BCG: STRATEGY CUP HNI STRATEGY

Indian School of Business (ISB) The Pathbreakers

Rishikesh Gajendra +91 9769768372 Rishikesh_Gajendra2015@isb.edu

Pandarinath Illinda +91 8688046499 Pandarinath_Illinda2015@isb.edu

Rishikesh Gajendra

ACADEMIC QUALIFICATIONS

PGP CANDIDATE, ISB

B.E. (HONS.) ELECTRICAL AND ELECTRONICS AND

MSC. (HONS.) MATHEMATICS, BITS- PILANI

PROFESSIONAL EXPERIENCE (3 YEARS)

ANALYST - INVESTMENT BANKING, J.P. MORGAN

Pandarinath Illinda

ACADEMIC QUALIFICATIONS

PGP CANDIDATE, ISB

B.E. (HONS.) MECHANICAL, BITS- PILANI

PROFESSIONAL EXPERIENCE (5 YEARS)

SENIOR ANALYST EMINENCE GROUP, DELOITTE

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DIVERSITY IN FUNCTIONAL KNOWLEDGE, EXPERIENCE WORKING WITH NGOS AND COMPLEMENTARY STRENGTHS LEAD TO A WELL BALANCED TEAM

Diversity in functional knowledge

Rishikeshs experience in investment banking and Pandarinaths work in Strategy and Policy lead to a healthy balance of analytical ability and strategic thinking

Pandarinath has also worked in supply chain risk analysis, lending an operational bent of mind to the team

Experience working with NGOs

Rishikesh was a founding team member of Samhita Social Ventures. He was awarded the E4SI fellowship for outstanding contribution in the social sector

Pandarinath has been an Ambassador for United Way and worked for children related causes

Complementary strengths

Rishikesh has a creative outlook, acting as the idea generator in the team

Pandarinath brings systematic method to the team. With an eye for detail, he builds a structured approach to solving problems

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EXECUTIVE SUMMARY

There are an estimated 300,000 HNI (salary greater than $42,000 (INR 25 lac)) with a cumulative giving potential of $2.0bn

o Based on the market sizing and number of HNIs, the average HNI donates $6900 (INR 4 lac) and belongs to the silver category of donors in The Leadership Club

o The ideal HNI profile is that of a first/second generation entrepreneur or highly accomplished professionals in banking, consulting, private equity etc.

To be successful in the long term, we recommend a 5-pronged strategy focused on Recruit a dedicated HNI engagement team; Develop a strong pipeline of donors; Enhance the benefits package of Leadership Club; Create sub-groups called The caring nuclei and Engage donors via gamification techniques

o Recruit a dedicated HNI engagement team HNIs require dedicated efforts for acquisition and retention; SC can recruit a fund-raising manager from a leading non profit who can drive these efforts with the support of an engagement team

o Develop a strong pipeline of donors SC needs to develop a strong pipeline of donors through existing HNI references and endorsements and apply a modified assessment framework to measure HNI interest

o Enhance benefits package of Leadership Club Convert Leadership club from a recognition platform to an engagement platform. SC needs to revamp its existing benefits structure and strengthen the value proposition to high value donors; Additional benefits include an advisory board, annual summits and granting of naming rights

o Create sub-groups called The caring nuclei Create cause based sub-groups called The caring nuclei, and enable strong social bonding to increase active participation

o Engage donors via gamification techniques Create a Points, Badges and Leaderboard based gamification for The caring nuclei and design a web interface and mobile app that incentivizes participation

SC CURRENTLY FACES CHALLENGES IN ESTIMATING HNI MARKET SIZE AND IN TARGETING, ATTRACTING AND ENGAGING DONORS

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Estimate: Market size and profile of HNIs

Capability: To work with the HNIs on a sustained basis; adequate involvement of Operations team

Donor Retention: Retain donors for long term sustainability

Estimated Market of

HNIs HNI

engagement team

Health Protection Disaster

relief

Evaluate HNI interest using

proposed framework and identify target

individuals

Re-engage with marketing material

focusing on appreciation for past donations

New HNIs

Existing/Past HNIs

Present enhanced benefits package

Create a tightly knit community of cause-based sub

groups

Education

Elements of the solution Challenges

Assess: Interest of potential donors in donating to Save the Children

3.5% of income:

$2.7bn

Target HNIs

with age >50:

$77.7bn

Total income of HNIs:

$155.4bn

75% to children:

$2.0bn

The target HNIs consist of those with

age greater > 50 years

Also, the Analysis assumes normal

distribution of ages with mean = 50 years

and std dev.= 7.5 years

Segmentation as per Households with income greater than $42.6k (INR

25 lac)1

Analysis assumes that 3.5% of the income of HNIs could

be donated

75% donations are to children related causes

2.0 2.3 2.9

3.7

5.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2013 2014 2015 2016 2017

Market potential ($bn)1

0.3 0.4

0.6

0.9

1.4

0.0

0.5

1.0

1.5

2013 2014 2015 2016 2017

Number of HNIs (mn)2

CAGR = 25%

CAGR = 48%

Additional assumptions

Inherited wealth is not included in the market sizing increases aggregate income

The HNIs with their own trust are to be excluded - decreases aggregate income

The net effect of the above two factors is to cancel each other

Households wealth is the same as individual wealth

Majority of the estimated 0.3m HNIs reside in Delhi / Mumbai

In the last 5-10 years, an increasing number of younger technology professionals in Bangalore and Hyderabad are involved in giving

