# **4.4 Customer Service and Marketing**

As with all private sector operators, customer service and marketing play an important role in the operations of SPSPs (see Table 8). The literature often indicates a preference among consumers for SPSP services, which they perceived (at the time of study) to be more accessible and reliable (delivered water on demand) than the formal utility, even when more expensive. As their services are tailored to specific niche markets, SPSPs are therefore more responsive to customer demand. They also offer terms that are more appropriate to their customers. Many do not require proof of legal residence, such as title deeds or rental agreements, in order to provide services and some offer credit facilities and flexible payment terms for connections and monthly tariffs. As most SPSPs operate on a small scale and in peri-urban rural and remote locations where people tend to know each other, customer service and relations are a priority and many business transactions take place on a trust basis, with credit arrangements being provided to some clients.

**Table 8. Customer Service and Marketing Arrangements for SPSPs**

|**Water **|**Electricity**|
|---|---|
|•<br>**PNOs’**billing and collection practices are often<br>similar to those of other utilities: monthly accounts on<br>the basis of fixed charges or meter readings. However<br>many small PNOs offer personalized services, tailoring<br>payment schedules to individual requirements or<br>extending<br>credit<br>facilities.<br>These<br>specialized<br>arrangements also cover other costs such as connection<br>or membership fees, which may be paid over extended<br>periods of up to 24 months.<br>•<br>Most<br>**point**<br>**source**<br>systems<br>and<br>**mobile**<br>**distributors**charge on a volumetric basis at the point<br>of sale— per jerrican, tanker load or storage container.<br>The literature also revealed a wide range of payment<br>mechanisms including weekly and monthly billing<br>dependingon customerpreference.|•<br>**Grid or Networked systems**: Some SPSPs sell<br>electricity on a metered basis directly to customers and<br>charge customers on a monthly or daily basis; others<br>charge on the basis of number of light bulbs.<br>•<br>**Home Based Systems**: Maintaining good customer<br>relations is particularly important where credit or<br>leasing arrangements are offered and prompt after-sale<br>service is essential for ensuring that monthly lease fees<br>are paid.|

# **4.5 Financing**

Investment requirements vary widely depending on the nature and extent of the system installed, but access to affordable financing was a constraint for most SPSPs surveyed (see Table 9). The majority tap a combination of three sources: their own earnings and savings, loans from friends and family, and money borrowed from formal and informal lenders. Informal money lenders appear to be a key source of financing, even though monthly interest rates are often as high as 5 percent per month. Electricity SPSPs appear to have greater access to commercial sources such as micro-finance institutions and commercial and development banks— non-profit or community based SPSPs are often eligible for grant funding provided by NGOs and international donors.

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