Innovation is central to achieving our strategic objectives, retaining our competitive edge and ensuring that we continue to grow.

As a technology-based company, if we are not constantly innovating, we are, effectively, stagnating and losing ground. Many of our customers are quick to embrace new developments, becoming ever more sophisticated and demanding, and each generation expects to accomplish more. If we do not keep up with customer sophistication, we run the risk of losing market share and revenue.

We use several sets of indicators to assist us to manage this multi-dimensional material matter, including our Net Promoter Score (NPS) and Brand Consideration scores, which track how well our innovations are meeting the needs of different customer segments.

As a result, innovation is central to achieving our strategic objectives, retaining our competitive edge and ensuring that we continue to grow. Innovation allows us to transform the lives of all types of customers, nonetheless, by developing tailored and transformational products and services to meet all kinds of needs.

Innovation being driven by customers

Our new strategy has had a profound impact on the way we innovate and develop new products and services for consumer and enterprise users. The process starts with specific customer needs and wants, based on insights and ideas that are delivered to us from the segmentation team. Samples of customers also participate throughout the development and testing of every product. The loop is then closed with customer feedback through channels like our NPS and Brand Consideration mechanisms.

As a result, many of the campaigns implemented this year were not entirely new propositions, but attempts to ‘close the gaps’ and solve the inadequacies in our existing offerings that were identified by customers.

One of our most popular campaigns, for example, was the ‘Never miss a moment’ campaign that was launched in July 2015. The campaign was a direct response to customer dissatisfaction with our existing data bundles. Customers were frustrated that the 30-day validity on data bundles could not be extended and so this campaign introduced 90-day valid bundles and enabled customers to roll over and extend this validity as well.

The campaign was an instant success and data customers grew by 960,000 within eight weeks of the launch.

As the preceding table shows, our NPS score for consumer customer satisfaction improved from 53 in FY15 to 66 for the period under review. Much of this improvement can be attributed to our shift from an all-out growth strategy to focusing on the frustrations and challenges being experienced by existing customers. We no longer measure our Brand Equity and migrated to a new Brand Consideration metric during the year. Although no comparative data is available yet, our score for FY16 was 82%, which we consider satisfactory. A more in-depth assessment of our performance will be included in our FY17 report next year.

Affordable devices driving mobile data usage

As the following table shows, we enjoyed another year of good growth in terms of mobile data. We grew our mobile data customers (who have been active within the last 30 days) from 11.59 million to 14.08 million. Likewise, our revenue from mobile data grew from KSh 14.82 to KSh 21.15 million and now accounts for 11.9% of our total revenue.

One of the key stimulants for mobile data usage is smartphone ownership and so an important focus for us during the year was to make internet-capable devices more affordable. To achieve this goal, we made four entry-level smartphones available for less than KSh 5,000. The most inexpensive device we launched was the Safaricom Neon Smartphone at KSh 3,999. Other affordable options included the Tecno Y3s, the Wiko Sunset 2 and Huawei Y330, which we launched for KSh 4,999. These affordable devices contributed 575,000 units to overall device sales for the year.

We also expanded our range of 4G-enabled smartphones and this category of device contributed a further 152,000 units to overall device sales during FY16. The total number of mobile data smartphones connected to our network almost doubled from 3.4 to 7.8 million.

In response to our new focus on putting the customer first, we also changed our policy regarding 2G-enabled devices during the year. We had been concentrating on 3G- and 4G-enabled devices, but decided to put the needs of customers first and launch our most affordable device yet, the Wiko Lubi 2, for just KSh 999. This device has proved to be immensely popular and sold 200,000 units within six months.

Data seeding campaigns stimulate demand

As well as enabling customers to purchase affordable internet-capable devices, we continued to help them to experience the possibilities of the internet through a variety of ‘data seeding’, acquisition and stimulation campaigns. Among the successful campaigns run during the year were the following:

As a result of these and similar campaigns, the number of highly active (daily) mobile data users we have has grown and there has been an increase of 77% in mobile data usage per customer. At the same time, the bundles have provided greater value for customers and boosted affordability, reducing the average price per MB by 33% year-on-year.
BIGbox initially fails to wow customers

Originally launched in May 2015, the BIGbox is a decoder that offers both TV and the internet to the home user. In August 2015, we decided to suspend the product due to technical issues and low sales. The decoder needs to be able to access 3G or 4G services in order to function and one of the main issues was that the decoder was sold to customers in areas with poor connectivity. Other issues included very little after-sales support to help customers install and confi gure the device correctly.

