How and why businesses in the Safe Water 2 programme do their monitoring.
In the Safe Water 2 programme, we are mapping lessons learned from local businesses selling household water treatment and safe storage products and services to lower-income communities in India, Nepal, Cambodia, Guinea Conakry and Pakistan. These lessons learned will feed into an online “Toolbox” for entrepreneurs and NGOs/Government that are active in the safe water sector. And one specific topic we are looking at is how businesses monitor their sales activities, what type of data they are collecting and why, with the aim to map the best data records and impact of their activities on communities for example benefits on health or economy of their consumers.
Monitoring can help businesses throughout the whole business development, from managing sales and marketing strategies, to improving the business model, attracting investors and scaling up. The businesses sell different products and services and are applying distinct business models. As they operate in different environments it is difficult to draw general conclusions about their monitoring efforts. Most businesses sell household water treatment products like ceramic water filters or liquid chlorine; others, however, are selling purified drinking water in jerrycans delivered to the doorstep of the customers.
The businesses in the Safe Water 2 programme are at different monitoring stages. Some have only collected basic baseline information about their customers, water quality in the target area and the number of products they sell. This data was used to develop the businesses' sales strategies. To improve their business model and fine-tune their sales strategy, some businesses collect information about the performance of their retailers, the actual use of the product and the water quality at the point of use. Finally, there are some businesses (such as water filter producer Hydrologic in Cambodia) that aim to estimate the impact of the use of the product on the customer's health and economic situation. This is required to tap into external revenue streams such as carbon finance and impact investments.
At every monitoring and evaluation (M&E) stage, additional data is being collected. This comes with extra costs for data collection such as software, staff time, equipment (i.e. smart phones and tablets), water quality tests, transportation, etc. The businesses also use various methods to collect data, ranging from paper-based registries to mobile-based data collection. A sales tracking system that, preferably, integrates real-time data in an online platform is aspired by most businesses to steer management and directly address problems. But such a system is expensive. Hydrologic is the only business that is currently using this kind of system (TaroWorks). This system helps sales agents to process sales data via tablets, and management can access this data real-time on an online platform. Spring Health and TARA are piloting similar platforms.
Costs and benefits
The costs of the various M&E methods are difficult to compare, as the businesses are selling different products and services, in very different contexts. MinErgy – selling water filter devices in Nepal – is for instance spending about 200- 400 USD per year on M&E. This includes buying coliform tests, transport, lab analysis, but excludes staff time. Whereas Hydrologic annually spends over 25,000 USD plus 0.5 full-time equivalent (FTE) staff time on data collection and monitoring. This budget includes household surveys to collect data on the impact of their product, and allows them to generate about half a million USD through carbon finance each year (excluding 15% costs for carbon consultant services).
It can also be interesting for Safe Water Entrepreneurs to attract impact investors to generate extra revenue to grow their business. Impact investments are investments made into companies, organisations, and funds with the intention to generate measurable social and environmental impact alongside a financial return (GIIN). These impact investors can be banks, pension funds, insurance companies, NGOs, family foundations, government investors, development finance institutions, etc. Well-known impact investors include for instance funds and banks such as Grassroots Business Fund, Acumen and Root Capital.
To attract these investors, the entrepreneurs do need to show that their business is generating measurable social and/or environmental impact. Collecting data on a regular basis is therefore essential, for the so-called due-diligence of businesses. It is difficult to say what kind of data impact investors want to see, because this depends on the investor’s profile and intentions. The IRIS catalogue gives an overview of performance indicators that leading impact investors use to measure social, environmental, and financial success. This catalogue, hosted by Global Impact Investors Network (GIIN), can also be filtered for specific topics such as water. It also includes several user profiles. A practical guideline called Getting Started with IRIS is available online.
In the Safe Water 2 programme, IRC is – together with partners - mapping lessons learned from safe water businesses involved in the programme. Read more about programme experiences in this earlier blog.