More energy, by word of mouth

Harish Hande says he does not advertise his solar energy products. His company does not have a marketing department. The word just gets around about his company's solar lanterns, panels, water heaters or ‘cookers'. Which is how they are readily bought and used by more than 1.2 lakh rural poor households in foresty Malnad and north Karnataka. Those who go out to buy them are mostly farm labour, semi- and unskilled workers, agarbathi rollers, basket weavers and migrants. They did it on monthly salaries of around Rs 1,500 and on easy bank loans.

Dr Hande, US-educated IITian who won last year's Magsaysay award for his 17-year-old social enterprise, Solar Electric Light Company (SELCO), emphatically says, “We normally do not 'sell' our products - in the classical sense. Ninety per cent of the people who install our systems buy them because of word of mouth. We would not like to sell if we think it does not make sense for the end-user. ”

The PDS kerosene they used did not cost much then but SELCO convinced them about the quality of life that light would bring: “We told them, ‘If you have four more hours of light, you could make another basket and earn extra to pay back the loan',” says Prasanta Biswal, SELCO's Senior Manager (Mission). Finance options and EMIs were customised.

To sell its reliable, affordable and environmentally sustainable energy services in non-urban settings, SELCO, he says, does not have a conventional marketing budget. Sales are always driven by word of mouth and through partners such as banks that finance the buyer and service providers or ‘associates' - postman, teacher, and headman.

At one stage they used wall paintings and rural buses to get the message across. “One would not see billboards or paper advertisements of SELCO. One would see some wall paintings in rural areas. We do participate in rural fairs and customer meets. Our marketing budget is less than 0.1 per cent (of the turnover).

The products cost between Rs 6,000 and Rs 12,000 and it takes 30-45 days to close a transaction. “We really do not want to dip into the non-expendable part of the end-user's income. We really want to cater to the need and not the want.”

At around 15,000 households a year, with a turnover poised for Rs 16 crore next year, the SELCO story goes far beyond the 8-10 per cent growth rate in the last three years.

Navi Radjou, Jaideep Prabhu and Simone Ahuja talk about the improvised market approach in their piece for Harvard Business Review :

“While the Indian government is still deliberating on how to effectively deliver electricity to the 600 million Indians who live off the grid, Harish has already sold more than 100,000 modular solar lighting systems in the remotest regions of India. His firm SELCO employs an innovative business model that relies on a cost-effective grassroots distribution network to deliver affordable electricity on a pay-as you-go basis to underserved Indian shops, households, and schools to power their everyday socio-economic activity.

SELCO's frugal just-in-time energy distribution system — as opposed to the always-on but wasteful electricity grid — brings more value to more Indians at less cost, and it is both environmentally and economically sustainable. SELCO's business model is an outcome of the jugaad mindset.”

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