Increasing market share through sales efficiency (part ii)
As explained in my previous post, we are supporting an African operator in increasing market share. As there’s still room for growth we are supporting them on expanding the commercial footprints in those regions with expected higher return (measured in daily activations).
The main issue in the regions is that there is a significant gap between our network footprint and our commercial reach (“there are over 2.4M inhabitants covered by our client’s network but who do not have a PoS in their city”) although our client is trying to reduce the gap, the limitation on resources and the need for checks to minimize risks in terms of fraud make the going slow.
So, what to do? First thing we did is measure the mismatch between PoS capillarity and mobile penetration. We saw a strong relation between the POS density and the subscribers penetration which led to a very low penetration rate in term of active subscribers (for example, we found 8 cities without any controlled sales presence and with a significant mobile penetration or that, at least, 1,2M people can not find any controlled POS in their city.
Our analysis unveiled that cities with low commercial presence (less than 1 POS per each 2.500 inhabitants) showed poor penetration rates of our client (les than 4% over the population) while had a significant traffic in them. This meant, that part of the population was driving a long distance to get a SIM of our client, as they had no choice to acquire it in their city.
Once we saw this, we extended the analysis to most of the bigger cities presenting low penetration level. The lack of commercial presence in these cities justified their poor penetration, but at the same time show the clear growth opportunity our client had in them.
Understood where the problem was, we suggested the following approach to revamp our current sales network and improve current acquisition levels:
- Define a target in term of POS density
- Select places where to be present (established retailers).
- Decide where to be visible (advertising in POS, etc.)
- Open a CSP per city to manage the stocks and to coordinate and monitoring the different commercial actions
- Review the commissioning structure in order to be more performance oriented
- Define a general distribution organization with control mechanisms for the mid term
Net, net, we are A) pushing to ensure a commercial presence (POS coded, CSP) in important cities that we think essential for our clients for winning market share (focus on potential areas), B) suggesting to increase significantly our client’s resources in the regions in order to push the sales activities and C) Redesigning the commercial network in big cities with low sales performance could bring an additional source of growth.
Is this exercise working? Will let you know in future posts.