GENERATING EVIDENCE TO IMPROVE CUSTOMER PAYMENT BEHAVIOR INTERVENTIONS FOR CBS SERVICE IN HAITI
In April 2022, SOIL launched a new research project in partnership with Appleseed, a behavioral research agency, to better understand and evaluate customer payment behavior, and develop strategies on how to encourage EkoLakay household sanitation customers to regularly pay the monthly fee for the service on time. SOIL charges a monthly service fee from customers for our household toilet, weekly collection and waste treatment service, in order to contribute to operational cost recovery and establish the provision of sanitation as an essential basic service rather than a charity in Haiti. Unfortunately, establishing on-time payment behavior has been a challenge, and the EkoLakay team regularly has to apply resource-intensive tactics such as home visits to actually track down these payments and encourage customers to stay in the service.
In low-resource contexts, like the communities we serve in Haiti and where the target population for basic utility services are informal workers earning daily income, paying regularly monthly fees does not align with their other typical payment patterns. For example, other fee-for-service models might not exist, particularly in areas without water connectivity or electricity, where households are not paying a monthly bill for usage, or where mobile phones are not on a subscription service, but instead talk/text minutes are purchased from a vendor. In this context, monthly payment collection has been a long-standing issue for SOIL and through this research we want to be able to understand and determine which customers can afford to pay the service fee but might require encouragement to adapt their payment behavior, and which customers simply cannot afford the service and might require other interventions, such as additional subsidies, to retain access to safe sanitation.
SOIL’s Payment Interventions & Incentives
The EkoLakay team regularly brainstorms interventions to improve payment collection methods and therefore cost recovery and customer retention. However, the results of these interventions have previously never been thoroughly assessed in how they might have influenced the desired payment behavior. SOIL values evidence-based decision making, and therefore we were keen to use our available payment data to assess our historic performance in a way that can inform future organizational changes. Prior to the kickoff of this new research project, SOIL’s research team conducted some preliminary analyses using SOIL’s historic customer payment records to understand whether previously implemented interventions have had an effect on customer payment behavior. Interventions identified and listed chronologically are as follows:
- September 2018: SOIL increased the monthly service fee from 200 to 300 HTG ($1.75 to $2.70 USD) per month and introduced an installation fee for new customers of 1050 HTG ($9.37 USD). This was an intervention intended to improve organizational cost recovery and have customers cover (subsidized) entry fees to the service.
- January 2019: Introduction of Koupe Sèvis. Koupe Sèvis consists of pausing weekly container collection service to those customers with >3 months of accumulated debt. This was an intervention intended to give customers an opportunity to pay off their debt and stay in the service rather than canceling their service (i.e. uninstalling the toilet). If customers still did not pay their debt after Koupe Sèvis, their service was canceled.
- March 2019: Implementation of a special offer for customers to pay off one month of accumulated debt and receive a free month of service. This was an intervention intended to reduce the debt burden of our customers.
- May 2021: Increase in monthly service fee from 300 to 350 HTG ($2.70 to $3.12 USD) per month This was an intervention intended to improve organizational cost recovery. At this time, the installation fee also increased from 1050 HTG to 1500 HTG ($13.40) in an effort to minimize debt risk and improve rates of favorable payments based on the theory that those who can pay a larger lump sum up front would be more likely to be able to afford regular monthly service fees.
- June 2021: Implementation of a raffle where customers were entered to win a free month of service, and other prizes, if customers paid in advance. The number of raffle tickets a household received depended on the number of months they paid in advance. This was an intervention to promote favorable payment behavior[1].
- December 2021: Implementation of a special offer that reduced the installation fee for the month of December. This intervention aimed to motivate customers already in our system as potential customers to move forward with installation and join the service.
Using SOIL’s historic payment records the research team was able to identify average customer payment behavior before and after each intervention and run statistical tests to assess whether there was a significant change (whether positive or negative) in payment behavior associated with these various interventions.
Interesting Findings from the Payment Intervention Data
The two different times SOIL increased the monthly service fee yielded unfavorable payment behavior results. The service fee increase in September 2018 was significantly associated with an 18% decrease in favorable payment behavior while the price increase in 2021 resulted in a 4% decrease.The decrease in favorable behavior after the price increases infers that customers who could previously afford the service fee were suddenly accountable for paying more money than perhaps they could afford. It is also possible that some customers did not pay attention to notices about the service fee increase, and therefore they may have made an on-time payment of the old amount, which would not have been considered a favorable outcome as it was less than they actually owed.
Implementing the Koupe Sevis policy, increases favorable payment behavior. The introduction of Koupe Sevis (pausing weekly container collection service for customers with >3 months debt accumulation) in March 2019 was significantly associated with a 8% increase in favorable payment behavior. This data indicates that having a policy to immediately cease services once a customer accumulates debt, motivates customers to pay on time. Prior to the introduction of the Koupe Sevis policy, SOIL’s policy was to cancel the service and uninstall the toilet from the household. However, this process was often delayed due to operational logistics, and customers who had not paid remained on the service despite not paying for the service. Koupe Sevis, was logistically less resource-intensive in that collection services only needed to be paused, instead of a team member having to go to the household to uninstall service, and therefore this policy could be immediately implemented.
Special offers help, but are financially unsustainable. The two special offers that conditionally gave customers a free month of service were also significantly associated with increased favorable payment behavior, one by 23% and the other by 17%. One-off special offers help to temporarily increase favorable payment behavior beyond the special offer months, however it is unsustainable for SOIL to rely on such offers in the long run as we would be regularly giving away free months of service when we rely on that income to contribute to operational cost recovery.
The effect of increasing the installation fee is yet to be determined. The increase in the installation fee in May 2021 was significantly associated with 36% increased favorable payment behavior. However, the initiation of charging the installation fee in September 2018 was not significantly associated with a change in payment behavior; nor was the special offer that reduced the installation fee in December 2021 associated with a significant change in payment behavior. The implementation of the installation fee appears to not have an effect on favorable payment behavior, which counters the theory that customers who can afford to pay a large sum up front, can also regularly pay the monthly service fee on time. However, the results from the increase in the installation fee in May 2021 tell a very different story. It’s possible that this could indicate that the higher installation fee reached a level at which this theory applies and customers who could just barely afford to join the service before but couldn’t keep up with regularly monthly payments no longer join the service in the first place.
Image 1. Baseline data and outcome proportion of favorable payment behavior for all payment interventions.
Image 2: Baseline data and outcome proportion of favorable payment behavior for all installation fee interventions.
Where do we go from here?
SOIL’s research team is now building on these findings from our data by conducting rigorous payment behavior change research in collaboration with Appleseed. From this research, we anticipate being able to develop contextually appropriate strategies to improve favorable payment behavior and therefore customer retention in the EkoLakay service. As a component of this research, SOIL is conducting household surveys in order to obtain a more complete picture of the barriers and motivations our customers face in regularly paying on time for a service. From this, we can strategize and implement evidence-based interventions to improve our cost recovery while continuing to ensure that EkoLakay is a service that is accessible to all who want it.
The SOIL team, in collaboration with Appleseed will be working through this research over the next few months. We look forward to sharing the results, and opportunities for interventions to increase favorable payment behavior for our customers, and provide an inclusive service for resource-limited communities.
[1] Note: favorable payment behavior was defined as paying on time or in advance for a given month in the service
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