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SOLVING THE CHURN CONUNDRUM THROUGH MVNOS
There’s no denying that we live in interesting times, economically and socially speaking, and the same is true of the mobile network industry. For years, the market happily relied on the sheer volume of new customers to bolster business, but now as the industry has reached and soared past saturation point, networks face fierce competition for even the smallest incremental customer acquisition and usage. So as mobile networks become a commodity the real issue is customer retention.
Recent research from Canalsys suggests that 30% of consumers across the UK, France and Germany are looking to overhaul their mobile phone consumption, be that churning to a new network (20%) or keeping their current handset and switching to SIM-only or pre-pay services (10%). With
tariff and handset options the only real lure, consumers feel no emotional attachment, and therefore no loyalty, to their mobile provider.
Bad Apple
The recent launch of the latest Apple iPhone handset only served to reinforce this, with consumer backlash against O2 for failing to meet expectations in terms of pricing and hardware upgrades. Many customers were left with a bad taste in their mouths and are now more likely to churn regardless of handset options once their contracts are up.
Therefore, churn will remain a major issue for mobile network providers in a world where network agnostic consumers see their mobile phone carrier as another nameless utility to be dropped at will.
It’s clear that there is work to be done to bring about a shift in consumer attitudes and I believe that the answer lies in community networks. The major players in the UK network markets do not currently segment their own-brand communications to resonate with customers based on their predisposition to belong to a wider community group.
Tasty model
However, some savvy networks are taking advantage of the mobile virtual network operator (MVNO) model, a concept that particularly lends itself to this kind of niche targeting, allowing big networks to reach very specific market segments through brands that have a direct relevance with the core target.
As agents and service providers acting on behalf of the host network, branded partnerships allow the network operator to build community networks through highly relevant and specific mobile services, maximising penetration and usage by delivering value added services and propositions. In this way, as well as providing an offering of high relevance to a specific community group, operators can tie into and give back to the community itself.
The international SIM-only prepay model has proven that, given the right proposition and distribution model, ethnically inspired service providers can be highly successful; Orangebacked Lycamobile, for example, gained nigh on one million subscribers within just nine months from launch. While good value calling plans have had their part to play, the emotive draw of a network specifically linking the target audience with its ethnic background has also had a role in the success.
Emotional bond
Where this emotional bond is forged and set, 2.0 MVNOs have a unique opportunity to increase loyalty and create emotional anchors by building an engaged and loyal customer base. As the UK’s first SIM-only post pay MVNO offering targeted, relevant services as well as value tariffs, Desi Mobi will be unique in meeting the needs of the sizable UK Asian community. By building an engaged and loyal customer base with personalised, emotional attachments to a mobile network they feel has been created specifically for them, it will be immune to the high level of churn that plagues the larger networks.
There is no reason why this should stop at ethnicity; any community could be targeted through emotive anchors be they based on religious beliefs, sexual persuasion, sports affiliation or geographic location. Pink Mobi will offer a unique true community 2.0 MVNO for the gay community, while plans are already afoot to reach sports fans in a similar way.
Hot independent
The independent retailer will play a big role in the success of customer acquisition for Desi Mobi, offering the opportunity to retail away from the big players and into the heart of the community being catered to. Networks invest heavily in brand building and product advertising, yet this can drive the consumer only so far. When at the final point of purchase, the unaffiliated retailer can make or break what network and handset the customer will ultimately choose, and hold major sway over how and where each connection is physically positioned.
It’s not difficult to imagine a future where, alongside traditional merchandise like t-shirts, mugs and scarves, every major football club has its own virtual network, a badge of honour to mark out the true fans. It needn’t stop there; movie franchises, popular bands and even major events like the Olympics could run virtual networks to bring like-minded fans together, regardless of geographic locations.
With tariffs hitting rock bottom, now is the time for the major networks to act. Building engaged communities of consumers through emotively driven propositions which tap into the customer mindset, select MVNOs have the ability to not only reduce churn but also give something back to the community, creating a positive brand association with higher emotive value than marketing activity alone could produce.
The Com Mobi Group is the UK’s first telco to apply capability and efficiency of a major service network to the needs of a specific community, by targeting nontraditional or traditionally hard to target mobile segment groups, based on ethnicity or sexual orientation.
 | | visit http://www.commobi.co.uk/ |