Showing posts with label MVNO strategy. Show all posts
Showing posts with label MVNO strategy. Show all posts

Friday, 22 November 2013

Mobile Roaming Regulation 2014 Customer Experience

When speaking to the organisers I thought it would be a good idea to present at the Mobile Roaming Conference 2013 on the impact of the EC Roaming regulations 2014 from, you know, the customers' perspective. It was a good idea and the presentation was received very well... however writing it was a lot more painful than the usual presentation!

It was only right to add the cover after I had made it look so nice...
So the premise of the presentation was to look at the user experience (UX) of customers while roaming in the European Union and how this may change with the wider EC roaming regulations of 2014, which will of course affect MVNOs. Virtuser is pretty well placed to speak about this, as we were there for the first round of regulations, requiring last minute WAP pages and SMS gateway solutions, and we have helped numerous MVNOs comply with regulation with advice of charge, etc.
Apple was not the first App Store, by far, nor the first to do apps, but the won with great UX
So what is the customer experience at present of not just the roaming regulations, but also just roaming... well its not a good one and its very, how shall we say, pre-iPhone, in fact pre WAP: when did you ever have a great text based customer experience?
The present Roaming Regulation experience is pretty dire and text only mostly
Most roaming experiences start with an overly edited text message, with no number to call customer service for free as we are supposed (come on, we know standard customer care calls abroad are not free, right?), the SMS service is most likely completely disconnected from any core systems or customer care tool and is the main reason why there are so many dormant roamers: when did a text based UX last convince you to buy something?
The roaming experience gets worse, what happens when you go over your limit? 
Then what happens when you go over the €50 limit? the €5 per day all inclusive plans are brilliant, but after 10 days what do I do... well you opt out and one operator was good to their word (above) another shall remain nameless and rubbed their hands together and delivered me a huge dose of bill shock. So I had 10 days of roaming regulation induced sanity, the rest of the time I was back in the dark ages.
And the prize for the best Roaming Regulations advice of charge message is.... 
Vodafone UK has, as far as I am concerned, the best roaming track record post the roaming regulations, however what went on in the office the day they decided this message was the way forward? and this is the reduced version as I culd only fit four screenshots in...
Its not just the regulated messages that are a poor customer experience
After upgrading my iPhone on Vodafone 3 or 4 times, once it decided I needed to change my romaining plan of the last 4 or 5 years... you know, just to shake things up a little: So I arrive and get a message saying I will be charged about 120 times my usual national rate for data as I was no longer using its roaming tariff - great, I am in a taxi, trying not to be taken the scenic route and make a meeting and I have to spend 30 minutes on the phone to my Operator (10 of which were on hold). I finally get it sorted and two hours later get a message, but when did the new tariff set in? was my call that I made a note to check on my bill that was free really free (I never got round to it, but suspect I know the answer).

Then there is the wonderful experience, particular to Voda UK, where on an iPhone, a person in your contacts list calls you and their number appears, you have them saved in your phone, as you do with all your numbers, with the +44 international code... yet you go to call them back, and because voda has delivered the call without the international code you get an error code and a text saying you need to put "00" in front of the number... worse is, I have spoken to a few people in Voda about this and they all go "oh, yes, that..." with a look of "who is going to take the next year of their life to fix that and probably not succeed or be thanked for it anyway" ...and I pay a premium for this type of service?
post 2014 will be different as it will introduce competition and "it will do" will no longer be good enough
So why will 2014 be any different when the second wave of EC roaming Legislation comes in? well, for a start, it will introduce competition. Operators do not typically like this, nobody in business really does, but we accept it as we know it is what get's you out of bed in the morning to drive progress. This progress is also important, as it will mean an app driven, internet based experience with all that that brings: real time knowledge, social interaction and real time reviews and ratings: it will be as close to a proper experience as we can get.and will bring roaming from pre app store to smartphone experience in one swoop... finally!
post 2014 with bring a) competition, but moreover b) an smartfone, interactive web and app based CX
It is this competition, as counterintuitive as it may seem, that will drive the 70% of dormant users to adopt roaming. Just as with national data and widespread mobile usage of all services (voice text and data) it was not just lower rates that drove wide spread adoption: it was competition: people did not message universally until whatsapp and imessage. Yes the operators lost a base a small % of their base who were uber texters, but they gained a complete base of data users who needed text as a fall back and the total volume of texts increased. The same with data, many people needed the comfort of their home wifi and hotspots to make the jump to a data tariff.
So who will win? the counterintuitive answer is everybody, as this will drive out the 70% dormant roamers
TBH many roamers will stay with the even lower price drop of their native operator, but if they go over their €50 limit, or their boss/client suddenly decided they need to rewrite a presentation with videos in it (been there) they have mobile options that do not mean finding a cafe with internet.
But there is still a lot to think about, like data configs when you break out and when you go back, fortunately Virtuser has a Mobile Roaming regulation OTA Data setting solution for this
I spoke to a lot of people about this, in my own mini focus group and took some great phrases you see in the word cloud from industry insiders, regulators and users: like:

