Suyo is a Colombian social enterprise that provides property formalization services to low-income customers. Suyo’s services start with a property diagnostic that details the formalization process they must undertake to obtain a property title. Upon accepting the services detailed in the diagnostic, Suyo carries out the entire formalization process, including the legal and technical analysis, preparation of documentation and submission of claims to the corresponding government agencies. Through this process, Suyo streamlines and simplifies the complicated process of property formalization for low-income customers who would otherwise not be able to obtain a property title on their own.
This study examines Suyo’s 5 years of delivering technology-enabled property formalization services in Colombia to contribute to systems change by identifying and disseminating the best practices and lessons learned. The study focuses on sales and services execution; customer willingness and ability to pay; and government relationships and impact.
Findings from sales and services execution analysis and an analysis of government partnerships reveal that customer demand exists for property formalization services and that demand is greater when customers first understand the benefits of property formalization. The impact section shows a results chain that is based on knowledge, which leads to a change in attitude and subsequently a change in behavior – where the change in behavior is purchasing property formalization services. The study found a relationship between knowledge and a greater willingness to purchase services from Suyo, which is described in greater detail in Section III..
This study’s results demonstrated that the frequency and type of communication are important for acquiring and retaining customers. Many customers were wary of Suyo’s services, as they claimed that previous providers had stolen their money or information. The study found that this problem was greatly reduced with more frequent communication and also when the services were offered through a trusted partner that maintained constant contact with Suyo customers. An example of this partnership can be found in Suyo’s B2B2C channel, where the company works with corporate partners to offer formalization services to the partners’ low-income employees. Across 29 hypotheses tested in statistical analysis, findings show that the B2B2C channel was the most efficient route for reaching and retaining customers at a large scale.
In relation to government partners, this study found that interactions with government offices are not handled with the same urgency that Suyo or Suyo’s customers have and are often delayed. This extends the time it takes to complete the formalization process, creating distrust between all actors involved in the formalization process. Regarding the type of communication, the way information is transmitted to customers while waiting for often extended government response times is also important for retaining customer trust. This study makes recommendations for adjustments in the communication process with government allies with whom Suyo must interact to provide their services and also for customer communications to improve processes both internally and externally that will reduce the amount of time spent on each formalization case.
Overall, the analysis of government relationships and best practices for public-private partnerships (PPP) offers a principles-based framework for offering formalization services in alliance with multiple government actors. The key pillars of the framework align with findings from the study, which show that the government understands the need for data-driven processes and decision making as well as efficiency and transparency. Furthermore, most government partners interviewed were aware of certain shortcomings and stated that creating private-sector partnerships has the potential to improve public offices´ processes, thereby allowing Suyo to offer faster, improved services to customers.
For all customer acquisition channels, the WTP analysis found that customers who lived on privately owned land were 4.4 times more likely to buy formalization services than customers who were living on public or unclassified properties – an important finding which aligns with the impacts that were important to customers, such as a reduced fear of eviction and reduced conflict. The study calculated a scale of customers’ Willingness to Pay (WTP), which reveals that up to 50% of customers are willing to pay up to $2,000,000 COP (approximately $525 USD) to formalize their property and the greatest percentage of customers are willing to pay between $250,000 and $1,000,000 COP ($65 USD – $260 USD approximately). Data were also analyzed to examine customer Capacity to Pay (CTP). CTP for the average Suyo customer is approximately 11% of the average formalization price, which limits customers’ ability to pay through complete cash payments and, furthermore, signals the need for subsidies or flexible financing options. Given income and CTP, without subsidies, customers would need approximately 10 months to pay their entire service on a monthly payment plan with no interest.
For the impact analysis, stakeholders were split into three main groups and then further disaggregated by the type of service they received from Suyo and other sociodemographic characteristics. The largest stakeholder group was composed of customers that received a property diagnostic service from Suyo, but did not formalize their property. The second largest group were customers who received formalization services from Suyo, excluding Legal Deed Transfer Services. Lastly, the third group was made up of customers who received Legal Deed Transfer Services from Suyo and formalized their property. Stakeholders were divided into these three groups to examine when customers experienced impacts and through which services through the end of 2020.
The impact section seeks to illuminate both the magnitude, or the number of customers affected; and the depth, or how important the changes were to the customers that experienced them. The results show that large numbers of customers experience impacts such as greater access to public services and that they invested more in home improvement after formalizing their properties. In terms of the depth of impact, customers reported reduced conflict between family members and a greater feeling of security due to reduced risk of eviction. Of the hypothesized outcomes that were experienced by Suyo customers, most of the experienced change was positive, the outcomes were important to the customers, and customers attributed much of the experienced change to Suyo services.
Although evidence exists for the potential impacts that property formalization can have on property owners, significant gaps in the literature and available impact data still exist to fully understand the extent to which these impacts occur and how customer-facing property formalization services can drive efficiency and greater collaboration across public and private sectors for social change. Regardless, the findings in this study show how adjustments in sales and services execution may change customers´ desire to formalize, or WTP. Furthermore, the impact findings may also drive future partnerships for subsidies and innovative financial mechanisms for social enterprises seeking to provide property formalization services to low-income customers.