Tigo Cash recently launched in the DRC and as mobile money is only in its infancy in this country, Tigo could not rely on the market’s prior awareness or understanding [1]. Tigo needed to start from the beginning and to develop awareness and build understanding, they relied on an effective and localized Above-The-Line (ATL) strategy. It is important to remember that ATL communications is just one of many effective tools available to operators and this must be coupled with equally effective Below-The-Line campaigns

Developing Awareness

The target market was selected on the basis of being both early adopters and easily addressable – young urban students – and then the mobile money service was positioned accordingly. Tigo needed to drive the Tigo Cash message to their target population. To do this, they used a teaser advertisement to create a buzz and generate interest. The advertisement excited their target market by saying “It’s coming soon” and introducing the “Ca$h-Moi” or “Ca$h Me” tagline. The format used also provided an introduction to the colour, styling and branding to be used by the service. While this teaser strategy is often used for pre-product launches, what Tigo Cash DRC did next was more insightful from a market analysis and segmentation perspective.

Building Understanding

The communication strategy to build understanding of the service involved recruiting JB Mpiana, one of the DRC’s best-selling artists. JB and Tigo created a new song and video explaining the Tigo Cash Service and how it operates. JB delivers a catchy tune and sings about tapping the USSD string used to access the service, *123#, and the simplicity, speed and security of the service. The backing vocalists sing a harmony slogan of “Tigo Cash” and the lyrics explains some situations where Tigo Cash can be used.  In this way, the main objectives of an ATL campaign are met; the service is introduced, explained and the primary benefits are presented.

JB then performed a free concert in Kinshasa at the launch of the Tigo Cash Service. Jonathan Johannesen from Tigo Cash, DRC saw the numbers of registered users rise by 50% in the week following the release of the song and the free concert. Heavy daily circulation on the national radio channels has also helped to build awareness.

Customer Journey Remains Incomplete

As an example of market analysis and marketing communications, the start exhibited by Tigo DRC has been very encouraging. They used simple messaging and a popular cultural icon to develop awareness and build understanding. While Tigo Cash in the DRC is a young service, there is huge potential in the market and Jonathan has exciting plans – which I hope to revisit – to continue to bring his subscribers through the customer journey.

MicroEnsure had originally experimented by partnering with MNOs to offer insurance directly to customers through the mobile money wallet.  Customers would sign up for insurance directly on the phone or through an agent and pay premiums through their mobile money accounts. Unfortunately, insurance awareness and understanding in Ghana is low (life insurance penetration is under 2%) and the mobile money ecosystem was still developing. These schemes struggled to reliably collect premiums and secure consumer trust in an unfamiliar product through a non-traditional channel.

In Ghana, MicroEnsure tried a variation on this model that seems to have had more success. Through a partnership between Tigo, Bima and MicroEnsure[1], Tigo subscribers were offered so-called “embedded” insurance – a free benefit on an opt-in basis. Subscribers are awarded free life insurance coverage in proportion to the amount of airtime they use as a loyalty benefit. The purpose of the free insurance is to create brand loyalty for Tigo and reduce churn. The scheme has resulted in more than 1 million new individuals covered by insurance in Ghana and Tanzania (where a similar service was launched), 80% of who had never previously had insurance coverage.

Here is the innovative part: In addition to the free embedded benefit, Tigo offered an option to double the insurance coverage for a monthly fee of GH₵1 (US$0.52).  This might be called a “Freemium” model – offering a basic level of service for free to many customers in the hope that some customers will voluntarily upgrade to a more premium paid service. Free + Premium = Freemium.

Impressively, Tigo has seen tens of thousands of customers upgrade from free insurance to paid premium product since the program’s launch in February. By offering the free embedded product they have created a market of customers that want and understand insurance. This market is coming back to Tigo to buy more of the product.

Peter Gross from MicroEnsure points out that Coca-Cola enters new markets with a similar model – first offering free samples of Coca-Cola to customers to get them hooked on the product and then subsequently selling it to them. For new products that are not yet well understood by consumers, this approach might have some merit.

[1] The roles between the parties are split as follows: Tigo provides the subscriber base and markets the product. Bima provides the technical interface, agency force to register users to the insurance service, and other supporting functions. MicroEnsure handles the insurance partnerships and claims administration.

Today, we count 34 countries where there are at least 2 mobile money services for the unbanked. In these markets, MNOs launch mobile money not to differentiate themselves, but because they don’t want to lag behind their competitors and lose customers.

With competition emerging in the mobile money space, we now see battles over price, but also attempts to better adjust services to the needs of unbanked customers and to increase the quality of service.

In Rwanda and Tanzania, Tigo illustrates that it is possible for operators to compete successfully in mobile money even when they have been slow to market and/or are not the market leader in the mobile business

The 2011 Global Mobile Money Adoption Survey has identified Rwanda as one of the fastest growing markets for mobile money. In a recent blog post, I explained how MTN Rwanda is now emerging as a new success story in the mobile money space. Two years after the launch of MTN MobileMoney in February 2010, MTN boasted 415,000 registered customers. MTN has a market share of 70% in Rwanda in terms of number of GSM connections. However, the competition over mobile money is fierce.

