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.
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