Using Deposits and Commissions to Boost Latrine Sales
LESSON LEARNED: Deposits are beneficial in securing sales and closing the orders vs. deliveries gap.
In the beginning of the project, customers would often place an order, but request sales agents come back several months later after harvest for delivery and final payment. This made it very difficult for the business to manage production and commission for sales agents. To solve this problem, the project encouraged all Latrine Business Owners (LBOs) to request deposits of $2.50-$10 from customers. This has helped close the order to delivery gap.
Deposits both solidify a sale (making it more likely that the customer will pay upon delivery) and motivate sales agents to hold more meetings (since collecting deposits means they get paid their commission immediately).
Most sales agents use a basic deposit system:
- Following a sales presentation, the village chief writes down the names of customers who want to buy a latrine, using a group order form instead of individual order forms.
- The village chief signs everyone up and also informs customers that they need to pay a nonrefundable $2.50 USD (minimum) deposit on the spot. It seems to be working very well to have the village chief introduce this deposit payment to villagers.
- Villagers then go home to get their down payment, which the village chief collects and gives to the sales agent.
- Sales agents are generally paid $2.50 USD per latrine delivered by the LBOs, although some LBOs have increased the commission to further motivate sales agents.
Deposits keep sales agents motivated because they allow for instant payment of their commission immediately following a meeting. If the customer cancels the order, the sales agent still keeps the deposit money (the village chief explains this when customers order). This motivates sales agents to keep selling–they do not have to wait for delayed deliveries or payments. Sales agents, of their own volition, also pay the village chief a portion of the deposit after the latrine has been delivered. The village chief and LBOs remain motivated to deliver the latrine to the end user, because neither of them get paid until the latrine is actually delivered and the customer has paid in full.