Tigo launched its mobile money service Tigo cash in May 2011 in Rwanda. It managed to leverage the high level of awareness of mobile money among the population – largely due to MTN’s marketing efforts over the past 2 years – to sign up over 260,000 customers in just one year. This is more than MTN one year after the launch of MTN MobileMoney. Airtel, which became the third operator in Rwanda in March, is also planning to launch its mobile money service by the end of the year.

Vodacom, the dominant mobile operator in Tanzania, launched M-PESA in April 2008. In comparison to the extremely rapid adoption of M-PESA in Kenya, the service grew more slowly across the border.[1] However, Vodacom was tenacious, and by September 2011 it was able to announce that there were more than 2 million active M-PESA customers in Tanzania—one-fifth of Vodacom’s mobile base.

In the meantime, however, competition in the mobile money market had emerged. Zain introduced a rival offering, Zap, in February 2009, a service which was re-launched as Airtel Money in October 2010; Zantel launched ZPesa in 2007 and re-launched it in May 2010; and Tigo brought Tigo Cash to market in September 2010.

The 2011 Global Mobile Money Adoption Survey allows shows that Tigo was able to capture significant share from Vodacom during the first half of 2011. In a countermove, Vodacom recently announced an across-the-board reduction in fees for M-PESA.

Tigo’s early success in Tanzania and Rwanda are important, because it illustrates that it is possible for operators to compete successfully in mobile money even when they have been slow to market and/or are not the market leader in the mobile business.

In Pakistan, competition between Telenor and UBL has led them to differentiate their product offering

There are two mobile money services in Pakistan: Easypaisa, which is offered by Tameer Microfinance Bank, in which Telenor Pakistan holds a 51% ownership stake, and Omni, a service of United Bank Limited. Both services allow customers to transact without first opening an account; for Telenor, the third mobile operator in Pakistan by market share, this decision was motivated by a desire to serve customers without a Telenor SIM.

Mobile money is catching on in Pakistan very quickly: according to the State Bank of Pakistan, transaction volumes have increased from 3.5 million transactions in Q1 2011 to 20.6 million in Q4 2011.

The data show that Easypaisa and Omni have highly differentiated offerings. Easypaisa dominates when it comes to [2] Bulk payments represented 18% of the total number of payments it processed in June 2011—while Telenor had not conducted bulk payments up until June.

[1] “What makes a Successful Mobile Money Implementation? Learning from M-PESA in Kenya and Tanzania”, GSMA, http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2012/06/mpesa_case_study9983.pdf

[2] “Case Study: United Bank Limited Supports Cash Transfer Payments,” Bankable Frontier Associates (http://www.cgap.org/gm/document-1.9.50409/CGAP_UBL_case_study_Jan_2011.pdf)

The use of independent retail agents is what, in the first wave of mobile money, has dramatically reduced the cost of cash-in and cash-out compared to doing so in bank branches. Recently, TigoPesa in Tanzania has taken this one step further.  They have begun to appoint roving agents, who aren’t confined to a single retail shop but who can, as the name implies, perform cash-in and cash-out transactions anywhere. They carry a handset with a merchant SIM that is loaded with e- float and cash, and they wear eye-catching aprons which distinguish them from the more common roving airtime resellers.

This is great for customers. Roving agents make “doorstep service” possible—serving customers where they live and work, rather than making them find the nearest retail agent. This makes it more convenient for customers to use the service. In Indonesia, several banks have introduced “smiling ATMs,” bank employees who are armed with a mobile POS device and who can process deposits and withdrawals. This level of service may also make it more likely that customers will take advantage of the ability to store value in their account as a simple way to save. Ghana is famous for its susu collectors, who visit clients regularly (typically daily) at their home or business to collect small amounts to save. Roving agents can allow customers to build up the same habit with mobile money.

Roving agents can make a meaningful difference to the business case, too. Roving agents will have a lower cost structure than retail agents. There’s no rent or other overheads to pay; instead, the roving agent just needs to earn a decent wage. If they are able to perform as many or more transactions as a retail agent, then significant cost savings are possible without eroding the agent’s value proposition. One possible implication of this is that roving agents may someday be able to facilitate very small value cash-in and cash-out transactions that are uneconomical at retail agents.

Why don’t we see roving agents in more markets? One reason is that regulators are concerned about their reliability. But because mobile money services post transactions in real time and require agents to trade on their own account, cashing in or cashing out with a roving agent is really no less safe than buying a physical good (like batteries or an airtime scratch card) from a roving salesman. Roving agents may be at greater risk of theft than retail agents, and operators may choose to limit the amount of float that they can carry in cash. But since that cash belongs to the roving agent, he has every incentive to make prudent decisions for himself about how much to carry.

Tigo has been pushing the innovation frontier outside of Tanzania, too: you can download MMU’s recent case study about Giros Tigo in Paraguay here.

