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Understanding How To Ensure The Successful Implementation Of Your Top Up Schemes

Understanding How To Ensure The Successful Implementation Of Your Top Up Schemes. Stathis Efthymiou , Vodafone Greece 27-30 September 2004 Prepaid Mobile 2004, Budapest. Scratch Cards. “Traditional” method to recharge prepay account

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Understanding How To Ensure The Successful Implementation Of Your Top Up Schemes

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  1. Understanding How To Ensure The Successful Implementation Of Your Top Up Schemes Stathis Efthymiou, Vodafone Greece27-30 September 2004 Prepaid Mobile 2004, Budapest

  2. Scratch Cards • “Traditional” method to recharge prepay account • Production & distribution costs (plus insurance, storage) • Stock outage at POS → loss of revenues • Restricted number of denominations (e.g. €9, € 20, € 36) • Difficult to “test” new denominations • Fixed values cannot “compete” for all available pocket money of a teenager! • Both sides of scratch card can be used to promote effectively new services, loyalty programs, contests etc. • Suitable even for POS that sell low volume • Fraud risk: for POS with multiple cashiers / shifts (e.g. gas stations, super markets)

  3. E-voucher receipts (off-line top up @ POS) • Electronic evolution of scratch card • No production costs • Distribution cost (Lower? Same? Higher?) • Minimum requirements for: • Easy deployment: sell & provide “PIN files” to e-voucher distributors • More denominations • Easy to launch & test intermediate denominations

  4. E-voucher: Availability wins! • Availability of high denominations results to higher penetration → higher revenues * Figures are indicative - Actual figures are confidential

  5. E-voucher receipts (cntd) • Limited promotion capabilities • Text based, few lines, black & white • Traditional physical scratch card distributors resist to e-voucher • Tax implications • Opportunities for local micro-marketing activities • E-voucher POS installed at merchants in a specific area / limited period

  6. Telephone Banking IVR ? CC agents ? • CC agents • High cost per top up (OpCo will pay?) • Prone to errors (I.e. type wrong MSISDN) • Waiting time (on a queue) costs if call is made by prepay mobile and usually balance is already zero! • IVR • Development cost

  7. Telephone Banking (2) • Issues • Not all banks would agree to offer Telephone banking e-top up → service not available from all banks and therefore cannot be communicated effectively • Not all bank customers are using Phone Banking • Call to Phone Banking cannot be offered free of charge (it cannot be treated as an exclusive line for top ups)

  8. IVR e-top up through Bank account (4) Credit prepay account (2) Request to capture funds (1) Call to 1258 and select top up amount (3) Debit bank account

  9. IVR e-top up through Bank account (2) • Registration • Link MSISDN with Subscriber’ bank account • Apply at bank (branch, phone banking, ATM) or at Vodafone shop • Top up experience • Subscriber calls 1258 free of charge from his prepay mobile • Enters PIN • Selects top up amount € 10, € 15, € 20 or € 40 (although that amount could have been variable) • Call ends

  10. IVR e-top up through Bank account (3) • Top up experience (continued) • Vodafone requests from Bank to capture funds (through ΔΙΑΣ) • Bank reserves funds and responds • Vodafone credits prepay account and sends confirming SMS + new balance • Real time top up (takes from a few seconds to 1 minute) • 24 hours x 7 days • Remote (from mobile) & convenient • Greece or abroad (CAMEL) • No more PINs to key!

  11. IVR e-top up through Bank account (4) • Low distribution cost • Lower than traditional scratch card, higher than credit card acquiring transaction fee • Loose customer communication • Less room for fraud

  12. IVR e-top up through Bank account: Issues • Prepay market is a cash oriented market • Subscribers are used to scratch card (or e-voucher) method • Subscribers dislike to disclose their bank account details • Subscribers’ inertia: need to apply at branch, Vodafone shop → hook ?

  13. IVR e-top up: Conclusions • E-top up through bank account / credit card becomes more effective as distribution costs tend to be close to the acquiring costs of credit card transactions • 24hr availability • Low penetration • Rule: go for the top 20% subscribers who redeem the 80% of airtime value

  14. IVR e-top up: Findings * Figures are indicative – Actual figures are confidential

  15. IVR e-top up: Findings • 40% of e-top up users still redeem scratch cards (hybrid) • 42% air time value redeemed by the above hybrid e-top up users comes from scratch cards • Introduction of e-top up drove to higher ARPUs • Average monthly airtime consumption: hybrid users = 2 x pure e-top up users • How to fully convert to e-top up and abandon scratch card / e-voucher top up? • Give permanent incentives? • Insufficient bank account balance? • Do subscribers think of it as an alternative (and not primary) top up method? • Are subscribers unconfident?

