The challenge of activating registered customers

A large number of mobile money deployments in emerging markets now show spectacular penetration. In understanding the success of these deployments, it is important to define three definitions of penetration:

• Target market refers to the number of possible subscribers that can be registered. For instance, if the service has been deployed on a specific mobile operator network, then the target market size is equal to the total active SIM cards for this mobile operator.
• Registered subscribers are the number of customers that have been registered on the mobile money system. In other words these subscribers have a valid account on the system and can receive money from another subscriber.
• Active subscribers are subscribers that actually transact on a regular basis. The definition of active subscribers differ from one installation to another, but boils down to subscribers actually using the service.

Generally, registered subscribers can be as high as 75% of the target market, but this is rare. Penetration rates of 35% are good, whereas 15% are achieved frequently. One should expect to have more than 50% of registered customers active, but this is sometimes quite low (5-10%). Installation with higher active subscriber penetration rates are usually profitable and sustainable. It has become more and more important for operators to get this percentage higher.

Various strategies exist to entice registered subscribers to become active. This would include special offers, promotion campaigns, new features etc. The penetration rate often start climbing above a critical mass when the network effect kicks in. Unfortunately, it requires investment to ensure that the percentage of active subscribers grow and keeps on growing (until critical mass has been reached). A good article on some of these considerations has been published by CGAP. (Read here).