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

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

May 2013

Summary

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Objective and Methodology

Main FindingsPrimary uses

Client perceptionsSegments and usage groupsAccount behavior

Recommendations3

Introduction

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This study examines the active customer base for a mobile money service in West Africa. The study works off the premise that mobile money providers have a rich amount of data at their disposal from their own customer transactional database. Analyzing this data can provide them with an improved understanding of customer activity in order to identify key usages and levers for activation. This analysis is critical to turn a subscriber base into a highly active user base. The consulting firm Sofrecom conducted this study on behalf of the CGAP Technology & Business Model Innovation Program.

This research builds off of earlier CGAP research on activation and data analytics.

http://www.slideshare.net/CGAP/the-challenge-of-inactive-customers

Objectives of the study

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The goal of the study was to understand the usage behaviors of active customers of a mobile money service in a West African country in order to identify 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

Methodology (1/3)

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Customer interviews by

telephone

Customer focus groups

Qualitative analysis of

customer usage

Qualitative analysis to understand the usage of the mobile money service

Telephone interviews with 200 customers from each of

the 5 customer segments (1,000 total interviews)

Focus groups to study and analyze segment behavior

Quantitative analysis of active

customer base

Data analysis of the active* customer base to identify

customer segments

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This study was conducted based on the following approach:

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* Active customer defined as one transaction in the last three months

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48 active customers were interviewed in 6 focus groups conducted in December 2012.

The focus group interview guide was designed with the aim of covering the entire spectrum of customer behavior, using different techniques in order to cross-check responses.

When the focus groups were too small, supplementary interviews were conducted by telephone.

The verbatim responses were analyzed segment by segment.

Methodology (2/3)

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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 between

segments

In order to understand the elements that determine behavior and identify the different transactional profiles, analysis was then conducted independently of segments on:

categories of account activity (deposits, withdrawals, balances) categories of usage and behaviors

Methodology (3/3)

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Summary

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Main Findings Primary uses Client perceptions

Segments and usage groupsAccount behavior

Recommendations3

1. Receive money (21)

2. Send money (10)

3. Protect money (7)

4. Send and receive (6)

5. Remote payment

(2)

“It’s my older brother who encouraged me; when he sends me money, it has to be fast.”

“I was contacted by a salesperson who explained to me that I could make deposits and my children, who live in various places, could benefit from them.”

“Once I was on mission and someone gave me money, and I did not want to travel with all the money. My supervisor suggested that I take up this offer.”

“I signed up for this offer in order to be able to receive and send money from the village.”

“I took this offer because I also own a small oil production facility – I order oil and send money to the provinces.”

5 most cited reasons for subscribing

(X) represents the number of occurrences noted among the 48 focus group participants

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Payment

Airtime recharge

Security

Transfer

The primary usage relates to transfers

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Send money (13)

Send and receive money

(3)

Protect against theft (5)

Pay bills (3)

Top-up(2)

Shop remotely(1) Pay

salaries (1)

Receive money (23)


Perception of mobile money transfer: speed, savings, and practicality

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Perceived advantages of mobile money transfers

Speed (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

Perception of direct deposit*: ease of connection, savings, speed

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No 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 connection problems (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 connection problems (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 to use his own account. Direct deposits are free of charge while transfers are not. A number of clients use direct deposit 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 responses

Perceived advantages of direct deposits vs. transfers

Perception of bill payment, deposit-withdrawal, and top-up functions

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Bill PaymentDeposit-

Withdrawal Top-up

+++Time Savings

Simplicity

+

Shorter wait times than at providers’ offices or at the bank

++Queuing at the bank and getting the account manager’s signature

++You do not have to go anywhere/more practical and faster

+

You have to take a taxi to get to the bank

+

Faster and easier than electronic recharge

Security

Money is not safe at home

Quick Solution ++

When there is no other solution

Profile of a customer: Amadou Occupation: student in 3ème (Grade

9 in junior high school) Preferred use: receiving money

This customer: Subscribed at the request of his

father who sends him money every week by direct deposit. Amadou withdraws based on his expenses, but with the same frequency.

