FIP 012: Selling High Price Products to Rural Farmers with Mirik Castro
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In this episode, we join Mirik in Northern Tanzania as he talks us through their strategy of selling relatively expensive biogas products to poor rural farmers in East Africa. Mirik has been working in business since 2005, working to turn businesses around that were not surviving the globalization of commerce. When his brother approached him with a new biogas product he had invented, the two brothers entered into business together. Simgas offers affordable, high-quality biogas systems for household use.
Some of the things you’ll learn on this podcast include:
- Why they decided to launch in East Africa rather than South East Asia.
- Why they moved from a very centralized approach to one that is hyper local, with hub managers installing biogas systems in a 10km radius, with a heavy reliance on IT to monitor quality.
- How they’ve productized the construction installation into a product installation
- How they’ve standardized 30 distinct steps of installation, and each step is documented and stored in a database for diagnosing problems in the system later down the line.
- How this installation monitoring system is linked to employee incentives for high quality installations.
- Some of the indicators that told them their highly centalized model wasn’t working, and the steps they took to confirm their intuition that a hyper local model was the better way.
- Reasons why a hyper local model is actually relatively cheap compared to the centralized version.
- How, on the downside, a higher volume of stock is required for a hyper local model, meaning a more capital intensive model.
- How trust in the company and affordability of the product have surfaced as the two key requirements for success
- Who their ideal salespeople are in the community, to reinforce the trust aspect.
- Who their customer is, in terms of status in the community, what motivates them, what their average monthly income is, and other characteristics.
- Why traditional MFIs, who are used to selling a higher volume of lower value products, are not the ideal organizations to sell higher value products to rural populations.
- How they’re solving their working capital finance challenges and the partners they’re working with to raise $150k increments relatively quickly.
- How they expand into a new community, who they strike partnerships with, who they target as their first customers, and how they quickly ramp up to many many more sales in each country until each hub becomes profitable.
- What part of his job over the last few years Mirik would happily giveaway.
We delve into the different leadership roles of Managing Director, COO and CEO and how they work together.
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