December 23, 2023 _ CRED

Revenue Model of CRED

CRED attracted too many eyes with their entertaining advertisement campaign (My favourite is “Indiranagar ka Gunda hoon main” featuring Rahul Dravid) and also by announcing mega Jackpot prizes for the CRED contest winners like Bitcoin (currently valued at ₹ 45 lacs), Mercedes car etc. So how does CRED manage to give expensive prizes to its users, who are just simply using CRED platform to pay their credit card bill? CRED is doing exactly what Uber, Zomato and Jio did to the society, they are simply trying to change behavioural pattern of the society. Now the question arises that how are they doing it? Kunal Shah, founder of CRED says, “when you change an inefficient thing to efficient, it creates a habit and that habit is irreversible”. Can you imagine life without Zomato or Uber? He also believes that entrepreneurs should focus on UBP (Unique Bragworthy Proposition) and not USP (Unique Selling Proposition). Being a philosophy student Mr. Kunal Shah believes that your product should be such that consumers should brag about it to others who are not using the product. The user interface of the CRED is designed in such a way that, it gives all the details about hidden charges which earlier used to be difficult to allocate in the credit card statement.


CRED is making Credit card payments Hassle-free which is actually not only changing the behaviour of the customer but also making them dependent to the product for paying their credit card bills. CRED spent approx. ₹ 727 for every rupee earned in the financial year 2019-20. Why is CRED spending such huge sum of money behind its advertisement campaign and distributing expensive gifts to the contest winners? CRED is doing this to acquire customers, any tech start- up company’s major head of expense is customer acquisition cost and once the customer is acquired, they give them a lifetime benefit, it’s just like creating an asset which gives you benefit for long term.

Currently CRED is earning by charging businesses a small listing fee to display offers on the app. In return, businesses are rewarded with visibility on the CRED app which has over 6 million users. What do you think, will CRED continue to run its business on same model? CRED has a very niche customer base due to its eligibility criteria which allows only those users who have CIBIL score of 750+ can make credit card payment through CRED app. This indicates that major consumers are the ones who have repaying capacity and have a steady flow of income. CRED collects all the data of customers including their buying preferences and spending capacity which can be sold to companies or used by cred to target customer as per their preferences. Is CRED sitting on a goldmine already? What do you think? Comment below

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