Also occasionally receives money from his uncle by transfer.

Never makes deposits or transfers, only receives

Also purchases airtime credit approximately twice per month when there are no other solutions

3 user segments emerged

Characteristics of the segment Age: 15 – 20 years old Expense level: low Occupation: student or none

Profile of a customer: Gisèle Occupation: caterer Preferred use: deposit/withdrawal

(security and savings)

This customer: Subscribed in order to receive

money sent by a friend to help her launch her business.

Receives money twice per month from her family, which she withdraws in its entirety.

Carries out monthly deposits into her sister’s account and pays her water and electricity bills directly to the provider to avoid queues, and therefore practically never leaves any money in her account.

Profile of a customer: Bertrand Occupation: retired accountant

and insurance agent Preferred use: deposit for a third

party from the agent

This customer: Subscribed on the suggestion of the

person to whom he had to send money. Since then, sends money to his family two or three times per month through a direct deposit into their account

Withdrew money from the bank to deposit into his account to avoid holding cash and to be able to purchase airtime in case of emergency

Youth Small business owner Sponsor

Characteristics of the segment Age: > 20 years old Expense level: average or high Occupation: student or employed

Characteristics of the segment Age: > 20 years old Expense level: average or high Occupation: student or employed

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Among the segments studied, 3 usage groups were observed

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Youth

Students or schoolchildren living far from their parents who receive money every month through mobile money in order to pay for their education and living expenses

This segment’s behavior is structured around the monthly receipt of money from their families and using the mobile money service as a means of limiting expenses

The behavior observed is homogenous with respect to the segment’s professional activities and with respect to the professional use of the account

This segment is characterized by a tendency to send money but almost never to receive money, by the high amounts they handle, by their education level, and their level of responsibility

Independently employed people over 20 years of age with an average or high level of expenses

People over 20 years of age who are not independently employed, with an average to comfortable level of expenses

Cash in Cash out“Outside account”

transactions

3 usage groups were observed

Sponsor

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Small business owner

“Cash In” usage

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Financer (active) Financed (passive)

Private use

Professional use

Deposit of funds from odd jobs

Direct deposit or transfer by the

family

Deposit of funds by family

Transfer by friends (to be redistributed)

Direct deposit or transfer by

clients

Direct deposit or transfer by

clients

Deposit or transfer by

family or friends


family or friends


family or friends


family or friends

Deposit prior to travel

Deposit prior to travel

Direct deposit by client (orders)

Direct deposit by client (orders)

Deposit of business revenue

Deposit of business revenue

Salary deposit (withdrawn from

the bank)

Salary deposit (withdrawn from

the bank)

Regular direct deposit for foodRegular direct

deposit for food

Regular direct deposit

Regular direct deposit

Direct deposit by friends for purchases

Direct deposit by friends for purchases

Direct deposit other than by family/friends

Direct deposit other than by family/friends

Cash inflow varies widely depending on whether the use is of a professional nature or not. Professional use is only observed among the sponsor segment and small business owners. The majority of money received “to cover living expenses” occurs among the youth segment.

Youth


Sponsor

Segment Summary

“Cash Out” usage

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Financer (active) Financed (passive)

Private use

Professional use

Regular partial withdrawal


Airtime credit purchase


Regular transfer to

family/friends

Regular transfer to

family/friends

Regular withdrawal of entire amount

Regular withdrawal of entire amount

One-time withdrawal after

travel

One-time withdrawal after

travel

Regular transfer to service providers

Regular transfer to service providers

Regular transfer to

family/relatives

Regular transfer to

family/relatives



Bill paymentBill payment



Withdrawal – remote client

payment

Withdrawal – remote client

payment

Withdrawal of entire amountWithdrawal of entire amount


Transfer to remote business

sites

Transfer to remote business

sites




Withdrawal while travelingWithdrawal

while traveling

Cash outflow mimics the same distribution of user categories according to the distinction between private/professional use and financer/financed, but less intensely than cash in usage.

