New Approaches To Old Program Management Problems

It was Bill Gates who said, “In this business, by the time you realize you‘re in trouble, it’s too late to save yourself.” Effective program management can put your prepaid program on the path to profitability and help you avoid getting into trouble in the first place. A different approach to program management is required in order to be successful in prepaid. This New Approach involve methods that will help programs identify and develop tactics that have the biggest impact on program profitability as quickly as possible.

There are 4 key methods of the New Approach, and two have been outlined in this blog and the remaining two in Part 2. When used in conjunction with each other, these methods give program managers significant insight into which strategies, campaigns and tactics will have the greatest positive effect on program profitability.

Four Key Methods of the New Approach for Prepaid Program Management

1. Track and analyze a set of Key Performance Indicators (KPIs) to tighten focus on profitability and provide a picture of overall program performance
2. Understand the Program Lifecycle (the different stages that a program goes through) and the different tactics that are effective at each stage
3. Analyze the performance of your accounts and look at them in Customer Clusters. By segmenting by clusters, you can more clearly compare and shift the behaviors of customers
4. Understand the Customer Lifecycle and how to move customers from enrollment through to activation, loading and usage

Method #1 – Track KPIs

Data analysis is a big part of being successful in prepaid and not surprisingly, the first method covered in this blog has to do purely with data. Tracking these KPIs are necessary to truly understand:

• Customer acquisition cost
• Net promoter index
• Program churn
• Cash cost of service per card
• Average revenue per card
• Average margin per card
• Card portfolio growth rate

KPIs establish a common language with which to discuss program health and play a big role in the formation of ongoing strategy. The tracking of these KPIs is essential to in order to hone in on profitability, or lack thereof, and helps program managers gain insight into the impact of campaigns, fees, added value service, etc.

Method #2 – Program Life Cycle

All programs go through three distinct stages and each requires a different focus, as outlined in this chart:

• Start-up:
  In this stage, you‘re focusing on getting as many new customers in the door as possible. Since the focus is customer acquisition – the key measurement is what is the activation rate and first load time frame. If these are not where they need to be, one way to improve them is to send out reminders to activate or provide an incentive to load.
• Ramp up:
  The Ramp Up stage focuses on profitability of the program, so once the cards are in the customers’ hands, look at what they are doing or not doing with them and how that is impacting profitability. If this needs improvement, one idea may be to send SMS account alerts with balances, transaction activity and load activity to drive increases in purchases and cut down on costly calls to agents. These types of changes can sometimes create dramatic results.
• Momentum:
  This is when you‘ve passed 200,000 cards and you‘re really continuing steady growth and profitability. The Momentum stage focuses on engagement and retention, and there is always room for improvement in this area. This is where targeted messaging and rewards could help keep customers engaged and active.

As the examples show, the key concept of the Program Lifecycle is that a program should adopt different tactics depending on the stage it’s in and use the stages to guide high-level strategy. In Part 2 of this blog, we will discuss the next two methods – Customer Clusters and Customer Lifecycle and provide you with the full picture of this valuable New Approach to prepaid program management.