  16. Web banking / ATM e-top up (2) Send request to Vodafone (3) Credit prepay account (1) Select top up amount & reserve funds (4) Capture funds

  17. Web banking / ATM e-top up (3) • No registration is needed: ad-hoc • 3rd party top up is possible • Limited to bank customers / internet users • Not convenient as a simple call from your mobile! • Loose customer communication • Less room for fraud

  18. Real time e-top up at POS • M-Pay solution • Real time (on-line) e-top up – no PINs to enter! • No need for a fixed line or a GPRS modem: uses subscriber mobile to communicate during sale process • Variable amounts: from €9 to € 36,0 (step: €1,0) • Fraud is more difficult

  19. Notes • Air time distribution cost is critical as it affects cost of funds • Distribution + production cost threats profit margins of offered mobile services • IVR e-top up improves top up experience: whenever, wherever, whatever • Guarantees uninterrupted use of prepay mobile account and increases airtime consumption • Option of higher top up amounts →increases usage and drives to higher ARPUs • E-top up through bank account / credit card establishes a link: MSISDN ↔Financial source of fundsIs this 1st step towards m-commerce?

  20. Is it worth to replace scratch card ? • A significant part of e-voucher receipts & e-top up @ POS cost is merchant’s margin …

  21. Where to be in future ? * Figures are indicative

  22. Prepay Roaming Top up • A global Vodafone initiative • Participating OpCos • Vodafone UK, Germany, Italy, France, Ireland, Spain, Portugal, Malta, Sweden, Australia, N. Zeeland • Partner networks: Mobilkom A1, Vipnet (Croatia), SiMobil (Slovenia) • E.g. A Vodafone Greece prepay subscriber (Vodafone àla Carte or Vodafone CU) roaming at UK, can top up his account by buying & redeeming ‘Pay as you Talk’ e-voucher receipts

  23. Prepay Roaming Top up (2) Subscriber Home Network e.g. Vodafone Greece Central System Roaming subscriber calling his subscriber network via short-code number (I.e. 1268) Visited Home Network (that issued voucher)

  24. Prepay Roaming Top up (3) • Low convenience fee: € 0,5 per top up • Fixed fee promotes redemption of high denominations • Subscriber redeems e-voucher by calling his home network’s top up line (or visitor’s network) free of charge • Uninterrupted service • Monthly reconciliation & settlement • Subscriber network has to receive voucher value from visitor network – visitor network’s costs • Alternative top up options: sell e-vouchers of local network abroad? • Next step: real time e-top up at POS?

  25. Prepay Roaming Top up (4) • Promote Prepay Roaming Top Up • TV Commercials, press, Tickets, Maps, Tourist guides: nice to create awareness, but expensive! • Welcome SMS and Low Credit SMS customized per outbound networkBoth are low cost and effective promotion tools.e.g. “Your balance is running low – Now you can top up in Italy by using Vodafone Ricarica scratch cards”

  26. Pro-actively alert your customers when they are running out of credit • Ensure that subscriber is notified when balance → 0 • Local: Nice for consumer, but not recommended! • Abroad: Yes, useful as international rates are high and subscriber unaware and inexperienced! • Prepay subscriber’s behavior is sometimes peculiar ... • Buying pattern: Buy one scratch card once / twice a week? • Alerting subscriber will drive to cautious usage:e.g. make only urgent calls / minimize duration till tomorrow / weekend

  27. Pro-actively alert your customers when they are running out of credit(2) • Low credit notification is useless, unless top up is possible! • Low credit alert abroad, requires roaming top up scheme and free call to top up line • A local low credit SMS could be offered as an added value service to subscribers who are registered:a. for loyalty programsb. their bank account / credit card for e-top upe.g. send low credit SMS: Your balance is running low. Do you want an e-top up? Send your 4-digit PIN to 1258 to top up € 10

  28. Ensure your customers keep their accounts topped up • Effective top up promotion scheme: easy to understand & implement • Fixed value bonus top up promotion (e.g. €1 per top up during promotion period) cannibalizes high denomination values (e.g. €20, €36) • Promotions should have specific objectives, such as: • Build loyalty (e.g. give extra loyalty points for ATM top up) • Promote usage • Promote high denomination values • Promote low cost e-top up channels (e.g. offer 10% airtime bonus per e-top up through bank account)

  29. Ensure your customers keep their accounts topped up (2) Top up € XX and gain XX % airtime bonus on your next e-top up (within 1 month) • E.g. e-top up € 15 and gain 15% airtime bonus on the next e-top up • Offer sounds more attractive as long as you e-top up higher values! • Promotion offer % is higher than the actual promotion bonus • Promotes usage of higher denominations: the more the top up value, the more bonus (%) you get • Airtime bonus is always related with the next e-top up • 1 month expiry period of the bonus option stimulates frequent top up

  30. Ensure your customers keep their accounts topped up(3) € 10 Top Up € 15 10% Earn: 15% € 20 € 40 20% Next time you e-top up! 40%

  31. Rules for promotion • Variable – not fixed for all denominations • Give extra bonus for high value top ups • Bonus should not necessarily be €s; it could also be services e.g. SMS, MMS etc. although this might narrow its target audience • Bonus incentives offered to promote top up through specific channels should not undermine convenience offered • Bonus should last as long as it needs for subscriber to fully embrace the new top up habits • Try to make synergies with loyalty schemes • Promote low cost e-top up channels

  32. Understanding How To Ensure The Successful Implementation Of Your Top Up Schemes Thankyou! Stathis Efthymiou, Vodafone Greece stathis.efthymiou@vodafone.com 27-30 September 2004 Prepaid Mobile 2004, Budapest

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