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 corporations like Engie driving the industry towards maturity.
And yet, all Last Mile Distributors (LMDs) need to diversify their offerings, leveraging existing distribution channels (whether through agents, shops, or kiosks) to serve their customers with more than one product. This is where smartphones come in.
Why do 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, while others have paid off. In all cases, the initial linkage and structure are in place and the customer information is known; helping LMDs to add a product while reducing the cost of acquisition and risk.
Selling the features and benefits of a Smartphone is easier when you are a direct user; which is often the case for an agent network or kiosk owners. They have smartphones and understand their 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 customersWhen done right, any sale of an asset under a PAYGO scheme is an opportunity to accumulate behavioural 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 help any LMD create an informed customer risk profile.
- Winning new customers
Smartphones 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 centre 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 — PAYGO Phones show excellent numbers that validate the opportunity for LMDs. Some of the reasons for high repayments are listed here:
At the end of the grant, only 14 per cent of PAYG smartphone customers were late on a 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, automate 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:
- PAYGO integration
For last mile distribution of phones to be successful, you must to be able to implement PAYGO Schemes: it reduces the upfront and monthly cost of the asset and allows you to control the asset and lock/unlock it based on payments from the customer.
In the Solar Home System space, major manufacturers like Biolite, Amped Innovation and Omnivoltaic offer that feature to all their customers; their products “talk” to software providers like Upya to automate the process of locking, unlocking, and 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 CRMs like Upya.
Upya is proudly integrated with
- A good inventory management capability
Answering the question of who has what product at any given point in 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 collect 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