PAYGO Smartphones — A Hot Commodity
Selling smartphones under PAYGO has made headlines for the the past few years. Initially, the term PAYGO was seen as a scheme to sell Solar Home Systems (SHS) in Eastern Africa with the likes of M-Kopa and d-light being the pioneers. Today, PAYGO SHS has reached most corners of Sub-Saharan Africa and a big part of South East Asia with pan-African players such as Bboxx and major corporation like Engie driving the industry towards maturity.
And yet, all Last Mile Distributors (LMDs) need to diversify their offering, leveraging existing distribution channels (whether through agent, shops, kiosks) to serve their customers with more than one product. This is where smartphones come in.
Why many LMDs love PAYGO Smartphones
A Huge Market
According to the GSMA, between 2021 and 2025 there will be 270 million new smartphone users in Sub-Saharan Africa alone (Link to study). In 2020, 68% of connections in Asia were from smartphones, and that number is expected to grow to 83% in 2025. The market is expanding quickly.
Easy to leverage existing distribution
All Last Mile Distributors of Solar Home Systems or Cookstoves have an agent, franchise or mini-shop network to service their existing customer base. Some of those customers might still be paying for assets, others have paid off. In all cases, the initial linkage and structure is in place and the customer information is known; helping LMDs to add a product while reducing cost of acquisition and risk.
Selling the features and benefits of a Smartphone is easier when you are direct user; which is often the case for agent network or kiosk owner. They have smartphones and understand its basic key selling points, making the adoption of Smartphones into the LMDs offering faster than less familiar products such as insurance or productive use equipment.
From a training perspective, the focus is therefore mostly on becoming familiar with the new deals, terms and conditions related to the phone. To ease the training, LMD’s might be interested in using platforms such as learn.ink to train all their agents remotely, keeping track of key training KPIs.
Access to the credit history of existing customers
When done right, any sales of an asset under a PAYGO scheme is an opportunity to accumulate behavioral and financial data from customers. Some of our customers have up to 30 well thought-of questions when onboarding a new customer: household information, age, status, work, assets etc. while also rolling out regular follow-up surveys. Added to that the repayment behaviour (rhythm, average amount, late payments, overpayments made) and the number of complaints and related tickets helps any LMD create an informed customer risk profile.
Winning new customers
Smart phones are a highly portable and desirable commodity for those in rural areas. Until recently, they did not offer PAYGO functionalities, making their cost inaccessible. Today it is a different story.
As a Last Mile Distributor, being able to promote through agents, mass SMS campaigns and community events PAYGO Smartphones is a huge opportunity to not only sell to existing customers, but also win new customers.
The smartphone can be charged and used anywhere (unlike a fridge or electric cookstove) and does not necessarily require power at home, but maybe a charging center in the village, or good friends with access to power.
Good % of repayments
With repayments rates of roughly 90% in the case of RDG Collective and Vitalite (full study here) — PAYGO Phones show excellent numbers that validate the opportunity for LMDs. Some of the reasons for high repayments are listed here:
1. A lot of sales are to existing customers, hence LMD’s know their credit history and customer profile.
2. Smartphones represent a great opportunity for customers to access critical information + services; making the product a necessity.
3. The products are mass consumption products sold by millions across the globe, bringing with them stability in terms of quality.
4. As in the rest of the PAYGO industry, having the asset PAYGO enabled, allows for better control hence better repayments.
“At the end of the grant, only 14 per cent of PAYG smartphone customers were late on payment, and most of these were for short periods of time. Only five per cent of customers have over 30 cumulative days of non-payment.” Vitalite Case Study by GSMA
The necessary requisites to make it work
To seize the opportunity, automise the sales and keep costs low — LMD’s will need to make sure their current ERP/CRM supports PAYGO and offers key features, some listed below:
For last mile distribution of phones to be successful, you must to be able to implement PAYGO Schemes:
1. It reduces the upfront and monthly cost of the asset
2. It allows you to control the asset and lock/unlock it based on payments from the customer.
In the Solar Home System space, major manufacturer like Biolite, Amped Innovation and Omnivoltaic offer that feature to all their customers; their products “talk” to softwares providers like Upya to automise the process of locking, unlocking, top-up based on payments. Similarly, services like NuovoPay and major phone manufacturers like Samsung and Transsion (Infinix, Tecno and itel) offer the same service while also seamlessly talking to CRM’s like Upya.
A Good Inventory Management feature: answering the question of who has what product at any given point of time. From the warehouse to the agent (or shop/kiosk) to the end-customer (or community leader) and back up the chain in case of repairs or defective product.
Ability to collet any type of data: throughout an LMD’s relationship with an end-customer, collecting the right data, quickly, accurately, and repeatedly is key. Data is mostly collected through the payment history of customers and through questionnaires that need high flexibility in their set-up.
Powerful and detailed analytics: All that data collected is great if you can make decisions on it. Your CRM needs to allow for clear dashboards for daily, weekly, or monthly decisions on how to run your operations; in addition to being able to download your data for more in-depth, one-time analysis.
Workflows to create almost any type of deals: you want the ability to create standalone deals based on the customer profile, add-on existing loans, create bundles with other products and/or have timely promotions to reward loyal existing customers or to capture new customers.
Could customers with smartphones be a game changer for Last Mile Distributors?
Today, most Last Mile Distributors start the sales process with an agent or maybe at the very top of the sales funnel a communication campaign. Further down, the agent needs to be on site to make that first contact, or sell a new product. The majority of the communication between HQ and existing customers is done using SMS or USSD; and customer support is through phone calls to call centers or again through the agent. The penetration of smartphones into rural communities could change much of that flow and reduce costs, increase sales while improving overall customer experience.
A company like Copia Kenya for example serves last mile customers with a combination of call-to-order, community representatives and their end-user App available on Android phone. At Upya, we have designed an End-user app called Wingu that allows our distributor’s customers to shop, pay, refer a friend, receive communication and raise tickets.
The goal being to reduce the necessary on-the-ground interactions between agents + customer, have customers be part of the sales process and be more reactive to communication around new products or promotions.
We see smartphones in the hands of end-customers not just as an opportunity for increasing our distributors’ revenues and impact, but also as the start of rethinking what selling in the Last Mile looks like. It will take time, it won’t be the same across all emerging countries; but it is a conversation that needs to take place as we are confident smartphones will be a game changer for Last Mile Distributors.
We are here to help:
Many of our customers in the SHS or Cookstove space have already implemented PAYGO Smartphones in their existing distribution, and with great success.
Having integrated with the likes of Transsion (and others) while providing all the above requisites, we are engaging with all our customers for them to assess the opportunity for their business and their customers. Reach out if you’d like to know more.
Thanks for reading!