DESIGNING E-MONEY PRODUCTS THAT MEETS CUSTOMER NEEDS

Transcription

1 DESIGNING E-MONEY PRODUCTS THAT MEETS CUSTOMER NEEDS What you already know about your customer What you could know about your customer RAMANATHAN SUBRAMANIAN TECHNICAL ANALYST PFIP March 20 th 2012

2 Flow Of Content Mobile Money Omnibus Survey Findings Why Should FSP s /MNOs Adopt a Customer Centric Approach Need To Connect Customer s Profile Segmenting, Targeting and Positioning (STP) What Drives Customer Behavior And Choices Psychology of Customers Who Is My Target Customer and How Do I Communicate That I am Different Awareness Interest Desire Action Approach Below The Line Marketing Strategies To Achieve Scale Bank Integration How can Utility Cos and Others reduce Collections Costs? 2

3 Mobile Money Omnibus Survey Objective Analyze the factors that prevent people from using MM services Inform PFIP and stakeholders on how to overcome subscriber reluctance Methodology 1020 Households Suva, Nasinu, Lami and Nausori in the East, and Nadi, Lautoka and Ba in the Western parts of Fiji Stratified sampling proportionate representation from ethnic, age and gender Types of Analysis Conducted Comparison of Demographic Profiles of Users and Prospects Limiting Factors Factors that prevent people from using the service Motivating Factors Factors that will persuade them to subscribe or use the service more 3

4 Gap between Awareness and Action Need for appropriate STP strategies as people relate to products differently based on their age, gender and location F I N D I N G S Major source of awareness is Television 67% of the MM Prospects (716) are in the income range of 0 to FJD$20,000 MM is a Money Transfer Product I don t have relatives to send money, so I don t need It 43% cite Convenience and 37% cite Saves Time as the biggest advantage of using MM 4

5 I prefer cash over MM 80%, I trust MM less than 50% MM is not expensive 40% Are agents at Western Division, providing better service, well located than Grater Suva? Yes F I N D I N G S I need to know how it works 31% rank training at community centers as critical Below the Line Marketing I don t need it, not interested, waste of time -- 33% of MM Prospects (716) I don t have the information and knowledge to use or subscribe for it etc. 32% How does it benefit me? Show it, I will use it! 37% ranked information as persuading factor to use MM more Niche Marketing and Targeting is critical for success MM cannot be sold as a Mass Market product 5

6 Where Is the Omnibus Leading Us? Straightjacket approach that fits all segments not effective Understand the behavioral variance across consumer segments and adopt a customer centric approach STP strategy is critical as MM cannot be sold as a Mass Market product unlike airtime Understand what drives customer behavior and choices Differentiate the product lines and target messages Active customer usage and retention is possible through positive demonstration effects by BTL Marketing 6

7 Growth Behavioral Variance Across Consumer Segments Historical Demand Pre-Paid Schemes Single SIM Phones One SIM/phone per household Emerging Demand Post-Paid Schemes Smart Phones Touch Phones Multiple Phones/SIMs Per H.H Commodity Price Positioning Premium Example of Behavioral Variance - Two kinds of migrant workers with significantly different preferences: one higher-income group that cares primarily about speed and convenience (willing to pay for it) and a lower-income group that cares about price (and will sacrifice speed and convenience). In this situation, two groups with the same need have different preferences, which calls for sub-segmentation. Source: IBM Institute For Business Value 7

8 Why should FSP s Adopt a Customer Centric Approach? Classic mass market is diminished but still pursued Hunting for cheapest product is still a popular sport Commodity end On the Premium end -- consumers are willing to pay for convenience and good service Consumers grow older, earn more their expectations change leading to further division of customer segments Segmentation and focus on customer preferences is the reality as customer profile evolves! 8

9 Need To Connect To Customer s Profile Segmentation -- Identify the Pros and Cons of the existing services that customers use as alternatives to MM and follow the four steps in segmentation Targeting -- Identify the target groups of customers likely to use the service by aligning the customer needs to the benefits of MM Positioning -- Selecting a target market helps operators communicate effectively with consumers and position the service based on their preferences. 9

10 Evaluate Alternatives Money Transfer Paying Bills Storing Money or Making Payments to Merchants Remittance Cos Paying Online Easy to Pay By Cash from Wallet Bus Cos House Maid or Security making bulk payment for the entire Apartment Building Money in M-wallet doesn t earn any interest Post Offices Prefer Standing in Queue Time taken Away from Work Airtime Transfer Facility Cash is accepted in all stores Time taken for M transactions is too long in comparison to cash Friends and Family carrying Cash 10

11 All Client Segments Cannot Be Satisfied! Different customer segments have different needs and preferences, it is impossible to market MM that addresses everyone equally well First Step Identify segment of clients for your biggest revenue earner (Money Transfer Services) Second Step Identify the motivations behind those making money transfers like parents, migrants, traders, employers Third Step Offer products that meet customer preferences, and motivates them to choose the MM product features Fourth Step -- it is important to consider attitudes and perception towards trust, advice, risk, etc. 11

