Low customer activity rates have been a persistent challenge across the mobile money industry. As of June 2012, industry-wide active rates stood at 22%. The question every operator is asking: How can one increase customer activity and therefore mobile money ARPUs?
One way to think about this question is asking how to maximize the value of every customer interaction. Perhaps the most important interaction is the point of registration. Here is where a customer learns about the service, identifies how it might fill a specific need, and draws first impressions.
Customers who have a positive experience at the point of registration – perhaps a sales agent who took time to thoroughly explain the service – might be encouraged to transact on that same day. Does this extra effort to encourage a transaction on the day of registration pay off? Let’s look at data from one anonymous operator.
ARPU numbers are net of agent commissions.
This data reveals a stark difference in future activity between customers that transact at the point of registration and those that do not. Customers who transact at the point of registration are more likely to be future active customers (26% more likely) and produce significantly higher mobile money ARPU (95% higher) as those that walk away after registering without transacting.
Why is this so? Consider a customer that walks away without transacting. Perhaps after a few months they have forgotten how to access the service, or even more likely, can’t remember their PIN. Suddenly there is a barrier to usage that did not exist at the point of registration. It should be no surprise that 30% of these customers are lost and never transact. [i]
There is a saying in the insurance industry that “insurance is sold not bought.” Might the same be true of mobile money – that the “push” of the sales and education process at the point of registration is a key determinant of whether a customer adopts the service along with pure customer “pull.”
How can operators increase the likelihood that a customer transacts at the point of registration? Here are some ideas to consider:
1) Place incentives on customer activity, not just registration: The mobile money sales force – whether agents or foot soldiers – should have strong incentives to register customers that might actually use the service. With proper incentives, the sales force will take more care with each customer interaction.
2) Train agents how to educate and convince customers, not just the mechanics of transacting: If agents are involved with registrations, they should be thoroughly trained on providing a quality registration and customer education experience.
3) Experiment with promotions at the point of registration: Operators might consider adding incentives for agents and/or customers to encourage customers to transact at the point of registration, to strike while the iron is hot. For example, customers can receive a bonus contingent on same-day usage.
Do any readers have other ideas for getting customers hooked on mobile money at registration? Let us know in the comments or at firstname.lastname@example.org
[i] It should be noted that there is also a selection bias at play here. Customers with more inherent need for mobile money are more likely to transact at registration. Those same customers are more likely to become more active later.
Tukashaba Saul says:
This is very true Plilip,
From experience, I have found out that subscribers registered by operators’ business centre staff are more active than registrations done by field agents (foot soldiers). This is because field agents aim at maximizing registration commission by registering as many customers as possible (including those with no real need for the service) leaving them with little time to educate customers. Secondly, most field registration agents do not have float to handle customer transactions that would want to try the service immediately after registration.