  • It will take a while for people to gain faith in roaming regulations, like a whole yearly cycle of travelling. 
  • Value is important. you do not want to pay €5 or even €2 every day, but you will happily pay €10 just for data the day your boss needed that presentation yesterday
  • legacy billing is no longer an excuse, in fact its the excuse we all got bored of and drove this regulation in the first place!
  • Technology challenges need to be overcome, like even UX, how do you go from one app (your native host operator) to the LBO app and configs and back again. It's bound to break at first! 
  • Competition is key, its no longer enough to ignore this, or your revenues will reflect this
  • Roaming is still a huge revenue by EBITDA % but will need a small investment in UX to grow
But these can be overcome, and whether you an an MNO or MVNO I have helped both through this before... so get in touch if you want to discuss apps and OTA settings and SMS gateways!
Follow @MVNO_ on twitter or facebook/mvnos or Google+ MVNO page

Sunday, 20 January 2013

Apple Global MVNO

Original Article 2007

Apple Global MVNO

Apple deal with operators is a de facto hardware MVNO
It is no secret that a typical MVNO may only manage to get a 10% to 40% margin on calls, onto which it has to add its costs. This is usually OK, as many of these have either already been sunk, written off or are as low as they can go if the MVNO core business is already a “no frills” card calling or other related business. However, it is still said margin before costs. It is, therefore no surprise that the most successful MVNOs so far have been “no frills” MVNOs as reported in by Business week in this article and as per my response below (previous article; RE: Why Europe’s MVNOs sing).
As far back as 2003, when I started writing my next generation MVNO report, I had the hardware MVNO as one of the next big business models. The two main contenders were Apple and Dell. Dell fell victim, in the UK at least, to Vodafone’s deal with Intel to give away 3G data cards with every Centrino laptop in exchange for merely signing a direct debit for the Vodafone SIM inside it. The Apple MVNO, however, has finally come to bear fruit, and in a way nobody could imagine: It is a Virtual, Virtual MVNO, as according to these articles in the Financial Times and the BBC, it has managed to get between 10% and 40% margin for all the iPhones, and on top of it no costs. The extra burden of billing, one of the biggest costs for an MVNO, is borne by the host network operator, as it’s the second major cost: customer care. Furthermore, it has managed to do what very few MVNOs have managed to date, export the model to become a global MVNO. To boot, its business plan manages to overcome the other great hurdle to any MVNO expansion: handset subsidies; as people are falling over themselves to buy an iphone, something to date that only Nokia and Sony Ericsson have managed to do with a premium handset to date (8800, 8210, N95, P800, P900, etc). You have got to hand it to Apple, they have pulled off the biggest MVNO coup to date. There is one final even more surprising fact, no, not that they managed it without my help (apart from buying a copy of my report): The biggest surprise is how they have managed to actually get the MNOs to bid against them, rather than the usual beauty contest that building an MVNO entails. Mobile Network Operators have not been in that seat since they managed to bid UK and Germany 3G licences into the billions. So how have they managed that?  It’s simple, due to the nature of the way networks were set-up, in larger economies there are networks that are predominantly focussed at a certain demographic. In the UK, the larger part of the youth market is on o2. However, it will not have escaped any of the networks that they could have poached a good few of the other’s customers.
So, for the record virtual mobile network operator, means 10-40% plus costs; virtual, virtual mobile operator means 10% to 40% with no costs, well at least if you are Apple.

Orignally posted by Christian Borrman 11:26am 25/09/07

mvno and the brand

MVNO and the Brand

We have heard a lot about the brand MVNO and MVNO and the brand, unfortunately most of it is confined to the conference room and reports.

Brand MVNO

The Brand MVNO is where it all started; Virgin Mobile UK spent a lot of money on promoting their brand, and they were right - look at how much money Vodafone started spending on its brand post Virgin success vs. before! The problem was, Virgin then went to conferences saying: "don't copy us unless you have £50M to spend on your brand" which the MVNO industry unfortunately generally read as "don't spend anything on your brand". The Brand MVNO Model is covered in this post.