Youth


Sponsor

Segment Summary

“Outside account” usage

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Financer (active)

Financed (passive)

Private use

Professional use


Direct deposit to pay salaries

Direct deposit to pay salaries

Direct deposit to purchase goods

Direct deposit to purchase goods

Direct deposit for family,

friends

Direct deposit for family,

friendsDirect deposit for the family

Direct deposit for the family

Direct deposit for on-site expenses

Direct deposit for on-site expenses

Gives money to brother to transfer

to the family

Gives money to brother to transfer

to the family

Only direct deposits and bill payments figure in this mapping since these are the only transactions that can be completed at an agent without using a mobile money account. However, the private/professional and financer/financed distinctions remain.

Youth


Sponsor

Segment Summary

5 types of account behavior were observed

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?ZZZ!Remote cash in accounts give the mistaken impression that they are inactive. They reveal nothing about the customer’s activity. Everything takes place outside of the account.

2 uses represented:

Transfer: direct deposit• Transfers are done at the agent• Money is deposited directly into

the recipient’s account• Sometimes the agent intervenes

Bill payment: at the agent• Bill payment (electricity or water)

is done at the agent • Helps reduce wait times

Dormant accounts are inactive accounts of active users.

Behavior shows lowactivity:

Inactive accounts

• The account does not work or account holder does not perform any transactions

• One or several transactions may have been completed initially, but the mobile money service is no longer in use, either via the account or at the agent

Fluctuating accounts are those whose only function is to receive money and quickly withdrawal. The account is empty between each receipt and withdrawal cycle.

2 uses identified:

Transfer followed by immediate withdrawal• Once the money is

received, it is immediately withdrawn

Regular schedule• The balance exactly

reflects the schedule of deposits/withdrawals, based on a very regular cycle

Saving accounts are active accounts in which the account holder maintains a minimum level of funds

3 uses identified:

Saving• Keeping money on your

person encourages spending at the slightest invitation, so it is better to keep it in the mobile money account

Security• Keeping money on your

person or at home is risky

Wallet• Transfer• Bill payment• Airtime credit purchase

Behavior shows elements ofother categories:

Behavior of a fluctuatingaccount • Money is not kept in the

account • There are numerous

transactions

Behavior of a “squirrel” account• But the behavior does not

reflect a specific reason why the account holder keeps a balance

Unclassified accounts are those displaying mixed or new behaviors owing to very specific patterns of use.

REMOTECASH IN

(6)

REMOTECASH IN

(6)

SAVING(24)

SAVING(24)

FLUCTUATING(13)

FLUCTUATING(13)

DORMANT(2)

DORMANT(2)

UNCLASSIFIED(3)

UNCLASSIFIED(3)


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Summary

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Main Findings Primary uses Client perceptions

Segments and usage groups Account behavior

Recommendations3

Mobile money works as a network made up of several actors with specific complementary roles to play :

Recommendation: Understand mobile money flows

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The supporter Melting pot The supported

Small business owners and sponsors are the supporters. They are money makers and they inject cash into the network in order to help people in need and/or to carry out business.

Youth are the supported since they do not have a steady income, and they rely on the support that the sponsors provide through mobile money.

Money flows

This melting pot represents people that are independent from the network or that play temporary roles within the network: they temporarily help or are temporarily helped.

YouthYouthOther segments

Other segments


Sponsor

Recommendation: Identify and understand each segment

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These two segments handle large sums of money

Two types of usage of the mobile money service are observed: Professional use by the small

business owner segment Private use to help relatives by

sending money from the sponsor segment

This segment receives funds from family through mobile money every month to finance studies

The account helps them manage their expenses better and save until the next transfer

2 clear communication avenues can be established relating to:

+++ Remote receipt of money from family members to pay for studies

++ Managing and limiting expenses

4 clear communication avenues are associated with these segments:

+++ Security of money during travel

+++ The ability to quickly help a relative or friend in need remotely

++ Receiving funds from remote clients

++ Sending money to an associate remotely to pay for goods or to pay salaries

Main Lessons Learned Recommendations

YouthYouth


Sponsor

Advancing financial inclusion to improve the lives of the poor

www.cgap.org

http://www.themastercardfoundation.com/

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

Economy & Finance

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