Mobile Money Operators in Nigeria and the Customer Retention Nightmare

Mobile Money Operators (MMOs) in Nigeria are financial service providers who provide mobile-based financial services under the Central Bank of Nigeria’s (CBN) regulatory framework.

MMOs use mobile money agents and aggregators to reach underbanked and unbanked populations in Nigeria, leveraging the widespread usage of mobile phones to provide convenient and accessible financial services to a financially underserved and unbanked sector of the population.

As a result, Nigeria is closing the financial inclusion gap. Typically, MMOs permit users to conduct a variety of transactions using their mobile phones. Typical examples of these services include money transfers, bill payments, airtime purchases, credits, and savings accounts.

Who are the customers?

Because most MMOs operate a B2B model, mobile money agents and sometimes, aggregators are referred to as customers.

Prior to the proliferation of MMOs in Nigeria, there were only a few service providers.

As of 2014, the Central Bank of Nigeria (CBN) reported that 80.7 mobile money agents served 100,000 adults, and 21 Mobile Money Operators (MMOs) were licensed to conduct business in Nigeria.

Numbers

According to Statista, Nigeria had 15 million mobile money subscribers in 2019 and 22 licensed mobile money operators.

In 2019, Nigeria counted over 375 million mobile money transactions.

In 2019, the value of mobile money transactions in Nigeria exceeded five trillion Naira (roughly 13 billion U.S. dollars) and in 2023, close to 17 percent of the population between 16 and 64 were using mobile payment services.

Customer retention however remains one of the most significant challenges that MMOs experience in Nigeria. Despite the fact that acquiring new customers is thought to be a relatively simple process, albeit one that may be marginally more difficult for new entrants in comparison to established industry players, MMOs continue to struggle with the challenge of keeping existing customers.

I will briefly discuss some of the causes of agent churn before proposing solutions to manage churn in the agency banking industry.

Common causes of agent churn; a myriad of issues.

• Incessant service downtime resulting in chargeback, delayed transfers, missing token and erroneous debits (bill payments, CICO services)
• Inflexible and high pricing
• Agents inability to reach customer support in real time (phone call/in app chat)
• Delayed resolution to issues
• Complex customer onboarding process
• Complex KYC process and transaction limits
• Zero/poor notification on resolved issues
• Lack of personalised service — Customers do not feel seen or heard.

Possible solutions to combat churn and improve customer retention

To combat churn, MMOs must develop strategies to manage their agents, terminals, and aggregators.

Agent Management

• Localise your customer retention and customer support team: Avoid the temptation of centralising your support team at the HQ. The closer your support and retention team are to your customers, the better. There is simply no one-size-fits all. For MMOs with regional operations in Nigeria (Southwest, Southeast, Northeast, North Central, Northwest), it is imperative to understand that there are regionally-unique needs in terms of customer support and retention that you must be aware of.
• Competitive Pricing: While I do not advocate engaging in a price war with competitors, I do recommend maintaining a competitive price point. However you may justify a slightly higher/premium pricing if you have some differential advantages such as; A 98–99% uptime, long-lasting (POS device battery-life and durability), faster, and sleek Point of Sale (POS) devices, seamless user interface on the app, providing POS papers to customers, or simply bundle two or more of these advantages. This may help customers understand why they should choose a platform with slightly higher price point. MMOs may also explore the concept of solution bundling to improve value perception to their choice laden customer base. Please keep in mind that pursuing a single line of competitive advantage i.e. Cost Leadership (being the cheapest), Product Differentiation (offering unique desirable features), and Focus Leadership (offering specialised services in a niche market) may be tricky. Nigerians are generally price sensitive and would sometimes appear to “want it all” so find a balance or tweak according to your organisation’s positioning strategy.
• Personalisation: MMOs must re-think and re-define what customer centricity means to them, and how they’d like to be positioned in the mind of their agents, actively seek feedback, and consistently create and improve value ads. MMOs must also creatively develop innovative marketing tactics that help customers feel seen and heard.
• Data-driven insights: To acquire insights into user behaviour, preferences, and patterns, MMOs must harness customer data. Analyse customer usage trends, transaction history, and comments to find opportunities for improvement, personalise offerings and develop retention strategies.
• Continuous innovation and adaptation: To add new features, services, and user-friendly interfaces, MMOs must keep up with industry trends and technical improvements requests. Continually develop your platform or app based on user feedback and shifting consumer preferences.
• End-to-end onboarding: provide onboarding support for the first 3 months without fail, get creative with product demos, device pamphlets, translation services to help your most technologically disadvantaged agents understand and seamlessly use your mobile app from end-to-end. You can also explore the provision of onboarding kits for your new customers.
• Downtime & Issue Resolution: Manage downtime and issue resolution proactively. Whilst it is practically impossible to achieve a 100% service uptime, MMOs must strive to ensure that their agents are notified of possible downtimes ahead, use in app notifications to keep in touch and communicate improvements as regularly as possible. In addition to phone lines, email, and tickets, MMOs can explore in-app chat for real time issue resolution. Your Support and Engineering team would probably be the largest team in your organisation.
• Identify and solve branding needs (Outlet branding, Umbrella, Banners, T-shirts, Caps, Packaging bags) for agents on a case-by-case basis to minimise cost.
• Agents Reward: Create performance based reward schemes for your agents and remain consistent with it. (Monthly, quarterly or annually).

Terminal Management (The 3 Rs)

Set up field operations team for terminal retrieval, repair, and replacement operations. Create and maintain SLAs for these activities and ensure to keep to it. I highly recommend that field staffs work within close proximity to their home with a focus on the 3Rs.

Aggregator Management

There’s a common saying that aggregators are hardly loyal to a platform. And my advise is “know this and know peace”

Implement proximity mapping of agents to aggregator: You can use a 1 aggregator to 100 agents model within a realistic proximity to the aggregators residence or office. As much as possible, ensure that aggregators do not onboard agents outside their coverage area. This can be tempting but firmly resist it. You may explore the option of creating an internal Yellow page where aggregators can see the closest aggregator to any agent. This will promote networking.

Set up a performance based compensation scheme for your aggregators. This could be based on agent acquisition, while you provide competitive commissions and bonuses based on revenue from new and existing sales which will be highly retention driven. Ensure that compensation for agent retention is higher than that of agent acquisition. Consider a 5 ratio 2 model. 5 for retention and 2 for Acquisition.

Provide adequate and seamless work tools for your aggregators (Aggregator performance dashboard) and (Agent performance dashboard) can be synchronised into a single dashboard.

Lastly, practice open communication, ensure transparency, and a free flow of information between internal and external team members, Practice inclusivity in sharing information, reward honesty, ensure clarity, demonstrate active listening, and provide regular feedback to your agents and aggregators.

Whilst there is no silver bullet to solving your entire customer retention issues, implementing the aforementioned strategies and keeping a motivated and agile team will help your organisation reduce customer churn significantly.

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Article written by Henry Ojo