Systematic performance measurement provides a good basis for institutions to improve the design of instruments in response to client demand, as well as facilitating decisions by donors on types of interventions to improve the extent and quality of the market.
Three categories of performance measurement are relevant in BDS (see Annex II for a suggested set of indicators):
- Client impact, in terms of changes in SE performance (e.g., sales, value added, profitability), or broader social and economic impact (employment, poverty alleviation, etc.).
- Institutional performance, according to indicators of outreach, cost effectiveness, and sustainability.
- Market development , measured for example by the price and quality of services available, SE awareness, trial and repeat usage, the level of satisfaction of SEs, and the extent to which BDS providers are reaching previously underserved populations.
When doing a market assessment, it is important to consider:
- what those in small enterprises are aware of, currently want and are willing to pay for, and what might be successfully marketed to them in the future. While recognizing the difference between "perceived needs" and "real needs", appropriate weight should be given to perceived needs, relative to the more traditional expert assessment of real needs. Note also that it is difficult to determine willingness-to-pay in underdeveloped and/or distorted markets, and for services which are totally unknown locally, and that test-marketing may be more reliable than a survey;
- differences in consumer segments, for example: which types of SEs are acquiring services, and which aren’t; gender differences; differences in desired features of the services;
- informal and indigenous sources of supply;
- services bundled with other goods and services or delivered as part of business-to business relationships;
- the potential crowding out (displacement) effect of direct or subsidized provision of services by donors and governments; and
- the evolution of BDS markets over time.