Usage Behaviors of Customers of a Mobile Money Service in West Africa


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Usage Behaviors of Customers of a Mobile Money Service in West Africa

  1. 1. Usage Behaviors of Customers of aMobile Money Service in West AfricaMay 2013
  2. 2. Summary212Objective and MethodologyMain FindingsPrimary usesClient perceptionsSegments and usage groupsAccount behaviorRecommendations3
  3. 3. Introduction3This study examines the active customer base for a mobile money service inWest Africa. The study works off the premise that mobile money providershave a rich amount of data at their disposal from their own customertransactional database. Analyzing this data can provide them with animproved understanding of customer activity in order to identify key usagesand levers for activation. This analysis is critical to turn a subscriber base intoa highly active user base.The consulting firm Sofrecom conducted this study on behalf of the CGAPTechnology & Business Model Innovation Program.This research builds off of earlier CGAP research on activation and dataanalytics.
  4. 4. Objectives of the study4 The goal of the study was to understand the usage behaviors of activecustomers of a mobile money service in a West African country in order toidentify key customer segments to: Improve communication activities Design effective customer promotional campaigns Prioritize the launch of new product offerings Organize distribution networks based on usage and corridors
  5. 5. Methodology (1/3)5Customerinterviews bytelephoneCustomer focusgroupsQualitativeanalysis ofcustomer usageQualitative analysis tounderstand the usage ofthe mobile money serviceTelephone interviews with200 customers from each ofthe 5 customer segments(1,000 total interviews)Focus groups to study andanalyze segment behaviorQuantitativeanalysis of activecustomer baseData analysis of theactive* customerbase to identifycustomer segments1This study was conducted based on the following approach:2 3 4* Active customer defined as one transaction in the last three months
  6. 6. 6 48 active customers were interviewed in 6 focus groups conducted inDecember 2012. The focus group interview guide was designed with the aim of covering theentire spectrum of customer behavior, using different techniques in order tocross-check responses. When the focus groups were too small, supplementary interviews wereconducted by telephone. The verbatim responses were analyzed segment by segment.Methodology (2/3)6
  7. 7. 7 The analysis was based on: description of each participant’s behavior comparison of usage at the time of subscription and current usage description of different usage patterns and the reasons behind them each account’s transactional activity (deposits, withdrawals, balances) comparison of individual behaviors within each segment and betweensegments In order to understand the elements that determine behavior and identify thedifferent transactional profiles, analysis was then conducted independently ofsegments on: categories of account activity (deposits, withdrawals, balances) categories of usage and behaviorsMethodology (3/3)7
  8. 8. Summary812Objective and MethodologyMain FindingsPrimary usesClient perceptionsSegments and usage groupsAccount behaviorRecommendations3
  9. 9. 1. Receivemoney (21)2. Sendmoney (10)3. Protectmoney (7)4. Send andreceive (6)5. Remotepayment(2)“It’s my olderbrother whoencouraged me;when he sendsme money, it hasto be fast.”“I was contactedby a salespersonwho explained tome that I couldmake depositsand my children,who live invarious places,could benefitfrom them.”“Once I was onmission andsomeone gaveme money, and Idid not want totravel with all themoney. Mysupervisorsuggested that Itake up thisoffer.”“I signed up forthis offer in orderto be able toreceive and sendmoney from thevillage.”“I took this offerbecause I alsoown a small oilproduction facility– I order oil andsend money tothe provinces.”5 most cited reasons for subscribing(X) represents the number of occurrences noted among the 48 focus group participants9
  10. 10. PaymentAirtime rechargeSecurityTransferThe primary usage relates to transfers10Send money (13)Send andreceive money(3)Protect againsttheft (5)Pay bills (3)Top-up(2)Shop remotely(1) Paysalaries (1)Receive money (23)(X) represents the number of occurrences noted among the 48 focus group participants
  11. 11. Perception of mobile money transfer: speed, savings, and practicality11Perceived advantages of mobile money transfersSpeed (13)More practical and faster than at the bank/post office (4)Faster and less expensive than by bus (3)Faster than at the bank (1)Less tiring and faster than by taxi (1)It takes too long at the bus station (1)It takes longer with a Money Transfer Operator (MTO) (1)Receiving money remotely from clients is faster (1)Less costly and faster than the post office (1)Savings (8)Faster and less expensive than by bus (3)I am too “small”/not wealthy enough to go to the bank (2)Less costly and faster than the post office (1)Less expensive than express mail (1)Less expensive than an MTO (1)Security (2)The mail is too risky (1)More reliable than the bus station (1)Availability (4)My boss uses a particular mobile money service (1)People have many more SIM cards from one particular mobile operator (1)There are agents everywhere (1)I have a bank account but my associates do not (1)Practicality (8)More practical and faster than at the bank/post office (4)Less tiring and faster than by taxi (1)I do not have a bank account (1)Prefer the mobile money service to the post office (1)I had a bad experience with an MTO (1)(X) represents the number of occurrences noted among the 48 focus group participants,bearing in mind that it is possible for one person to have several responses
