Increasing the customer’s span of control seems to imply success

By | April 28, 2009

IMG_8326 We broke down the basic concept of the 'pay as you go' or prepaid
mobile plan – in general, discounting the details of the various
different strategies and pricing/time plans of different countries as a
way to begin understanding what is it about this model that makes it
work at the BoP, now in the light of our findings from the workshop.

Could
we somehow find a general principle that could then be applied
elsewhere, seeing as how successful this model has been amongst the
lower income markets?

Fundamentally, all prepaid plans had one
lumpsum upfront amount for the starter pack/activation and thereafter
could be kept 'alive' by a minimum additional recharge or top up
accordingly.

That is, this payment plan is flexible – it
allows you to decide how much you wish to pay and when, though the
absolute minimum frequency does depend on the provider's rules and this decision making thus puts you in control of how much you spend and when; based on your incoming cash flow and current priorities for your discretionary spending.

Just
for comparison's sake, a mobile phone subscriber on a post paid model
would have to pay the amount on the monthly bill by a certain date in
order not to fall behind or incur penalties. That is, there is little
flexibility (other than making actual changes to which plan you're on)
and the control of when to pay, how much to pay and the frequency of
the billing is all in the hands  of the service provider. The user
(customer) has little control over time and money.

Now,
bringing it back to our findings from the workshop on the financial
planning behaviour observed among those at the BoP where we see that it
is their ability to control the elements of time – periodicity &
frequency; money – cash or goods and also social capital or in this
context "trust" that in fact allows them to increase their ability to
plan their 'cash flow' and 'working capital' across their multiple
sources of income and resource allocation, thus decreasing the variance
between their income and expenditure. 

We can already see the
fundamental reason why, then, the pay as you go model has been
successful for those at the BoP, it is one of the very few that
essentially puts control over time and money in the hands of the user
(customer) rather than the provider (business).

One thought on “Increasing the customer’s span of control seems to imply success

  1. Putting people first

    Prepaid economies and bottom of the pyramid research in Helsinki

    Recent Experientia collaborator and emerging markets expert Niti Bhan is currently based in Helsinki, Finland (where we met her yesterday), where she is involved with several research projects on Bottom of the Pyramid issues.
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