Multilevel customer segmentation for off-grid solar in developing countries: Evidence from solar home systems in Rwanda and Kenya

Off-grid solar systems have a number of advantages in developing countries, but they rely on the capacity of private entrepreneurs to develop a reliable customer base and methods for recruiting these customers. This study uses data from 68,600 customers of BBOXX, a London-based off-grid solar power company, to classify customers and explore the demographic and recruitment factors associated with customer behavior. We compare a non-parametric clustering method for customer segmentation with linear models of customer behavior. The results show a number of important demographic and geographic factors that influence recruitment of the company's core customers, and demonstrates how linear models can be misleading. For example, women and those recruited by agent advertising or word-of-mouth are more likely in the company's core clientele, even though the linear models suggest that they may be less profitable customers.