12 Fourth Step of Segmentation Understanding What Drives Customer Behavior And Choices Tendency to defer choice is greater when the difference in attractiveness among alternatives is small than large (paying utility bills standing in queue Vs. MM) Behave more impulsively when outcomes of decisions will be realized in near future than distant future Willing to accept a dramatically smaller immediate payoff rather than waiting for a larger later payoff Examples Want Vs. Need dilemma for shoppers we buy ice cream, chocolates, (want items first) and vegetables, groceries (should) items later 12

13 Wants Purchase Now Time Online Grocery Shoppers Need Purchase Later Longer the delay between placing an order and delivery, the less he spends and the greater % of it is allotted for healthier items than for junk In Fiji, this could apply to spending on want items such as Kava, cigarettes and grog and deferring payments on need or should items such as school fees for a later date Research:- Katherine Milkman, Wharton, Hold the Vegetables: How 'Now vs. Later' Affects Customer Choice 13

14 Principal cognitive bias that prevent consumers from using MM is Status Quo Bias Tendency for people to stick with their prior choices Powerful influence of default options People feel safer when they follow others examples Change is expensive transitions costs influence people to follow non-productive conventions, behaviors Examples standing in line and paying utility bills, using family and friends for money transfer, paying wages by cash involving lots of paperwork Source: David De Meza, Financial Capability: A Behavioral Economics Perspective, Prepared for FSA 14

15 Successful Example To Overcome Status Quo Bias 1) Analyzed Pros and Cons of Existing Alternatives 2) Identified the segment which offers the biggest revenue earning potential for the product 3) Identified the Biggest Pain Point for the customer 4) Offered First One Product That Met Core Preference of Customer 5) Communicated The Core Benefit To Target Audience 15

16 Who Is My Target Customer? Criteria for selecting a target market includes Existing penetration of airtime in the market Expected volume of transactions per product line in MM Compare current alternatives to the different product lines in MM (acute pain points that MM can solve) Possibilities of integrating this target group to a bank account Is this potential target group comprised of early adopters? 16

17 How Am I Different From Others? Positioning -- Lays foundation for a successful marketing campaign Strategy Define the main benefit of the FSP/MNO Focus on the Customer s preferences Single primary benefit is promoted based on the customer s emphasis on convenience, security, speed etc Single benefit is easy to identify and associate with the brand than promoting multiple benefits Horses For Courses -- Different positioning statements for different customer groups based on their preferences Do not promote all product lines and benefits in one message 17

18 How Do I Communicate That I am Different? Adopt AIDA Approach for each product line Communicate clearly the user benefit that aligns with customer s preference Be specific about the benefit and target audience Brand the service, it should also fit with Core brand Don t talk before you can service Partner with agents in the client locations Ensure agents are trained and informed about the product Ensure there is adequate liquidity with agents for withdrawals Lead customers towards taking action and/or purchase Attract the attention of the customer Convince customers that they want and desire the product or service and that it will satisfy their needs Raise customer interest by focusing on and demonstrating advantages and benefits 18

19 How Do I Bring Cultural Shift From Physical Cash To E-Money? Below The Line Marketing Barefoot Agents Promotions SMS Effective for behavior change Ensure sales pitch is prepared by the FSP/MNO Pay facilitators based on registrations and active usage Incentivize customer usage Bill Pay Use promotions for products types where Status Quo Bias is maximum Incentives work best for Repeat customers than first-time customers Effective Retention tool Deliver targeted messages based on customer data and transaction history 19

20 Strategies for Reaching Scale -- Target Aggregators Small Cos / Factories paying wages Monetary exchange between farmers, middlemen, traders, exporters for goods Government transferring monthly payments to staff (salaries), regular vendor contracts Increase the basket of Payment services that can be made through phone Courts, Utilities, Taxes, etc. Integration with Bank Account is critical for sustained client MM usage and retention 20

21 Example of Integration With Bank Account Nationwide Microbank 97,700 clients Push and Pull directly from bank account No Virtual Wallet, so customers earn interest Tangible benefit to customers Focused on Below the Line Marketing to drive home benefits (Feet on Street Agents) Widened both the Basket of services and Transaction Points by targeting agents at concentration areas closer to Target Segments 21

22 Why Should Utility Cos, Hire Purchase Cos, Courts and Others Sign Up With MNOs? Existing Bill Payment Method Printing Costs Postage Costs Staff Time and Costs (Service Centers) for receiving payments Cost of reconciling the book of accounts SMS cost SMS cost Bill Payment Through MM Report in 24 hours is sent by MNO on customers paid Can be reconciled with no marginal cost as customer due report and collection report is reconciled on a daily basis by the system 22

23 Concluding Thoughts MM cannot be sold as a Mass Market Product Choose target segment based on volume of transactions not size of customer base Market MM s primary benefit that aligns with customer preferences Active customer usage and retention is possible through positive demonstration effects by BTL Marketing Bank integration with MNOs is critical for achieving scale in the long run Create a ecosystem of retail network partners, utility service providers, banks, MNOs and clients for e-payments and MM products to flourish 23

24 VINAKA VAKA LEVU! 24