The ideal profile of an HNI can be:

First or second generation entrepreneurs

Highly accomplished individuals in the private equity/investment banking/consulting professions

Key considerations

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THE MARKET SIZE OF HNIS DONATING TO CHILDREN-RELATED CAUSES IS $2.0BN AS OF 2013 AND WILL GROW AT A STAGGERING CAGR OF 25% FROM 2013-2017

Source: 1,2Linearly interpolated data from the Economist Intelligence Unit data,1980-2030

Average potential donation per household is INR 4 lac

Key assumptions

1 SC can recruit an HNI engagement manager and team and the operations manager will closely work with HNIs on implementation aspects

CEO

HNI manager

Operations manager

HNI Engagement team

Operations team

HNIs

SC can recruit the fund-raising manager of a large non-profit to lead the HNI engagement efforts

The HNI Manager will lead a dedicated team that will coordinate HNI engagement activities

The Operations manager will work with the HNIs on mobilizing the ground activities decided by the caring nuclei sub-groups

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RECRUIT A DEDICATED HNI ENGAGEMENT TEAM AND DEVELOP A STRONG PIPELINE OF DONORS TO TARGET WITH MARKETING MATERIAL HIGHLIGHTING DONOR IMPACT

Reporting relationship

Working relationship

2 SC needs to assess potential donor engagement, build a strong pipeline and present marketing material highlighting donor impact

Develop and work through a dynamic wishlist of potential donors

Approach existing donors for referrals/endorsements when targeting HNIs

Modified prioritization: For all HNIs who score 3 on Life stage parameter

Assess response based on the one-to-one introductory meeting and feedback on marketing material

SC can target the younger HNIs to develop the future pipeline of donors

Score Characteristics

3 Highly interested, is passionate about the cause, follow up activities discussed and scheduled

2 Interested and positive about follow-up activities

1 Not interested, is passionate about other causes or affiliated with other organizations or neither

Marketing and Media SC can revamp its marketing collateral to include the impact of HNIs and

highlight pictures of HNIs in action SC can tie-up with media partners via HNI donors who work in the media

sector for active coverage of SC events and activities

5 SC can use gamification to engage and incentivize sub-groups by introducing a PBL system and a mobile app/web interface

Introduce a Points, Badges and Leaderboard system to benchmark sub-groups and update website and include latest standings in SC Publications and assessment reports

Create a web-interface and mobile app that records donor contributions and involvement to unlock further levels

4 SC can form cause based sub-groups - The caring nuclei and facilitate strong social interaction to build a tightly-knit community

Each Caring nucleus to have 10 HNIs and pledge to donate a fixed amount i.e. for example Platinum donors would donate INR 10 lac per person per year - corpus amount of INR 1 crore

Brand each sub-group as a distinct team i.e. provide unique name/slogan

Facilitate group visits to site, encourage HNIs to bring their family along

Follow a collective voting system on key issues such as application of funds

Dedicated disaster relief nuclei responsible for mobilizing resources during emergencies

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ENHANCE THE BENEFITS PACKAGE, FORM CARING NUCLEI SUB-GROUPS AND SUSTAIN ENGAGEMENT VIA GAMIFICATION TECHNIQUES

Platinum/Gold club members

Protection nuclei

Health nuclei

Education nuclei

Disaster relief nuclei

3 SC needs to provide exclusive benefits to gold/platinum donors and expand benefits package for other donors of the Leadership club

Advisory board

All Platinum donors to join an advisory board that overseas Leadership Club activities On a rolling basis, 2-3 HNIs may join the governing board

City-based Annual summit

All Platinum and Gold donors to be invited to a city-based annual summit, with panels on innovative solutions to social causes Engage donors in causes by having on-the-spot pledging Media coverage and social profiling of the top city donors

Other Benefits Bronze Silver Gold Platinum

Donor chronicles - marketing pitch-book

Naming rights to NGO initiatives

Donor database access

Bi-annual recognition

CREATE AN ACTION PLAN, ASSIGN DESIGNATED OWNERS AND WORK TOWARDS IMPLEMENTATION WITHIN THE TIMEFRAMES WITH CONSTANT EVALUATION

ACTION OWNER TIME FRAME METRICS/EVALUATION

CEO 0-3 months N/A Recruit a HNI engagement manager Reach out to personal network, recommendations of

past donors and advice from governing board

1

HNI engagement manager

3-6 months Ongoing

Number of potential HNIs identified

Develop a strong pipeline of donors Apply modified prioritization framework and present

marketing collateral

2

HNI Engagement manager

Immediately after HNI manager recruitment

Number of HNIs and donation value ($)

Enhance the benefits package to HNIs Review proposed benefits and include further industry

best practices

4

HNI Engagement manager

< 2 weeks after donor buy-in

Number of caring nuclei formed

Form cause-based sub groups Caring nuclei Work with donors and identify best fit with cause

3

Operations manager

1-4 months Gamification metrics web/app usage

Apply gamification techniques to incentivize HNIs Hold competitions in engineering colleges for app

design

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POTENTIAL RISKS TO THE 5-PRONGED STRATEGY

Lack of coordination between HNI Engagement Manager , HNIs and Operations manager Lack of precedent in Save the Children India

Subjectivity in assessing HNI interest in prioritization framework Appeal of gamification techniques to all age groups