Important lessons were learnt from these initial setbacks and included in the successful re-launch of the decoder in November 2015. The BIGbox software was upgraded to improve performance and the device is only sold to customers in areas that have good mobile broadband connectivity. Brand Ambassadors have been assigned to retail outlets to demonstrate how to use and configure the device properly and customers are also offered the option to have an installer visit their home and assist with the installation. The price has also been slashed by 50% to make it the most affordable 4G WiFi device on the market. As a result of these improvements, the relaunch has been a success and total sales had reached 6,141 as of March 2016.
M-PESA continues to deepen financial inclusion

M-PESA continues to grow and evolve from a simple mobile money transfer service into a robust payment platform and a driver of financial inclusion. Revenue from the service grew by 27.2% from KSh 32.63 million in FY15 to KSh 41.50 during the year. Likewise, the number of users (active in the last 30 days) leapt up by 19.8%, from 13.86 million to 16.6 million in March 2016.

One pleasing aspect of this growth is that our M-Shwari banking service, which makes it possible for ordinary Kenyans to save, earn interest and borrow money using their mobile phones and the M-PESA service, has grown from 3 million to 3.9 million active users and has facilitated KSh 8.1 billion in deposits and KSh 7.4 billion in loans at 2.0% interest.

Our partnership with KCB, which offers customers an alternative to M-Shwari, continues to grow and has facilitated KSh 1.47 billion in loans to date (up from KSh 950 million in FY15).

We have focused on using customer experience to drive innovation. One early outcome from this has been the launch of our Hakikisha service, which provides users with peace of mind by asking them to verify the receiving party before sending funds. We have also introduced Free M-PESA E-statements, giving customers the option to request complimentary monthly statements.

Spark Fund backs exciting local start-up

As part of our commitment to stimulating innovation within the developer community, we launched our venture capital fund, ‘Safaricom Spark Fund’ in 2014. Exciting local start-up, Sendy Limited, has become the first recipient of investment.

Sendy offers a marketplace for last-mile package delivery and logistics services, allowing customers to send packages and documents within Nairobi and its environs using a mobile application that connects them to motorcycle riders, and drivers of vans and pickup trucks.

The Safaricom Spark Fund is a venture capital fund that aims to support the successful development and scale-up of high-potential, late seed to early-growth-stage, ICT startups in Kenya, through investment and in-kind support. The fund seeks to invest between KSh 6 million and 22 million per start-up, for a minority stake in portfolio companies. In addition to the funding, Safaricom provides in-kind support, such as mentorship, technical assistance and access to Safaricom services such as SMS, SSD, Cloud hosting and marketing opportunities.
Enterprise-related innovation

Among the innovations introduced for enterprise customers during the year were the following:

Transforming lives through social innovation

We take our promise to transform lives and contribute to sustainable living throughout Kenya very seriously and are committed to improving the quality of life of Kenyans wherever possible. From a social innovation perspective, we continue to build on our work in areas such as agriculture, education and health, where technology is a critical tool that can make a significant difference to people’s lives.

Among the applications we continued to develop during the year were the following:

Looking ahead

From an innovation perspective, the focus next year will be on further developing and maximising the potential of our current customer-focused strategies, for example, the anticipated launch of our innovative new approach to purchasing and managing mobile services, BLAZE. The new application is an exciting example of our ‘Customer First’ strategy at work and the direct result of feedback from Youth segment customers.

On tight budgets, many Youth customers expressed frustration at having to purchase bloated monthly plans full of services they did not need or use. Accordingly, the application will allow customers to create and customise their own personal mobile services plan, ensuring they only get and pay for what they want.

One of our overall goals will continue to be to expand our innovation pipeline, increasing the number of new ideas we generate and receive through portals such as the Zindua Café, as well as improving the quality and success rate of the ideas. There will also be roadshows targeted at innovation hubs like universities and incubation centres and we intend to make further investments in other Kenyan start-ups through the Safaricom Spark Fund.