Playing the behavioural game to improve financial health
In developed markets, where the postpaid subscriber reigns supreme, mobile operators are able to provide their customers with personalised offers relevant to their social demographic, and to their contextual behaviour. They can do this because they know a lot about them as they remain loyal to the provider.
But in the emerging market, the opposite is true. In regions like Africa and the developing economies of Asia, the percentage of prepaid consumers can top 90% of the subscriber base. That’s nine in ten customers completely anonymous to the mobile operator. Quite literally these customers are just a [mobile] number, says Meg Bear, SVP, Product & Engineering of Juvo.
A recent report by Strategy Analytics revealed that in some of those developing market economies, as many as 80% of the operator’s prepaid customer base will switch to another operator during the course of the year. It is quite likely that some of them hit zero credit balance, churn to a better deal, and then return. Following a good deal later in the same year when they experience zero balance again on another network. Yet that operator knows so little about them, it’s likely that they don’t even realise this is a returning customer.
A cycle of churn
The Strategy Analytics report highlights how operators are, in fact, sitting on vast amounts of untapped data about their prepaid customers. This data can be used to engage with customers and improve their experience – a gamification-style strategy to reward good behaviour and encourage loyalty.
While operators may not know names, ages, or places of employment, they have insightful data that could be put towards a more rewarding customer experience. For example, operators have access to basic payment history: how much customers top-up, how frequently, on what days, and whether there have been occasions when a customer’s balance has been left at zero for any length of time.
Data science can be used to build a real-time profile of a customer. Mobile operators are uniquely positioned to build a financial identity where previously none have existed. This profile can then be used to create value for both the operator and the consumer. Data driven engagement can be used to reduce churn, drive uptake of new services, unlock opportunities for the operator and trigger rewards for their customers.
Creating a rewarding experience
In most emerging markets, the majority of the prepaid customers are either unbanked (do not maintain any bank account) or under-banked (lack any formal financial history). Simple financial services – even very small credit loans – are closed to them. By monitoring mobile payment history in real time operators can identify ‘moments of need’ and are then in a unique position to offer help.
For example, if one customer tops up their account like clockwork every Friday, this is likely a pay-day. Operator data might also show fairly consistent usage, with a steadily decreasing balance over the week. In these instances on consistent behaviour, anomalies are powerful signals. For instance, if one week, a flurry of activity sees the balance get very close to zero on a Wednesday, the customer is certainly experiencing a ‘moment of need’, but might also be considering switching to a rival network.
An operator can leverage this data to send a text message offering a credit lifeline, allowing the individual to access text, data and calls for the next two days until the regular Friday top-up. This can be exactly the offer needed to keep that customer on the network. And the cost of the credit extension is recouped from the next top-up. Over time, through these patterns of borrowing and payback, that customer begins to demonstrate creditworthiness. This creditworthiness allows operators to better tailor rewards or access to new services building.
As a result, because that customer was helped at ‘a moment of need’ and now has access to new services, they are much less likely to churn to another provider. Instead, they will stay with their current provider in order to gain more rewards and access new services.
Building financial health
This gamified and personalised approach to customer experience gives operators the opportunity to drive a new prepaid business model based on lifetime value and behaviour as opposed to the short-termism of simply replacing churning subscribers. What’s more, using gamification to sustain and reward good payback behaviour creates a financial profile for the individual that can be used to help bring vast numbers of the prepaid population into the formal financial economy.
It’s potentially life-changing for emerging market economy subscribers to be able to demonstrate their credit re-payment reliability. The habit of repayment ultimately helps drive not only financial inclusion but also financial health. This is the ultimate win/win whilst the prepaid subscriber builds a financial identity — operators get more loyal, engaged and active customers and ultimately more value from their prepaid customers.
The author of this blog is Meg Bear, SVP, Product & Engineering of Juvo