Case study: Nomanini experiments with unit economics for a more economically viable device
Imagine you’re Nomanini: How do you react when you’ve designed the ideal product for your end-user, but your end-user isn’t the buyer?
Nomanini is an enterprise payments platform provider for the informal retail sector.
Having identified a need in the Cape Town public transportation market for easier distribution of airtime credits, Nomanini developed a device to manage airtime credit distribution for the “conductors” on Cape Town mini-buses (taxis). The design and components of this device were completely proprietary. Designed from the bottom up, with an understanding of the pain points that “conductors” experienced while selling airtime on taxis — South African mini-buses that supplement public transportation. Nomanini successfully sold their device to one major airtime credit distributor, and received positive feedback from its users. Conductors, who before had to manage paper slips of airtime credit, as well as collect taxi fare, appreciated the ease that the device brought.
The issue was that, despite this positive feedback, Nomanini was struggling to sell to a second client. The issue came to a head when Nomanini’s first client collapsed into bankruptcy.
Based on industrial design and market research, their device was sleek and excelled in its singular function. However, the conductors were not the ones buying this device. Rather, the device was issued to them by the distributor, which led to a disconnect between the buyer of the device and the perceived value of the device in action. Nomanini needed to understand and resolve the challenge at hand.
Nomanini first moved to understand the issue. According to Werner Pyke, Head of Product, Nomanini’s awareness of the issue had been growing over time. With the collapse of the first client, they had to take rapid measures to secure revenue streams.
During pilots with potential clients, Nomanini understood that the unit economics did not work for the purchasing client needs. People “can often have an optimistic view of their business case and then if you implement in a pilot and start looking at the actual data, you see that it won’t pay for itself. By the later pilots, seeing that the economics weren’t working, it all becomes clear… there is a temptation to say ‘This is only a pilot, when it scales, the price will come down or there will be higher volumes.’”
Keeping in mind the challenge of high upfront capital expenditure by the buyer, Nomanini reworked the device to improve its unit economics.
“A lot of that [reaction] had to do with being emotionally attached to the design that we had, really believing in it, and it being a great product. It takes a while to let that emotion work itself out, but then it’s important to not let those personal emotions confuse you.”
Using the industrial product design approach of Design to Value (DTV), Nomanini broke down the device into its component parts and assigned value to each part.
Nomanini shifted from a completely proprietary design to the use of commoditized parts within the device to reduce cost, thereby improving unit economics. While they had to sacrifice a part of their original value proposition, they were able to maintain the device’s functional integrity using the DTV approach and a feedback loop with clients.
Nomanini feared a change in user acceptance during the shift from their original offering to the updated, more economic offering. However, both buyers and users were happy with the altered product. Nomanini gauged no shift in user acceptance when comparing the two devices.
Beyond the device changes, Nomanini now places huge emphasis on their economic modeling. Their client interaction process is streamlined based on robust models for unit economics, which dispels rose-colored views during the pilot if the unit economics aren’t working well and allows for easier changes to the device functionality based on the client’s evolving needs.
“We’re now even at a point where if a client would like to add a new transaction [function to the device] and they ask for a quote to roll out the transaction, we calculate whether that transaction will be profitable for the client based on all of the costs… We have folders full of ready-to-go spreadsheets to calculate for new functions.”
Starting with a device designed to improve the work of taxi conductors, Nomanini shifted towards a greater sensitivity of the buyer’s needs, as well as that of the original users. This meant moving to more economically viable product for the buyer and an orientation around modeling to communicate clearly and openly with the client.
Assessing Product-Market Fit
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