10 Rules for Sales and Distribution in African Fintech – TechEconomy Nigeria
In 2021, Africa’s tech startups raised nearly $5 billion, almost double the funds raised in 2022. Britter Intelligence’s 2021 Africa Investment Report showed that the fintech industry contributed to a lion’s share of investment in startups across Africa, with close to 3 billion dollars.
Last year, five startups also reached unicorn status on the continent – Flutterwave, OPay, Wave, Chipper Cash and Andela. Four of them were fintech.
In the first half of the year, African startups raised over $2 billion. This is an increase of over 130% from the $1.19 billion collected in the same period last year. The top leading sectors were fintech – which raised $305,430,000 (71.7%), energy technology (8.4%) and mobility/logistics (7.7%).
By all indications, the fintech industry in Africa, and Nigeria in particular, appears to be lucrative. But does this mean that a good fintech idea and product automatically leads to success? Of course not.
A great tech idea is only a fraction of the work required to build and scale a viable startup in Africa or any part of the world. Building a marketable product that can appeal to the right target market; retaining the right talent, and good business and sales models are some requirements.
A good sales and distribution strategy is invaluable
A good sales and distribution strategy can never be overestimated. From driving revenue growth, managing revenue-generating processes and increasing market share, a suitable sales strategy gets down to the basics of the product and its goals. And here are ten rules every startup owner must live by in order to succeed:
1. Get the right technology
The product is the first proper experience for the customer; it’s important to get the technology right.
Second chances are a difficult question. When a customer/agent tries your platform once and it fails, they move on to someone or something else that can help solve their problems. So take the time to fix anything that might hinder the functionality of your product.
Test the product, test it again and test it again. Launching powerdeal.ng by ITEX took a lot of resources from the QA team.
Ernest Uduje, Managing Director of Itex Integrated Services insisted that the product should pass all necessary tests to ensure that it delivers the required result to end users the first time.
Make sure you deliver something of greatest value to the customer. Customers don’t buy an item just because of its aesthetics. “Can this solve the customer’s problem?” that is the most important question.
If you can’t answer yes to that, you can’t proceed to the second step yet. It may be time to go back to the drawing board.
2. Automate your processes
Automation tools help improve performance quickly. It can enable companies to deliver on the reduction of internal costs and speed of service. However, not all automation is equal and it varies from business to business.
Choosing the right tools for your business will depend on understanding the need and knowing how you want to meet it. It is critical to reduce as many processes as possible to enable efficiency, and the best way to improve efficiency is through automation.
The next time you think about efficiency in your processes, think twice before throwing bodies at the problem. Can technology solve the problem?
Performance management should not be done manually, reports from the field by the sales team should be automated and feedback close to real time. Agent commission should also be automated and made visible to the agents in real time.
3. Compliance is key
It is important to understand the legal requirements of the industry in which your business operates. This is an avoidable pitfall that can be addressed by working with the right legal partners.
Whatever you do, always protect your license. Licensing of a fintech company depends on the company’s category.
It can either be a digital bank, a payment service bank or a payment service provider. These three categories have different licensing procedures.
Your business must be fully compliant as it is the only way to guarantee protection. The cost of non-compliance can be colossal.
It can lead to job losses, the board will ask for blood and someone or some people will have to fall on the knife, is still mild as long as the license to operate is not revoked.
A case in mind was the popular $5.2 billion fine imposed on MTN Nigeria by the Nigerian Communications Commission (NCC) in October 2015.
The NCC claimed that MTN had continued to provide services to customers with unregistered SIM cards. The size of that fine shook business to its core. There are reports of other fines by the CBN on various banks for a number of transgressions in the Nigerian banking ecosystem
4. Define the right goal for the sales team and monitor their performance
Don’t expect what you don’t inspect. First of all, create a detailed prospect landscape and develop a rigorous, goal-oriented pipeline. This means articulating correct OKRs (goals and key results) and KPIs (key performance indicators).
Establish proper documentation for each step in the sales process to ensure alignment and follow-up. This will allow for accountability and ensure that everyone is aware of their responsibilities. It is very easy to lose a salesperson who is distant and is not questioned about his performance regularly.
Critical questions to ask as part of the strategy session is to determine the size of the opportunity. For instance, on agency banking in Nigeria, the EFInA report shows that 36% of the adult population is yet to be banked.
Mitchel Elegbe, CEO of Interswitch, an integrated payment platform, believes the figure is 50% of the population. If the adult population of Nigeria is 106 million people, do the math.
