Globally mobile money operations has relayed heavily on Mobile Money agents to extend their distribution network and reach. In June 2013, there were 886K mobile money agents. Despite the rapid growth rate, 48% of these agents were inactive. Looking at the data from the State of the Industry report, an agent should be performing at least 10 transactions a day, and the most successful perform 60-70 transactions on average a day. If agents fall below 10 transactions a day on average, what tactics should operators apply to activate agents through incentives?
This post will highlight three types of commissions and incentives that could be introduced and fine-tuned to increase the role of agents to activate the user base.
(1) Review the basic transaction commissions:
Industry benchmarks provide us some insight on appropriate commission levels to drive activation. Based on the state of the industry report, the median percentage of transaction revenue paid to the channel is 50%. That means that most operators, at a minimum, split their earnings with the channel. Anything less than this and agents risk struggling to earn enough to make the business case work. Without a clear vision of the business case, agents become inactive and eventually become a drain on operator resources.
For example, Econet Zimbabwe sacrificed short-term profits in the launch of Ecocash to build a strong distribution network, paying their agents 80% of the earnings. As a result, the agent incentives allowed Econet to race to 2.3 million subscribers in 18 months. An additional consideration to paying out commissions is also ensuring the agent is aware of the value of the business. Providing the agent with a regular report of transactions or an agent portal/enterprise solution gives the agent a greater ability to manage their business and track their earnings from offering mobile money.
(2) Introduce agent campaigns & target-based rewards:
Campaigns may last for a limited time or be an annual event to encourage agents to reach a target that higher than their existing performance level. One example is an operator who, for a period of three months, set specific P2P transaction growth targets for their agents. Any successful agents received a voucher and insurance coverage, and the highest performer won a motorbike. Another operator runs an annual event for “agent of the year” as a means to distinguish high performer.
Lastly, we have seen operators implement a tiered-base system to differentiate top performers. As agents reach a certain level of performance, measured in absolute terms or in percentage growth, they advance to a higher-tiered segment. Top-tiered agents gets access to more support, attention, and promotional material than those in the lower tiers. Not only does the tiered based system encourage agents with greater support, it also allows the operators to monitor and evaluate the overall health of the agent network.
While these tactics can drive activation and create much needed buzz for the mobile money product, they must complement and align with building strong operational foundations. The reason for that is there is a risk that agents will only focus on their targets during the duration of the campaign, and forget targets when the campaign ends. Or, potentially will engage in fraudulent transactions to boost their numbers. Without a strong operational strategy in place, an operator may struggle to see long-term impact from activation campaigns. To sustain longer-term growth, operators need to ensure their campaign is part of an overall distribution strategy that focuses on supporting the training and development of the agent base. Successful operators have found that campaigns can be a trigger to help tip a market and we have seen agent creating their own promotional material, targeting new segments in their neighbourhood.
(3) Usage based customer activation commissions:
Traditionally, agents get a flat fee for signing up new customers. The shortcoming with this approach is that it often leads to a large portion of inactive customers. If a customer makes his or her first transaction at sign up, that customer is 49% likely to become an active customer, compared to 39% if he or she does not transact on registration. To drive customer activation, many operators have added a commission when the customer performs his or her first transaction after account verification. One tactic that has been used in East Africa is to pay agents only after the customer transacts. To receive $1 commission, the agent must register, verify and encourage the customer to transact 5 times in a six-month period. This delayed type of agent incentive programme aims to compensate the agent for time spent educating the customer.
There are many incentives to boost agent performance; however, the foundation of a good agent network also includes training, managing, and a good recruitment process. While these are a few tactics that we have seen work to increase agent activation, this list is not exhaustive. As the industry works to increase the number of active agents, we invite you to share below about tactics that have worked in your market.