  12. 12. Perception of direct deposit*: ease of connection, savings, speed12No connection problems (9)Direct deposits are better than transfers because there are no problems (8)Transfers are too complicated, have an associated cost, slower with connectionproblems (1)Savings (6)To avoid costs (5)To save time and money in the transfer fee (1)Speed (6)To save time (4)To save time and money in the transfer fee (1)Transfers are too complicated, have an associated cost, slower with connectionproblems (1)Simplicity (8)Do not know how to do a transfer and have never known (5)It is simpler (2)Transfers are too complicated, have a cost, slower with connection problems (1)In case of a lack of funds (1) When there is no money in the account (1)*Direct deposit consists of depositing money directly into the recipient’s account without the sender having touse his own account. Direct deposits are free of charge while transfers are not. A number of clients use directdeposit owing to unfamiliarity with the transfer process.(X) represents the number of occurrences noted among the 48 focus group participants,bearing in mind that it is possible for one person to have several responsesPerceived advantages of direct deposits vs. transfers
  13. 13. Perception of bill payment, deposit-withdrawal, and top-up functions13Bill PaymentDeposit-Withdrawal Top-up+++Time SavingsSimplicity+Shorter wait times than atproviders’ offices or at the bank++Queuing at the bank andgetting the account manager’ssignature++You do not have to goanywhere/more practical andfaster+You have to take a taxi to getto the bank+Faster and easier thanelectronic rechargeSecurityMoney is not safe at homeQuick Solution ++When there is no other solution
  14. 14. Profile of a customer:Amadou Occupation: student in 3ème (Grade9 in junior high school) Preferred use: receiving moneyThis customer: Subscribed at the request of hisfather who sends him money everyweek by direct deposit. Amadouwithdraws based on his expenses,but with the same frequency. Also occasionally receives moneyfrom his uncle by transfer. Never makes deposits or transfers,only receives Also purchases airtime creditapproximately twice per monthwhen there are no other solutions3 user segments emergedCharacteristics of the segment Age: 15 – 20 years old Expense level: low Occupation: student or noneProfile of a customer:Gisèle Occupation: caterer Preferred use: deposit/withdrawal(security and savings)This customer: Subscribed in order to receivemoney sent by a friend to help herlaunch her business. Receives money twice per monthfrom her family, which shewithdraws in its entirety. Carries out monthly deposits intoher sister’s account and pays herwater and electricity bills directly tothe provider to avoid queues, andtherefore practically never leavesany money in her account.Profile of a customer:Bertrand Occupation: retired accountant andinsurance agent Preferred use: deposit for a thirdparty from the agentThis customer: Subscribed on the suggestion of theperson to whom he had to sendmoney. Since then, sends money tohis family two or three times permonth through a direct deposit intotheir account Withdrew money from the bank todeposit into his account to avoidholding cash and to be able topurchase airtime in case ofemergencyYouthSmall businessowner SponsorCharacteristics of the segment Age: > 20 years old Expense level: average or high Occupation: student or employedCharacteristics of the segment Age: > 20 years old Expense level: average or high Occupation: student or employed14
  15. 15. Among the segments studied, 3 usage groups were observed15Youth Students or schoolchildren living farfrom their parents who receivemoney every month through mobilemoney in order to pay for theireducation and living expenses This segment’s behavior isstructured around the monthlyreceipt of money from theirfamilies and using the mobilemoney service as a means oflimiting expenses The behavior observed ishomogenous with respect to thesegment’s professional activitiesand with respect to theprofessional use of the account This segment is characterized by atendency to send money butalmost never to receive money, bythe high amounts they handle, bytheir education level, and theirlevel of responsibility Independently employed peopleover 20 years of age with anaverage or high level of expenses People over 20 years of age who arenot independently employed, withan average to comfortable level ofexpensesCash in Cash out“Outsideaccount”transactions3 usage groups were observedSponsorProfilesBehaviorsUsagegroupsSegmentsSmall businessowner
  16. 16. “Cash In” usage16Financer (active) Financed (passive)Private useProfessional useDeposit of fundsfrom odd jobsDirect deposit ortransfer by thefamilyDeposit of fundsby familyTransfer byfriends (to beredistributed)Direct deposit ortransfer byclientsDeposit ortransfer byfamily or friendsDeposit ortransfer byfamily or friendsDeposit prior totravelDirect deposit byclient (orders)Deposit ofbusiness revenueSalary deposit(withdrawn fromthe bank)Regular directdeposit for foodRegular directdepositDirect deposit byfriends forpurchasesDirect depositother than byfamily/friends Cash inflow varies widely depending on whether the use is of a professional nature or not. Professionaluse is only observed among the sponsor segment and small business owners. The majority of moneyreceived “to cover living expenses” occurs among the youth segment.YouthSmallbusinessownerSponsorSegment Summary
