Identifying the right users before scaling

Lessons from Alain Nteff, African healthtech entrepreneur

Gifted Mom: Tackling maternal and child mortality through mobile technology

Each year in Africa, a quarter of a million women die of pregnancy related causes[1]. In addition, more than 1.16 million babies die in their first month of life, another 3.3 million children die before turning five years old[2].  The reasons why mothers die at birth or soon afterwards are varied, but 75% of the time, the causes of death include complications that could have been avoided.

As for newborns, most of the deaths are caused by preventable infections and conditions. Over 39% of deaths are caused by infections such as sepsis/ pneumonia, tetanus, and diarrhea.

               

     Figure 1: Causes of newborn child deaths in Africa (Source: WHO)

Cameroon is no exception. The country is ranked 18th among the 20 countries in the world with second largest contributor to the under-five and maternal mortality rate in the world according to UNICEF. The high number of maternal and child deaths is a reflection of extreme inequality and lack of access to maternal health services. Over half of all deaths of mothers and children occurs in Sub- Saharan Africa.

In 2012, Alain Nteff, a 20 year old in Cameroon, alarmed by the high infant and maternal mortality rate in his community, developed a mobile app called Gifted Mom to help alleviate this problem.

Only 18 months later, the mobile application had an impressive 500 downloads and resulted in a 20% increase in pregnant women visiting healthcare centers in 15 rural communities, having about 1200 pregnant women and mothers as beneficiaries, which is impressive for a country whose total internet penetration remains at below 30%[1].  In 2015, at only 22 years of age, Alain was the youngest participant in the World Economic Forum Davos gathering and the only participant from Cameroon – proving that age was not an obstacle to his ability to make an impact.

“Many poor women and girls in Cameroon experience difficulties accessing quality health care service. Maternal health is a human right and no woman should be deprived of this right”

Nehsuh Carine Alongifor 

 

Too much of a good thing? Gifted Mom acquires more users than it can handle

The mothers supported through the mobile app were from all socio-economic backgrounds, each of these user groups’ demonstrated different levels of engagement with the application. One of the ways in which users engage with the company is through giving feedback that allows Gifted Mom to improve the services to mothers.Alain and his team were excited about the impact they were making in the community in a relatively short time.  Their mission was being realized with the many numbers of lives they were saving.

Gifted Mom generates revenue through both paying users (through micro-mobile subscriptions) and brands that pay to reach customers in their database. However, not all of the users of Gifted Mom services pay for the services received.

By mid-2017, the company started scaling very fast. At the time, they had over 80 thousand users. Non –paying users were a significantly large proportion of this new user base. In the space of 6 months, they had grown their staff by 20 people, which meant there was a large sum of money that was paid out in salaries. As a startup, the high burn rate meant that Gifted Mom’s break-even point was increasing.

Figure 2: Growth of Gifted Mom’s User base 2015-2017. (Source: Gifted Mom)

 

Alain and his team had conducted their financial analysis and were confident of their potential profitability because their unit economics were positive for each of the segments of mothers who were using their services. But this was proving to be misleading.  They needed to work out a smart solution, or else the business would be in danger.

What happened next saw Alain and his team take some decisions and implement some tools that would change the trajectory of the business. They had to make a huge decision about which customers to serve and how. But first, they needed to understand their customers better.

Step 1:  Understand your users intimately

 

Alain and his team then started looking more closely at each of their customer segments. They used the NRS social grades to understand their users more closely. The NRS scale is used in market research and grades customers on a scale of A to E based on the occupation of the head of the household. This allows the researcher to understand the associated education and income levels of users from each grade.

 

Grade Social class Occupation of Head of Household
A Upper middle class Higher managerial, administrative or professional
B Middle class Intermediate managerial, administrative or professional
C1 Lower middle class Supervisory or clerical and junior managerial, administrative or professional
C2 Skilled working class Skilled manual workers
D Working class Semi-skilled and unskilled manual workers
E Non- working Casual or lowest grade workers, pensioners, and others who depend on the welfare state for their income

Table 1: NRS Scale of Social grades

Find out more about the NRS grading system here

Initially, Alain and his team were targeting mothers of classes A-E for their services. However, each of the mothers from the different classes showed different characteristics:

  1. Moms from classes A-C were the ones who were engaging the most through feedback and paying for services
  2. Moms from classes D and E, who were mostly non-paying customers, were not engaging enough with the service and were not giving actionable feedback.

These differences meant that Gifted Mom had to be clear about what decisions they make around what services to offer, to whom, and to what extent.

Step 2: Define the One Metric that Matters and grow it

 

Alain then set out to learn ways in which he could grow his business smartly. He did this by reading about how to “Hack Growth” for startups and developing a growth engine for the company with the Seedstars World Growth Team. In doing this, there was one lesson that served to facilitate decisions in his business. The solution had to be simple and not require additional human resources or significant investment.

Gifted Mom had to define the One Metric that Matters for the company and see if they can keep growing it by 5-10% weekly. For Gifted Mom, that one metric was monthly recurring revenue. Monthly recurring revenue is an important metric for subscription based businesses. Since subscription businesses do not have to make new sales to the same customers every month, it becomes important to track the growth of that recurring revenue and to retain their existing customers.

In doing this, they discovered that mothers from grades A to C were the ones that were contributing the most to their monthly recurring revenue.

Step 3: Make decisions that support your growth ambitions

 

Armed with the right information and tracking the right metrics, Alain could now make some decisions that ensured that Gifted Mom was poised for success. As a start, the team made a decision to focus revenue generative services more towards the category of mothers that they can create value for and get good margins in return. These are category A to C.  The mothers from categories D to E require a more developmental approach, not the same suite of services designed for paying customers.

Secondly, Gifted Mom has cut their staff by 50% and challenges different teams to be as lean as possible. This allows the business to better manage operations and prepares them to scale faster as they grow. Today, Gifted Mom is closing up on a 100 thousand users, and the new strategy is to reach the next 1 million users across West Africa in 18 months.

Looking Forward: Great Ambitions, Great Investment

 

In line with the ambitious tenfold growth Gifted Mom is aiming for, Alain and his team have implemented a cross platform solution where they use USSD, SMS, and Chat bots to acquire and engage users. Gifted Mom is also experimenting with driving all users to an App assistant model. They have ambitions to scale into 7 markets in West Africa.

The journey has held many lessons for founder, Alain Nteff, and he has a clear idea of what Gifted Mom will do differently going forward: “Every day, we challenge different teams at Gifted Mom to automate processes. So with anything they are doing, they ask themselves how they can automate it. It cuts costs, generates more revenue and gives us more time to spend listening to our users”

 

This case study is produced  as part of a series by the Anzisha Program, a partnership between African Leadership Academy and Mastercard Foundation that seeks to fundamentally and significantly increase the number of job generative entrepreneurs in Africa.They are free to use and can be used as part of entrepreneurship curricula in schools, non-profits and support organizations.

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