You must have seen the snazzy ads. Now have a look at how it makes its dime. Here's how.
Indiranagar Ka Gunda.
Neeraj Chopra.
Anil Kapoor.
These ad campaigns have run ablaze across different platforms & make Cred the talk of the town. But has this marketing success materialized into business? What is the business model of Cred? Let's find out!
ALL ABOUT DATA
Cred is all about running business circles around your data. By acting as the facilitator in paying your credit card bills, Cred knows how much you spend & more importantly, where. It may know stuff about you like:
You are a fast fashion fanatic
You spend a lot on medical bills
You like expensive dining.
You buy a lot of stuff for fitness gains.
And then, it gives the same information to certain companies (like Nike or H&M) who list their products on the Cred App. Thus it makes money in two ways here:
Seeking listing fees for partner brands who give offers in exchange for Cred Coins.
Getting paid for sharing consumer buying habits in form of data analysis.
You may think this is not a very lucrative model.
You are right.
It isn't.
Because Cred is playing the long game. It is burning VC money, for now, to rapidly capture premium customers who have high spending power. Cred has a policy of only having members who have a credit score of above 750. Thus they are capturing the upper-middle class
Although the data above is outdated, it is an apt representation of India's income disparity. On seeing the numbers, you'll notice that the majority of wealth is held by the minority at the top. And it is this wealthy minority that Kunal Shah's Cred is vociferously targeting.
This economic class of people are the crème de la crème of India's consumer market. And getting their loyalty and data will pay Cred in the long run. Because monetizing the super-rich can pay off supremely well.
They've already launched a P2P lending programme wherein high net worth individuals will lend money at lucrative interest rates of 9-12%. I have made some educated guesses below on some other revenue streams for Cred in the future:
Launching a paid Cred membership with cool perks like cred Card (sign of elite background- status symbol), lucrative offers (2X Cred Coins) etc.
Tying up with brands for data-driven product placement on the app (different for every user)
Launch an Apple Pay like application for its members with a slick User Interface. (UPI of plastic money). It can take a sliver of every transaction for facilitating payment.
So there you have it. Kunal Shah's master plan to be the financial centre of India's elite class.
WHAT DID YOU LEARN FROM THIS?
Look beyond the razzmatazz. If a person is too flamboyant on social media or a listed company makes disruptive declarations, take a fact check. Before investing in that flashy company or blindly following an influencer, make sure their claims have some foundation. Cred has a fantastic user interface & brilliant marketing strategy. But it still burns Rs. 726.7 to earn a single rupee in operating revenue. Lofty standards, eh?
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