  17. 17. “Cash Out” usage17Financer (active) Financed (passive)Private useProfessional useRegular partialwithdrawalAirtime creditpurchaseRegulartransfer tofamily/friendsRegularwithdrawal ofentire amountOne-timewithdrawal aftertravelRegular transferto serviceprovidersRegulartransfer tofamily/relativesRegular partialwithdrawalBill paymentAirtime creditpurchaseWithdrawal –remote clientpaymentWithdrawal ofentire amountBill paymentTransfer toremote businesssitesBill paymentAirtime creditpurchaseWithdrawalwhile traveling Cash outflow mimics the same distribution of user categories according to the distinction betweenprivate/professional use and financer/financed, but less intensely than cash in usage.YouthSmallbusinessownerSponsorSegment Summary
  18. 18. “Outside account” usage18Financer(active)Financed (passive)Private useProfessional useBill paymentDirect deposit topay salariesDirect deposit topurchase goodsDirect depositfor family,friendsDirect depositfor the familyDirect depositfor on-siteexpensesGives money tobrother to transferto the family Only direct deposits and bill payments figure in this mapping since these are the only transactions thatcan be completed at an agent without using a mobile money account. However, the private/professionaland financer/financed distinctions remain.YouthSmallbusinessownerSponsorSegment Summary
  19. 19. 5 types of account behavior were observed19DescriptionCharacteristics?ZZZ!Remote cash in accounts givethe mistaken impression thatthey are inactive. They revealnothing about the customer’sactivity. Everything takes placeoutside of the account.2 uses represented:Transfer: direct deposit• Transfers are done at the agent• Money is deposited directly intothe recipient’s account• Sometimes the agent intervenesBill payment: at the agent• Bill payment (electricity or water)is done at the agent• Helps reduce wait timesDormant accountsare inactive accountsof active users.Behavior shows lowactivity:Inactive accounts• The account does notwork or account holderdoes not perform anytransactions• One or severaltransactions may havebeen completed initially,but the mobile moneyservice is no longer inuse, either via theaccount or at the agentFluctuating accounts arethose whose only function isto receive money and quicklywithdrawal. The account isempty between each receiptand withdrawal cycle.2 uses identified:Transfer followed byimmediate withdrawal• Once the money isreceived, it isimmediately withdrawnRegular schedule• The balance exactlyreflects the schedule ofdeposits/withdrawals,based on a very regularcycleSaving accounts are activeaccounts in which theaccount holder maintains aminimum level of funds3 uses identified:Saving• Keeping money on yourperson encouragesspending at the slightestinvitation, so it is betterto keep it in the mobilemoney accountSecurity• Keeping money on yourperson or at home isriskyWallet• Transfer• Bill payment• Airtime credit purchaseBehavior shows elements ofother categories:Behavior of a fluctuatingaccount• Money is not kept in theaccount• There are numeroustransactionsBehavior of a “squirrel”account• But the behavior does notreflect a specific reasonwhy the account holderkeeps a balanceUnclassified accounts arethose displaying mixed ornew behaviors owing to veryspecific patterns of use.REMOTECASH IN(6)SAVING(24)FLUCTUATING(13)DORMANT(2)UNCLASSIFIED(3)(X) represents the number of occurrences noted among the 48 focus group participants!
  20. 20. Summary2012Objective and MethodologyMain FindingsPrimary usesClient perceptionsSegments and usage groupsAccount behaviorRecommendations3
  21. 21. Mobile money works as a network made up of several actors with specificcomplementary roles to play :Recommendation: Understand mobile money flows21The supporter Melting pot The supportedSmall business owners andsponsors are the supporters. Theyare money makers and they injectcash into the network in order tohelp people in need and/or tocarry out business.Youth are the supported sincethey do not have a steadyincome, and they rely on thesupport that the sponsorsprovide through mobile money.Money flowsThis melting pot representspeople that are independentfrom the network or that playtemporary roles within thenetwork: they temporarily helpor are temporarily helped.YouthOthersegmentsSmallbusinessownerSponsor
  22. 22. Recommendation: Identify and understand each segment22 These two segments handle largesums of money Two types of usage of the mobilemoney service are observed: Professional use by the smallbusiness owner segment Private use to help relatives bysending money from the sponsorsegment This segment receives funds fromfamily through mobile moneyevery month to finance studies The account helps them managetheir expenses better and saveuntil the next transfer2 clear communication avenues can be establishedrelating to:+++ Remote receipt of money from family membersto pay for studies++ Managing and limiting expenses4 clear communication avenues are associated with thesesegments:+++ Security of money during travel+++ The ability to quickly help a relative or friend inneed remotely++ Receiving funds from remote clients++ Sending money to an associate remotely to pay forgoods or to pay salariesMain Lessons Learned RecommendationsYouthSmallbusinessownerSponsor
  23. 23. Advancing financial inclusion to improve the lives of the