A successful salesman in Cambodia, let’s call him Mr. Bun, had a problem: The owner of his favorite noodle shop would not buy his improved cookstove, even though the new stove would burn less fuel and reduce unhealthful smoke. “I don’t have the money to buy it” was the justification the owner gave, though Mr. Bun suspected that the owner was concerned the stove might not work.
“No problem,” Mr. Bun replied. “Take the stove for a free trial. My two sons and I will come for noodles each morning. Noodles cost you less than the stove saves you each day. That way you can use the money you save on fuel to pay for the stove over time.
Mr. Bun’s “noodle contract” meant the noodle shop owner could get the efficient stove cheap. In addition, he could quit providing the free breakfasts if the stove broke.
The problems this noodle contract solved—lack of funds, uncertainty about product quality, and concerns about durability—apply to many new products, not just cookstoves. But getting more cookstoves into the hands of more cooks is imperative. The World Health Organization estimates that smoke from unsafe stoves kills a million or more children a year in developing countries. In addition, the low efficiency of traditional stoves’ mean they worsen poverty, deforestation, and global climate change.
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With my colleagues in Uganda, I have been testing a novel sales offer that shares the advantages of Mr. Bun’s noodle contract: a free trial, time payments, and the right to return the stove if it does not work. With this sales offer, the customer pays all or most of the cost of the new stove with money she has already saved on fuel—removing almost all risk in trying and keeping an improved cookstove. We have run two randomized trials of the novel offer with the charcoal-burning Ugastove in Kampala, Uganda, stoves that retail for $7-$11.
Among the 355 potential customers who received the novel offer, 47 percent accepted the free trial. And among those customers, only 2 percent returned the stove. While some moved away or defaulted, we received over 97 percent of scheduled payments. We also found that the offer increased sales about twice as much as offering just the free trial or just time payments plus the right to return.
These results apply only to one model of cookstove in one city. But they suggest that more flexible sales offers can greatly speed the adoption of efficient cookstoves. More generally, it is likely that a similar sales offer combining a free trial, time payments, and a guarantee can help speed the adoption of long-lasting goods ranging from solar lights and water filters to sewing machines and irrigation pumps.
But much remains to be learned about how to apply the new offer to safer stoves. Our next step is to market the Ugastove through community groups, to reduce the cost of collecting payments and increase the rate of sales. This summer we will be testing sales through some of BRAC-Uganda’s network of 150,000 women organized into microfinance groups. (Pilot tests at a handful or groups conducted in March 2011 were positive.)
Then we must find an offer that works with different types of stoves and learn how to motivate salespeople to provide the new sales offer. If we can disseminate the new stoves at scale, we face the most important challenge: determining how well self-proclaimed “improved” stoves reduce the terrible health and environmental problems associated with traditional cookstoves.
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Read more stories by David I. Levine.