3 must-know growth tenets from prepaid mobile success

Understanding the consumer behaviour responsible for the success of prepaid mobile adoption in India offers a peek into the evolution of current and future services

January 24, 2021 / 12:29 PM IST
Representative Image

Representative Image

Kaamta Driver, Kaamta New, Kaamta driver 20, Kaamta Jio. Kaamta is my parents’ driver. Last Sunday, he was at the airport to pick me up. He has been there every time I have gone back home in the last 20 years.

New, Jio, driver 20 is how I have saved his phone numbers in my list of contacts. He has a knack for getting a new number every time I feel I have cracked which one works. It is a routine between us, he gives me a new number, then I ask him, “Aur, pehle wala (what about the earlier one?)” and his answer is along the lines of “hai, abhi bhai le gaya hai” or “abhi discharge hai (it is there but my brother has taken it or it is discharged)”.

So, you can’t delete the old one and save the new number with a new code, hoping you have cracked it. The last one I saved was driver 20, in 2020. It didn't work. It seems nothing related to 2020 works.

I had to call my mother to get his number for the pick-up. Waiting at the airport, I decided not to save his latest number. What is the point, eventually I have to dial my mother to reach him?

Kaamta is not the only one. Many people change their phone numbers frequently. The reason could be many but the most common factor is that these are prepaid numbers. So when I heard Nandan Nilekani in conversation with Haresh Chawla on the topic of all things digital, what stood out for me was Nilekani’s comment on prepaid phone strategy. His comment took me to the success story of prepaid, almost like that of sachet marketing in FMCG, when these brands made inroads in rural markets through the packaging of products in small, affordable sachets.

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Following is an excerpt of Nilekani’s talk published by Founding Fuel:

The India opportunity in the next decade, where India will go from a “prepaid” economy to a “postpaid” economy. This will drive a huge cycle of consumption and growth, because credit will boost the system. (The prepaid model was built by the mobile companies in pre-Aadhaar times, when they couldn’t identify the user. It enabled them to reach every corner of the country. As people get to digital payments, build credit histories, they will now be ready for credit.)

Nilekani talked about the state of the Indian economy and opportunities. He brought up the example of prepaid mobile reach in the country and illustrate democratisation of credit lending as an idea to drive growth.

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Prepaid connections account for 95 percent of the market share, a staggering figure for a service in its space. Imagine a train commute pass, where you have two options—one, where you get to use the pass for a month with unlimited rides, like in Chennai metro, and the second, like any prepaid mobile service where you buy travel points and commute. The second one is so lucrative, like the prepaid mobile service, that it takes a bigger chunk of the two offerings.

Similarly, if one looks at services like education, credit-lending and mutual fund investments, there is no particular offer that outshines the rest to like the prepaid mobile service.

It is not only about the 95 percent share but also about the only unique service that has reached every nook and corner of the country—and largely through the offline mode initially. It has not only reached but it also continues to be the bedrock of the growth in the country.

In Habits for Thinking, we focus on mental models. Mental models are how we understand things. It is our reference point, our understanding arranged in chunks in our mind.

Mental models are our thinking tools. They help us form a web of frameworks that help in decision-making and problem-solving. We learn mental models from diverse fields like economy, science ( read about entropy here) sports and business.

In today’s Habits for Thinking, here is a mental model inspired by the prepaid mobile market, as a consumer strategy framework. The economy is moving towards a gig economy where a steady flow of income is changing to income in batches, with some good months and some slow-income generating months.

Understanding the consumer behaviour responsible for the success of prepaid mobile adoption offers a peek into the evolution of current and future services.

In this model, we look at three tenets that made the adoption of prepaid mobile cards deep and wide.

1 The tenet of convenience 

Convenience is complex. It is not just about the convenience of shopping, but convenience is about the ease of decision-making. Is decision-making convenient enough for one to make a purchase? What are the factors that impact decision-making?

The first is the price. To make products affordable, FMCG companies introduced sachet as a packaging variant. Prepaid has gone to another level. They made many sizes of sachet available, meaning you can buy a small amount of mobile time too. Availability, the most visible convenience factor, is most talked about in the field of ecommerce.

Let me bring your attention to the availability of prepaid cards 10-12 years ago. Prepaid cards were not launched through e-commerce but the convenience was added through sale counters in every corner store in towns and villages. Selling from the neighbourhood store killed two birds in with one stone. The product was made easily available and the sale through a neighbourhood store made it trustworthy and for some, available on credit too.

The trust that a face-to-face sale generates is sometimes essential in the adoption of a category. People know the neighbourhood store guy and are comfortable buying SIM cards through him. Affordability of price, easy availability and trust made the decision-making easier.

The convenience of an offering is not just about affordability and availability but is also about simplicity in decision-making for the consumer.

2 The tenet of flexibility 

You can recharge not just any amount, you can also use it for as long as you want. It has no stopper on the calendar like an expiry date. So there is no pressure on your time. This flexibility over time and spending empowers the user and therefore aids quick decision- making. Flexibility about time also takes care of the seasonality of spends. During festival season, income rises and therefore the power to spend. If we had a health insurance plan that would allow variable amounts to be paid in the bucket as against a fixed amount every month, it would possibly see more adoption of health insurance.

In a gig economy, seasonal spending will only grow and so will the need for flexible programmes.

3 The tenet of respectability

It doesn't judge you. It lets you be you. There is no shame in refuelling a Rs 20 charge. It doesn't ask why you refill three times a week when you could have done once in a week. It does not judge the irregular flow of liquidity. One day one can have Rs100 in cash and the other day just Rs 20. That's the reality but no one is judging that.

It often happens during a sales negotiation, that the buyer starts thinking about how the seller perceives him. Luxury brands thrive on perception marketing. Many purchase decisions get influenced by what others will think and these “other people” could be friends, colleagues and sometimes even the sales guy.

My years of observing consumer behaviour have taught me that a buyer may get conscious of what they are ordering in the restaurant influenced by people around them but are never conscious of how much or how little they pay for a prepaid mobile. The credit goes to building a category, where there is no perception marketing.

There is another advantage of prepaid mobile cards’ positioning and price point. It makes everyone equal. The office boy and the office boss both have access to the same but health insurance is out of bounds for the office boy. Not because he cannot afford it, but because the product doesn't meet the needs of the office boy.

As we move into a transactional economy, the convenience of decision-making, the flexibility of the offering to suit needs and the respectability of the product will define the growth of any product or service.

Nilekani brought up the fact that the consumer today has access to digital platforms and has Aadhaar identity card. He is ready to consume if we are ready to sell like the prepaid mobile businesses.

(Vishakha Singh, author of a forward-thinking course SHIFT, is a business strategist & a design thinking practitioner. She writes at www.habitsforthinking.in, offering insights into the ever-changing business environment.) 
Vishakha SIngh
first published: Jan 23, 2021 07:47 am

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