Then ask questions about the location of the target audience, in this case the unbanked people.
Now you are close to setting the right goal. Also, make sure you participate in very robust performance management. This will allow for accountability and ensure that everyone is aware of their responsibilities.
5. Be competitive, but don’t engage in a price war
Any good business must have a strong understanding of its main competitors, their strengths and weaknesses. It is essential for survival.
However, there is a tricky part that many people stumble into – be competitive but don’t go into a price war. Price wars are a nightmare – they can hurt your bottom line and your brand.
You need to make sure you don’t have a knee-jerk reaction to your competitor’s actions. Your strategy cannot be reactionary. Develop an informed strategy and stick to it. However, you must also be nimble and responsive to the market and the situation when the need arises.
A major downfall of Fintech companies in Nigeria today is the unhealthy competition that erodes value through unfair pricing.
The agents further complicate this by wanting the terminals for free and the costs next to nothing.
Another aspect of this is that you also need to manage capacity smartly. And it can get to the point where there is significant overcapacity, so you have to be extra careful.
6. Keep employees highly motivated
Attrition and overlap among fintech employees is very high. To develop a unique culture and brand that attracts the right talent, you need to invest in building an employee and company map that is anchored with strong values.
The industry is highly competitive and demanding, and it is important that employees feel valued, seen and heard.
This is the first stepping stone to building a highly motivated and productive employee experience.
You also need to manage your risks, not avoid them. Provide a clear vision for employees so that the business can consistently focus on its long-term plan.
Ensure they have a clear understanding of how their work helps overcome obstacles and directly contribute to the company’s future. The success of a business is entirely dependent on the people responsible for delivering the strategy and building the technology, not on the technology or strategy alone.
Organizations must strive to build an environment that is seen as a great place to work. In addition to this, a new concern created by the pandemic is the work-from-home model.
Whether it’s a hybrid or full telecommuting policy, the real issue today is how to ensure your employees remain productive when working off-site. Some employees view WFH days as the time to do laundry and visit their homes, this can greatly affect productivity.
7. Collaborate with the right VAS providers
Value Added Service (VAS) providers increase customer satisfaction, eliminate complexity through abstraction, simplify the experience and convert customers into brand evangelists. The right provider can do all this and more, but engaging the wrong provider for your service can be just as detrimental.
So be persistent in exploring the best deals until you have the right fit, well negotiated to remain profitable.
The Payvice app today is the online store for various VAS. Partnership with Discos has ensured that from the palm of their hand, Nigerians can buy electricity tokens, renew digital TVs, recharge their phones, buy insurance, bet, pay bills and do a host of other things. This simply means that the highway for more products to be present online is still largely free.
Engagement must continue between fintech and various VAS providers on how to work together to make these products available to end users where they live, work and play.
8. Hit the road and develop connections
The fintech business is very volatile, but this shouldn’t stop you from going out and getting things started.
This involves actual man-hours and talent acquisition dedicated to understanding the ins and outs of the business, sourcing remote locations and building strong partnerships across your industry.
Certain data and relationships cannot be gathered or built behind a desk, no matter how much work is done.
The concept of rubber on the road remains valid to this day. If you need to understand your products, your competitors’ products, the loyalty of your agents, etc., you need to engage your customers in the various markets where they live and work on a consistent basis.
9. Software development is evolving rapidly
To get to the top of the series you have to compete with international organizations. Your software developers need to be at the forefront of innovation and changes in the industry to be able to solve problems quickly and anticipate challenges as they develop their solutions.
However, managing the developers in Nigeria has become a major challenge. The market has suddenly become their market. They want to be paid in foreign currency, they want to work from home, they want flexible hours, they want to work somewhere else, they want to “JAPA” (Nigerian parlance for relocation).
10. Cooperate with your agents
Sales agents may be part of your organization’s internal sales team, but that doesn’t make them any less important. In most cases, sales agents are the first point of contact a customer has with your organization, so you need to make sure they are aware of new products or features and can communicate unique selling points effectively. Make sure they are placed in the right places and focus on key markets. They must become your ambassadors.
Achieving agent loyalty in this highly competitive, multi-player market is an uphill task. Just keep climbing.
As investment in startups across Africa continues to increase, the fintech sector looks set to continue to take the lead for the foreseeable future. Make sure you have the right product and have done extensive research before venturing into the “lucrative” industry. For existing startups, invest in the right distribution strategy – it will save you millions in headaches and debt.