MVNOs need to create an “on-demand” experience and make it easier for customers to buy connectivity when they need it, and — whether they use it or not — share it easily with friends and family, as well as allowing it to be carried over to the next month. 

It is much more expensive to acquire new customers than it is to retain existing customers, so reducing churn is critical to success. MVNOs need to create sticky propositions and experiences by adding additional services like broadband, fixed line and family sharing, including multi-SIM deals and OTT partnerships. 

Understanding what customers value and upselling and cross-selling to them can account for up to 30 percent of e-commerce revenues, according to Forrester Research.

Customers are also less likely to churn if they can buy multiple services and add-ons, which also increases their lifetime value for the MVNO. Add-ons purchased through an app will also dramatically reduce customer care costs. Identifying customers who might be small-business or home office workers, and tailoring offers for both their work and home lives, is another way to retain and serve an underserved niche. Analytics should also be employed to identify and target customers who are likely to churn so that offers can be proactively offered to stave off that churn.

Finally, if MVNOs can reduce their reliance on the MNO’s workstack, they can be better equipped to create their products and pricing around customer needs, and to differentiate themselves from the rest of the market. Having their own BSS means they can sell products that are more than just mobile, such as broadband, fixed line, and more. And, they can control their own prices and processes, including acquiring and retaining customers.

Successfully Selling Connectivity

MVNOs target a very specific segment so selling purely mobile services, which they cannot control, is not a sustainable business practice. The future of MVNOs is not in selling hardware, nor is it about being mobile, but rather about selling connectivity. It’s about the online experience of buying data and sharing it with friends and family, and about the services customers can access using that connectivity — whether that’s 4G, broadband, WiFi hotspots, IPTV streaming, music streaming packages or various other OTT partner services.

A study by McKinsey & Company in 2014 found that consumers value mobile connectivity over and above what they pay for it, to the tune of €250 billion per year (approximately $295 billion USD), and no doubt this will have increased again over the past three years. But while consumers value mobile connectivity, fierce price competition among operators has pushed prices down enough that the value of connectivity to customers is much higher than what they actually spend on it. 

A value-based pricing approach would help to close this huge value gap and provide a more profitable resource of revenue for MVNOs.

The Bottomline for MVNOs

To grow profitably and succeed, MVNOs need to be smarter. They need to behave less like telcos using legacy business models and behave more like disruptive online businesses taking an agile approach to business and innovation. 

They need to find out what their customer base values and create sticky propositions that reflect what they find. 

They also need autonomy from MNOs so that they can make their own decisions around pricing and services, and about how to optimize their business models. Then, they can differentiate on experience and offerings, as with real-time apps, build-your-own tariffs, family sharing and other compelling offers that move subscribers beyond just mobile and onto a more meaningful experience.

With access to analytics, strategic thinking, and a real-time VNO platform, MVNOs can break free of the old model of static, one-size-fits-all services, and instead take a flexible, agile, dynamic approach that is guided by customer values. There is a world of opportunity awaiting MVNOs that prepare and take the steps to be innovative, daring, and truly disruptive.