Converting Freemium customers at
Scale
Tughral Ali
Head of MicroEnsure Africa
MicroEnsure Overview: by the Numbers
Founded in 2002 by Opportunity International
2007 Gates grant, 2012 conversion to for-profit social enterprise Investors: AXA, Omidyar Network, IFC, Sanlam
Design, implement and operate micro insurance products worldwide 16 million customers in Africa/Asia
85% of customers are new to insurance
Cover various classes of risk: life, inpatient/outpatient health, crop, political violence, micro asset, accident/disability, “decongestion” 90 banking and microfinance partners
70 insurance partners 14 telecom partners
Freemium Mobile Insurance in Africa
Competitor 1 Leo Namibia – 2007 EcoNet Zimbabwe - 2011 MicroEnsure Tigo Ghana – 2010 Tigo Tanzania – 2011 yuMobile Kenya – 2012 Grameenphone BD – 2013 TNM Malawi - 2013 Telenor Pakistan – 2013 Airtel Ghana – 2014 Airtel Zambia – 2014 Airtel Burkina Faso – 2014 Airtel Nigeria – 2014 Airtel Niger – 2014 Airtel Madagascar - 2014 Airtel Kenya – 2014 Airtel Malawi – 2015 Equitel Kenya – 2015 Telenor India - 2015 Competitor 2 Tigo Senegal – 2012 Robi Bangladesh – 2012 Tigo Mauritius – 2013 Dialog Sri Lanka – 2013 XL Axiata Indonesia – 2013Competitor 3
Vodacom TZ - 2012
MicroEnsure built and operated the first major freemium mobile product with Tigo in 2010 which has been copied by several companies since
MicroEnsure has deployed more freemium mobile products than all competitors combined: freemium is the dominant model for mobile insurance success as documented by CGAP, GSMA and other independent researchers
Competitor 4
Unprecedented Products High-Volume Systems Technical Strength Market Knowledge Speed, Efficiency, Agility Customer Value Robust Operations
Freemium
Product Examples:
Telecom
Mobile Insurance Freemium Model
Earn free life, accident and hospital
cash cover up to $2,500 when you top
up $2
The more you top up, the more you earn
Pay $1 per month and double the free cover
you earn
Earn up to $5,000 in life/accident and hospital insurance
Buy additional cover for a family member
Buy additional types of cover: health,
handset, travel, crop …
Embedded leads to paid uptake
Product Example – Ghana “3 for Free”
Phase 1 – January 2014
Phase 2 – March 2015
Double Cover – pay GHS 1 per month to double
your 3 for Free Cover: enjoy up to GHS 5,000 in life, accident cover and GHS 300 hospital cash
Family Cover – pay GHS 3 per month to double your
3 for Free Cover and give them same coverage to a loved one
Monthly Recharge Life Cover Accident
Cover Hospital Cash
GHS 5 – 9.99 GHS 250 GHS 250 GHS 25 GHS 10 – 19.99 GHS 500 GHS 500 GHS 50 GHS 20 – 49.99 GHS 1,250 GHS 1,250 GHS 100 GHS 50 and up GHS 2,500 GHS 2,500 GHS 150
Free Product Impact – 2014 Data
Increased ARPU and decreased churn leads to an excellent return for the MNO…
While financial inclusion & insurance penetration skyrocket as claims are paid…
100.000 200.000 300.000 400.000 500.000 600.000 0,0% 2,0% 4,0% 6,0% 8,0% 10,0% 12,0% 14,0% 16,0% 18,0%
Jan Feb Mar Apr May Jun
Oct Nov Dec Jan Feb Mar Apr May June
Average Recharge per User (ARPU)
Control All Insured
Insurance Launched
Mobilizing Deposits: Proven Results
Example from Ghana: Savings-Linked Life Insurance Product
MicroEnsure insurance product was the only intervention during the period
Mobilizing Deposits: Proven Results
Ghana: Savings-Linked Life Insurance Product
June-November 2011 Increase in Deposit Balances Below 10,000 NGN
Branch Balance As At June 2011 Ending Balance As At Nov 2011 Ending Savings Increase % Branch 1 7,314,012 22,003,922 201% Branch 2 5,666,264 17,637,195 211% Branch 3 7,822,223 25,308,989 224% Branch 4 10,971,826 29,841,481 172% Branch 5 9,899,560 27,702,122 180% Branch 6 11,681,174 39,608,069 239% Branch 7 6,782,638 22,321,789 229% Total 60,137,697 184,423,566 207%
ADD Flood/Fire Catastrophe Cover
Selling Loans through Microinsurance
Bank / MFI Borrower Borrowers’ Families Bank, borrower and trust groups benefit Borrower and family benefits directly
ADD Permanent Disability/Critical Illness
ADD “Credit Health” Cover
ADD Spouse / Children Funeral Cover
Must extend beyond credit life insurance to drive value
Converting
Freemium
Customers:
Freemium to Paid
Field Agent Retail Call Centre SMS
Choosing Sales Channels
Product Understanding
Reach
Best Option: Call Centre
• Product explained by real person.
• Reach 3x more than field agent per day.
Field Agents – some challenges
• Agents face limitations on achieving scale required for profitability
• Cost of agent reduces the value that can be provided to the customer. Result: low benefits
• Training and new product introduction are complex and expensive
• Insurance sales is not a frequent transaction model
Freemium to Paid
•
Use customer balance data to design payment structure.
• Worked with telecom to go through historical data.
•
Daily payment options must allow for missed payments.
• Originally 20 daily payments per month, but customers balances are too inconsistent for so many transactions.
• Solution: increase payment amount, decrease number of payments.
Freemium to Paid
•
Characteristics of successful sales leads:
• Subscribed to freemium product
• Active on network
• Consistently has balance
• Has balance at point of enrolment
•
In-house call centre more effective, cost-efficient
• Greater control of scripts, quality of information.
• Direct connection with agents, easier to manage morale. • Significant cost saver, quickening pace to break-even.
