Merits Of Enabling One-Click Payments
One in every 4 insurance companies in India uses Compass. An empirical account of how an insurance company brought about direct savings by enabling one-click payments and timely payout of incentives.
The insurance company, as a practice, awards non-cash incentives (via sales contests) to insurance advisors while achieving their targets/sales quota.
Before Implementation of Compass
The company procured gift cards like Amazon, Flipkart, Tanishq, MakeMytrip, etc in advance. The discounted value of each gift card is different and the average discount value for the brands calculated is 6.5% (on purchased values). Below is the calculation of the Gift card purchase. The frequency of purchase has been mostly monthly.
| Particulars |
Time Period |
Quarter 1 |
Quarter 2 |
Total Billing |
Notes |
| Total Value of Gift Cards |
July 19 to Dec 19 |
10.59 |
12.37 |
22.96 |
in Crores |
| Discounts on Gift Cards |
July 19 to Dec 19 |
6.50% |
6.50% |
6.50% |
in% |
| Before Automation (Final Billing) |
July 19 to Dec 19 |
9.89 |
11.67 |
21.56 |
in Crores |
Now (After the Implementation of Compass)
The company enabled one-click payments via Mobile App for all users. The users could now go to the app and select the gift card from Amazon, Flipkart, MakeMyTrip, BigBasket, etc. of their choice and at the time of convenience. Below are the calculated values of the payments made.
| Particulars |
Time Period |
Quarter 1 |
Quarter 2 |
Total Billing |
Notes |
| Post Automation (Total Recharge) |
Jan 20 to J2une 20 |
11.86 |
11.36 |
23.22 |
in Crores |
| Balance Points (as of July 01, 2020) |
Jan 20 to June 20 |
|
|
0.82 |
in Crores |
| Total Recharge (Max Assumed) |
|
|
|
24.04 |
in Crores |
Net Savings
The company's business grew by ~28% as compared to the last half-year and the net incentive payout is assumed to grow at 57% of the business growth value (i.e.16% in this case). Below are the approximate calculated values.
| Calculations |
Headers |
Time Period |
Values |
Notes |
| A |
Before Automation |
July 19 to Dec 19 |
21.56 |
in Crores |
| B |
After Automation |
Jan 20 to June 20 |
24.04 |
in Crores |
| C |
Business Growth (For half Year) |
|
28 |
in % |
| D |
Payout to Business Growth Ratio (57% of C) |
|
16 |
in % |
| E = A*D |
Net Payout to be disbursed After Automation |
Jan 20 to June 20 |
25.01 |
in % |
| F = (E-B)/B*100 |
Savings |
|
4.03 |
in % |
| G |
Bank Interest (For 2 Months) |
|
2.50 |
in % |
|
Total Savings |
|
6.53 |
in % |
Observations
1. Direct net savings of ~6.5% via enabling one-click payments.
2. Additional savings of up to ~3.4% i.e. 0.82 lacs (INR) in case the balance points are not redeemed by users.
3. The users are more motivated and empowered when given an opportunity to choose reward gift cards.
4. It is assumed that a timely payout has helped the company to increase the revenue significantly.
*Please note that there are a few assumptions considered while calculating (after a brief discussion with the customer) like payout to business growth ratio, aggregate previous discounts on gift cards etc.
| S.No. |
Components |
Cost Dependency |
Fixed Cost (INR) |
Recurring Cost (INR) |
| 1 |
Server & its maintenance |
Depends on data-streaming & frequency |
NA |
40 to 80 / User / Month |
| 2 |
IT Infrastructure |
Includes infra like Email, SMS, Others for notifications & nudges |
NA |
10 to 20 / User / Month |
| 3 |
Software Development |
1 Data Architect
2 Software Developers
1 Software Tester
1 UX Designer
(6 Months) |
4-5 lacs / month (for 6 months) |
NA |
| 4 |
Software Maintenance |
D1 software engineer
1 UX Designer |
NA |
1.5 to 2 Lacs / Month |
| 5 |
Support Ticketing |
Depends on user volume |
NA |
1 Lacs / Month |
|
|
|
~30 Lacs |
~ 4-12 Lacs / Month* |
| *Depends on the no. of users. These are very optimistic costs and can go high as much as 2-3X. |
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