as a preference or does it suit us best for project months etc.

Could the failure point also lead to assessing the risk profile of the most popular loan? Im not sure if it would be better to have us suggest a loan to reduce the profile or let customers decide their preference and hope that that reduces risk, so would be interesting to look into both.

Wondering if there are any results on this so far??

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Reply 1

Rose Martin 4 months ago

The 4 weeks was chosen based on survey's completed by Ineke's july team from surveys done with your team on sales made for buka stoves in July. This was the preference for those customers, however it is stated as a hypothesis here because we didn't make enough sales with the micro-loan to make this assumption for sure from July.

But if I think we're on the same page about what you mean by risk profile, yes I'd like to assess the 'risk', so to speak, of the loan structure picked as most popular. I guess my assumption here is that the most popular loan WOULD intuitively reduce the risk of default, because why would people choose a loan structure that was hard to pay back, you know? Like for example, if it was difficult to pay in 4 weeks, it wouldn't make sense for them to preference this. But this is complete intuition and may not prove correct as you say, so if the most popular loan structure proves to have high default rates, we may have to look into other structures so you're definitely right there.

I'm not actually in country running this now so can't speak on results, but I'm sure the teams will be posting them in the coming weeks as projects for December come to a close :)

Reply 1

Alexander Teicher 4 months ago

I like it I like it a lot. I just wonder if theres something like a false economy in terms of their loan preference and whether the data will reveal a counter-intuitive result in terms of risk profiles. Depending on education levels etc the perceived easiest repayment might not be the most beneficial for both the lender and the borrower.

Ill keep an eye out for the results, love your work Rose

Reply 0

Rose Martin 4 months ago

Yeh this is a good point I haven't really thought of. I guess the biggest test will be the correlation between default rates and most popular chosen, which will probably tell us whether there is some type of mis-education around finance which is possible. If this is the case we might have to iterate on structure.

Love your brain teich

xxx

Reply 2

Alexander Teicher 4 months ago

Super keen to see the results from you next month <3

Reply 2

Rose Martin 4 months ago

come back to fiji we can sell stoves together :):):):):):)

Reply 1

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