Building Value Proposition and Beyond

Incentives to breed a culture of compliance and engagement

Ciprian PanturuAssociate Consultant

PHB Development

Developing and Managing Efficient Agent Networks in Lao

What is a DFS Ecosystem

• A “community” of operators with various roles, responsibilities and opportunities

• Each are unique and designated to fulfil specific tasks

• Together they provide comprehensive coverage area, assure liquidity and secure cash handling

• Oversight and monitoring from BoL with goal of continually serving customers better

Customers

Regulator and

Government (G2P)

Banks and Financial

Institutions

MNOs

Agents

Billers and Utility

Companies

Wholesalers and

Distributors

Our focus Today

• A “community” of operators with various roles, responsibilities and opportunities

• Each are unique and designated to fulfil specific tasks

• Together they provide comprehensive coverage area, assure liquidity and secure cash handling

• Oversight and monitoring from BoL with goal of continually serving customers better

Customers

Regulator and

Government (G2P)

Banks and Financial

Institutions

MNOs

Agents

Billers and Utility

Companies

Wholesalers and

Distributors

Overview

• How important is the role of the Agent?

• What makes up a Value Proposition

• Monetary incentives

• Non-monetary incentives

• Agent investment to achieve engagement

How important is the role of the Agent?

DFS Agents Service Providers

Your Local « Point of

Presence »

Buyairtime

Pay bill

Transfer money

BanksMNOsDFS

Customers

• The Agent is the only person your Customer will see• They will determine your Success or Failure

What do Agents want?

• More Money

• More services to customers

• More customers

• Different from competition

• Support from my suppliers

• Added Security

• Learn New Skills

• Increase community status

• = More Value!

What makes up a Value Proposition

• The agent value proposition

has to be built based on a

Cost – Benefit Analysis.

• All Countable & Uncountable

Costs and Benefits shall be

taken into account.

• Their relative importance will

be different for each Agent

Profile.

• Identify the strenghts of your

Value Proposition and aim for

the right Agent Profile.

Costs Benefits

Agent Value Proposition

Value proposition

This is not only profit -

but the VALUE that an

Agent gets from

delivering the services.

Value Proposition

Monetary

Non MonetaryBenefits

Commissions and

Incentives

Increased footfall

Community Status

Meeting Customer

Demand

Bonuses and Prizes

Improved Image

Training & Support

Costs & Risks

Upfront capital

Liquidity management

Security

Staff and space

System inefficiencies

Revenue at start-up

Number of agents

Time

Monetary benefits

Commissions

Agent Commission = F (active Customers; Transactions per Customer; Commission per type of Transaction)

Don’t forget: The Agent gets paid for each transaction performed, whether there is a customer fee or not!

Fee type Description Pros Cons

Percentagebased

The customer feeis a % of transaction value

No comparative advantage based on transaction’s value

Different for eachtransaction value, expensive for highvalues

Flat rate Same feeregardless of the transaction value

Easy to calculate, easyto remember

For low transaction values, is perceivedbeing expensive

Tiered Different fixedfees for each tier

Ensures reasoniblerevenues for differenttransactional values

Would encourage customers to choosetheir transaction value

Monetary benefits

Incentives• Compliance Incentives:

• Meeting Regulatory/ Branding Requirements• Meeting Quality of Service Standards

• Interest paid on float/ funds on the account:• Encourage to keep right level of Liquidity

• Trailing Incentives• Customer Registration AND Activation• Encourage Customer Activity

Make sure the incentives are serving the purpose they are meant for: ie, high interest on float no cash in hand!

Monetary benefits

Bonuses & Prizes

• Bonuses (targeted actions)• Increase usage• Promote a specific/ new service

• Prizes (for best performing agents):• Electronics/ Consumer appliances/ Service subscriptions• Exposure trips to other countries/ Training course

Misaligned benefits could lead to uninended behavior: make sure that they reach the goal they are provided for!

Non-Monetary benefits

Increased footfall and Customer loyalty

• Additional services attract customers to the shop• Strong incentive for retail agents that are mid-sized, in a

competitive environment, or not in a central location.

Non-Monetary benefits

Improved image

• The branding & marketing support is highly appreciated• Working with a well-known Company• Creating awareness around their business

• Providing financial services (requires trust and respect)

• Dealing with technology, seen as a trained person whocan help others in the community

Non-Monetary benefits

Service to the community

• Provides a vital service within the community• Meeting the demand by delivering Financial Services

• People would reach out to the Agent • For advice on Financial products/ services

• B2B AND B2C payments to increase usage• Buying from suppliers/ selling to customers

Make sure the Agent is well trained on Products&Services: if they don’t use them, will not promote them to others

Non-Monetary benefits

Other non-monetary benefits

• Training• Learn something new• Offer training on how to improve their business

• Support• Products & Services support• Technical support • Sales support (awareness creation)

Make sure your agent knows that will get proper support: they are not alone!

Exercise

What do you think is most important for the Agent?

• Arrange the Benefits• from Most important

to Least important

• Do you think there are othermonetary/ non-monetary benefitsthat could be included in the Agent Value Proposition?

Benefits

Commissions and

Incentives

Increased footfall

Community Status

Meeting Customer

Demand

Bonuses and Prizes

Improved Image

Agent Costs

Upfront Capital & Liquidity

• Minimum initial investment• This is significant for the agent:

could be one year’s profit!

• Manage right levels of Liquidity• Adapt liquidity to be able to serve ALL customers• Agent may prefer more profitable investments

Make sure you understand your Agent’s business and dailyactivities, to help assess their cash flows!

Agent Costs

Operational costs and risks

• System down time• If the system or the network doesn’t work,

the Agent cannot make money• Unserved customers may blame the agent

• Slow uptake• The Agent needs a minimum of transactions to become

profitable

Make sure you have back-up solutions to limit down time!Make sure you drive enough traffic to each of your agents!

Agent Costs

Physical adaptations of the existing business

• Hire new staff• Once the daily volumes reach significant levels, new staff

may be required

• Dedicate space in the shop• Counter space, place for branding

• Security• Safe box to secure the cash

Summary

To build a sound Agent Value Proposition

• Assess ALL Agent’s potential benefits• Commissions/ Bonuses/ Incentives/ Footfall/ Image/ Status

• Assess ALL Agent’s expected costs• Investment/ Liquidity/ Staff/ Space/ Security/ Time

The Value Proposition has to be consistentlycommunicated to Agents and Staff.

Target your Value Proposition at the right Agent Profile, to make sure they will be fully ENGAGED.

Ciprian PANTURUAssociate ConsultantPHB Development

Thank you!