Because online businesses compete on what customers value and customer service expectations, there is a more iterative way of building a customer base — first, having them try something, and if they like it, build on it; if it fails, change it and try it again. 

In comparison with traditional telcos, Gartner has found that OTT players have made this approach work for them, launching more than twice as many products than operators in one year. 

Some examples of interesting MVNO models are emerging, as with the United Kingdom's Giffgaff, which has a payback scheme that incentivizes its members to get involved in promoting its product and building its community in return for points, which twice a year are converted to cash, top-up credit, or a donation to charity. Also interesting is Suop Mobile in Spain, the first MVNO to be completely managed by its members.

Both Giffgaff and Suop operate more like online businesses than traditional telcos, and to be successful, MVNOs need to embrace this style of customer engagement. 

Two years ago, iD Mobile entered a saturated market. New subscribers could only be won by taking them away from competitors. With minimal marketing spend, iD Mobile has since become the fastest growing U.K. MVNO ever, boasting more than 500,000 subscribers. iD Mobile succeeded because it took the time, prior to launch, to gather feedback from hundreds of thousands of customers in what were then nationwide Carphone Warehouse stores. By putting time and energy into learning what customers did and did not like, iD Mobile transformed its look and feel based on what its customers said. It also transformed all of its offerings, based on information derived from communicating with its customers. iD Mobile did not stop there, as it also created a simple, easy-to-use app from which customers control their accounts and track usage, change tariffs, and add bolt-ons on demand. The app also gives iD Mobile the ability to directly contact customers and build one-to-one, proactive relationships via more than 50 trigger points, 30 decision points and 30 notification parameters.

This app has helped iD Mobile build a completely different relationship with its customer than that which typifies other MVNO-subscriber relationships.

This agile approach favors the value-based pricing model, as opposed to the cost-based model that operators typically follow, and as a consequence, iD Mobile understands what customers value and it capitalizes on that understanding.

Strategies to Adopt

There is plenty to learn from the examples of giffgaff, Suop and iD Mobile. MVNOs have more freedom to adopt an agile approach because they are not subject to the same levels of internal governance as traditional telcos. In order to differentiate themselves from the competition — to grow and retain their customer base — there are a number of strategies that MVNOs can adopt.

The first step is to ensure that the business is as efficient as possible by getting costs under control. Wholesale accounts for 50-60 percent of an MVNO’s costs, while subscriber acquisition accounts for 15 percent. Using the insight from predictive analytics to understand customer behavior, MVNOs can optimize the cost of their wholesale contracts, and through wholesale optimization, churn prediction and fraud reduction, they can personalize services to customers and reduce costs.

Secondly, MVNOs can move customers from prepaid to postpaid by offering them a differentiated experience: an app that the family can share and services that go beyond mobile. Adopting an agile approach, MVNOs should focus on providing an outstanding customer experience, rather than just copying what other operators do. To accomplish this, they need to truly understand their customer base and create propositions that customers value, such as creating their own tariffs and separating hardware from plans, moving away from subsidized handsets and lengthy binding contracts. 

By creating a plethora of differentiated pricing methods, including sponsored data, micro bundles, shared data, and hybrid pre-paid/post-paid options, MVNOs can give customers greater flexibility tailored to what they need and want.