This case study begins with a summary of the Paraguayan mobile financial ecosystem, highlighting the favourable conditions which have contributed to the development of Mobile Money. It then examines the key success factors of Tigo’s Mobile Money product such as deep market knowledge, successful distribution network, effective marketing tactics, and collaboration with an aligned bank partner.

This will be an important  year for Mobile Money in Latin America.  Be sure to read this case study to understand how the deployment is positioned and the lessons that can be derived for other deployments in the region.

The case study can be downloaded in English and Spanish from our Resources section.

Last month, Tigo Money launched in Guatemala and Honduras.

The MMU team had a chance to catch up with Juan Carlos Arriaga, Head of Mobile Financial Services in Guatemala to discuss about their new product and the challenges and opportunities in rolling out in the Central American Region.

MMU:  Juan Carlos, congratulations on the launch.  We are increasingly seeing more deployments in the region.  What is your opinion regarding this change in the market?

JCA: In the past, there was no real need for it in the market.   MNOs in Latin America were not focused on mobile financial services, partly because of regulatory constraints, but also because of the robust growth in the airtime business.  In some countries, we are still seeing growth opportunities in terms of coverage to rural areas and this has been the focus for the past couple of years, but now that mobile penetration rates are hovering around 90%, we are starting to look into other value added services. The lack of regulation in some countries has also slowed down this process and given that civil jurisprudence is followed throughout the region, in some markets this has proven to be a major stumbling block.  Not to mention, our proximity to the US makes us much more vigilant when it comes to AML controls, etc.

MMU: What mobile money offering has the biggest potential to address the needs of unbanked Latin Americans?

JCA: I believe domestic, but most importantly, international remittances will play a major role in the roll out of mobile money in the region.   The World Bank estimates that around 6 to 7 % of Guatemalans reside abroad, mainly in the US .  Guatemala received about $4.1 billion in remittances in 2010-  — about 9.8 % of its total gross domestic product. Guatemala’s dependence on remittances highlights some latent demand which we want to address with Tigo Money in the long run.

MMU: Can you describe the service for me?

JCA: At the moment Tigo Money is a domestic remittance service. Users can send and receive money via any of Tigo’s 500 agents present in all 22 provinces of the country. The service enables users to send or receive money via SMS.  The amounts remitted can range between 5 and 2,500 Quetzals ($.64USD to $320 USD), and we hope that once users become more familiar with the service, the platform will evolve to offer a further array of OTC  and m-wallet services in the near future.

MMU: How much do you charge for your service?

JCA: Guatemala is a country where more than half of the population resides in rural areas. We actually did a domestic market study and found that the average remittance in the country is 500 quetzals or approximately $65 USD per month. In addition, the minimum salary in the country is approximately 200 USD. This information led us to setting the Tigo Money commission at 6% and to set the monthly transaction limits at 320 USD.

MMU: What role do agents play in your model?

JCA: Agents play a very important role in Tigo Money´s commercial model since they are the first point of contact with our consumers.  Also, they help our trainers by spreading the effort of educating the consumer.  As Tigo has approximately 50% market share in Guatemala, this means we can select the best agents to become part of Tigo Money. We are using our pool of airtime super agents to manage liquidity at agent level and cherry pick the agents we think can provide our consumers with a better value proposition.

MMU: How have you promoted Tigo Money? What are the challenges in marketing this new product?

JCA: In Central America, remittances are  a very well understood concept,  whereas e-money doesn’t exist yet.  The local population understands very well the concept of sending and receiving money, and in our experience, they do not really see the delivery channel as a major decision influencer.   Customers care about the cost of sending money and the ubiquity of its agents.  As a result, we are placing our agents in high traffic areas where users in the bottom of the pyramid will find it convenient to use the service. In addition, given the high rates of mobile penetration in the country, users are also very comfortable with the concept of e-top-up. We hope that given this familiarity with this concept will help us take that initial step towards a wider understanding of mobile money amongst the local population.

MMU: Yours is the first service to be launched by an MNO in Central America.  How is the customer need for mobile money here the same or different than in other parts of the region?

JCA: BOP users in Central America depend economically on remittances. Large numbers of the population have emigrated to the US and Mexico and this situation results in cyclical flows of money coming into the country.    We hope that our service will allow money to flow more effectively throughout the economy.   We have also found that even in the BOP segment, there is a high rate of consumption for VAS technologies such as 3G.  Given the familiarity that users have acquired while working abroad or through their family and emigrant networks, we think this will have a positive impact on the service as it matures into a wider gamut of services being offered over the platform.

MMU: How will the Tigo Money service in Guatemala be the same or different from other countries where Tigo has launched (Paraguay, Tanzania, Ghana)?

JCA: The existence of alternatives plays a big role in the shaping and design of a mobile money service. The approach Tigo is taking in the region is somewhat similar, but regulation at the end of the day dictates what kind of service we can provide.     The maturity of the African market has lead to different types of services being offered and at the moment in Latin America, the focus is on educating customers in order to increase their level of knowledge and sophistication when it comes to mobile money.

MMU: Thank you, Juan Carlos.