Strong Customer Activity Should Begin on Day One

Last week, CGAP released a study focused on using data to understand low customer activity. We worked with four branchless banking providers in three regions to look at data they already had to discover insights about low customer activity. In this post, we’ll see that one of the keys to high levels of customer activity is getting it right from the very beginning – ensuring that the registration agent and first customer transactions are both focused on long-term customer activity.

Can we even call them customers?

One of the first things we noticed as we looked at overall activity levels was that, aside from the high percent of inactive customers (92%), the majority of them – 59% – had never done a single transaction! Providers with high levels of customers who have never transacted need to get customers to actually understand and try the service in the first place. This is different than providers who have high levels of customers who had once been active but are now dormant. These services are not offering customers a value proposition that they are willing to pay for and need to investigate what aspects of the product or pricing customers are dissatisfied with. The providers we worked with were clearly struggling with the initial customer registration and trial process.

Low Customer Activity Low Customer Activity

Awesome agents register active customers

Next, we saw that a customer’s activity level is often determined by who registered them. We looked at the top 20% of agents by number of registrations – all high-performing agents based on number of registrations and all receiving high registration commissions. However, when we segmented this group based on the activity rates of the customers they were registering, we saw a huge disparity. The activity rate of customers registered by the best agents (top 10%) in this group was over 40 times higher than those registered by the worst! The activity rate of the worst agents was close to 0 and they clearly were failing to help customers understand and try the service. For example, one agent signed up 1052 customers but not a single one did a transaction! These providers need to understand what makes the best agents so successful (great location, good customer education, etc.), re-train or get rid of the worst agents and – most importantly – change the incentive structure so that agents are rewarded for ongoing activity of clients they register rather than just the registration process.

Transact early, transact often – and not just top-ups

Just getting a customer to transact from the beginning is not enough; higher numbers of transactions and the right types of transactions in the first month were equally important in establishing a valuable and long-term customer relationship. Customers who did more than 6 transactions in their first month were almost 6 times more likely to transact in their 2nd month than those who only did 1-2 transactions in their first month.

The type of transactions a customer does in the first month is extremely important as well. Many services offer big airtime discounts under the assumption that customers will try using mobile money to buy airtime and then move on to higher value transactions like transfers. Unfortunately, this is not the case. Of customers who only did top-ups in the first month, only 19% did at least one other type of transaction in their third month versus 65% for those who tried other transactions in their first month.

Strong customer activity levels start at the very beginning. Providers should focus on incentivizing customers to do both a high quantity and a wide variety of transactions soon after registration and ensure that registration agents who help them achieve this are amply rewarded. By using the right incentives for both agents and customers from the very beginning, providers can turn new customers into the loyal, active customers that providers need for a viable business case.

See the full analysis in this deck.



- Claudia McKay & Toru Mino


14 August 2012 Submitted by Anonymous (not verified)

One variable not taken into account: demographic of the customers due to location of agent. E.g. agent next to expensive supermarket will garner rich clients who use mobile money transfers more. agent in slum or near a school will get clients that don’t know why or how to use the service.

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