MVNO Brand

The Brand is a critical part of every MVNO, from the pitch to the MNO to sales:
  1. The MNO is putting its faith in the MVNO ability to access a market - without a brand, how long will that last? Brand is one of your strongest MNO negotiation points!
  2. In fact all your MVNO partners will be sizing up the opportunity of your brand when they negotiate with you, as Brand = ability to sell, ability to distribute
  3. The brand will determine your your uptake and limit your churn. Remember, Remember that MVNOs live and die on acquiring customers cheaper (than the MNO can) and keeping customers longer, and the Brand is key to this.
  4. There is a role for the niche within a niche with brand: Brand helps you compete within even an extremely competitive space such as the Ethnic MVNO market

MVNO Brand as part of Marketing strategy

However, be aware of how you use your brand: see matrix below; many MVNO brands today are in the dangerous "follower" space, especially those that do not have a defined MVNO marketing strategy. Some may try to come in at the Leader level, however this has its problems, the key being that it is expensive to maintain: you can find yourself at a monthly / quarterly review renewing media that just is not effective at selling because it is protecting your brand, you may also be even considering subsidies or at least a large amount of arbitrage/utilisation risk on your bundles to get here...

Virgin mobile entered as the challenger, and did not move into the leader position until maybe 2-3 Million customers when it essentially became and MNO brand of its host, began subsidising handsets, etc, etc.

MVNO Brand Values

Becoming a challenger is not hard: if at first you have defined your product and segmented your market, the brand and its values should not be hard, but check, do those value ring through? An overwhelming feedback in the latest MVNO conference in Paris, from Red Bull, NRJ, Bleip and more leading brand strategy MVNOs commented on one thing: NO SMALL PRINT. If your brand is simplicity, honesty, etc, small print goes against this. Most MVNOs win over the MNO on simplicity, if you look at the MVNO segmentation post. Does your MVNO product reflect your MVNO brand, is what you are doing new, or just rehashing what the MNO does???

Work these simple points out, and not only will your negotiations with your MNO and other partners be simpler, but your MVNO will benefit is acquisition and retention - in this sense, every MVNO is a brand MVNO!

Original MVNO and the Brand support page:


For a brand to have any value it must mean something to the customer and to do so it needs to be exclusive. This is not compatible with trying to own all areas, sectors and parts of the market with just one brand, as most mobile operators do today. Because of this, most mobile operators' brands are all over this matrix. Note that successful MVNOs, like Virgin Mobile, started as a challenger and are now becoming brand leaders, whilst minimising any association with the "follower" values.
©Copyright 2001-2005 Christian Borrman, All Rights Reserved. Reproduction Prohibited

Wednesday, 4 April 2012

Marketing and MVNOs

MVNO marketing budgets, strategies & process

"We don't have a marketing budget" - yes you do, it's called lack of gross margin!

Often MVNOs have said to me "we don't have a marketing budget". My reply is almost inevitably always the same: "yes, you do, its that 10% - 20% of gross margin you are missing by selling on price due to a lack of a marketing plan, and the budget required to fund it!"

Marketing MVNOs in their infancy

MVNOs are still largely in their infancy as a result; they are still at the "white label" end of wholesale, where they are largely marketing on reselling a product and promoting simplicity or price. the opposite end is when you have a huge marketing budget, a great brand, and you can add hundreds or thousands of percent margin. I am not suggesting MVNOs will get their, yet, but there is still a long way to go.

There are emerging, promising behaviours. MVNOs with just a Facebook page, that I have referred to elsewhere on these blogs, however the fact that a client of mine, who has been in the MVNO business for many years and is very successful,  recently asked for help on their marketing strategy 3 days before launch shows the position we are in at the thick end of MVNOs

So why do we not have MVNO marketing strategies in MVNOs?

There are three main reasons MVNOs are not marketing well yet
  1. to market a product successfully, you need to understand the end to end product, where it comes from, how much it costs, what element cost a lot, which ones cost a little (freebies do not pay for themselves) and of those things that cost a lot and a little, which add value and which don't and when. Virgin mobile were very good here, putting marketing people on the board, where they could see management accounts, understand the issues and as such end up with 2 million customers when they expected to have 200,000! As MVNOs are still in their infancy, most of my work in MVNOs is helping clients bridge that gap across the board, let alone finding a single marketing person who will understand this.
  2. The market is still in its infancy and dynamic: I have trouble keeping abreast of the end to end dynamics of MVNOs and I work full time, have done since the beginning and allocate a huge amount of my time and effort to R&D and helping new entrants pro bono, as well as having a blog where every man and his dog who wants to be an MVNO invariably contacts me at one point or another. If you are not prepared to get your hands dirty or get off the clock every so often you stand no chance!

So what are the classic three MVNO marketing mistakes:

  1. The MVNO is a brand and already has a marketing department. All well and good, but selling mobile wholesale is a specialist product and does not relate well to other services, except maybe wholesale food, where supermarkets have been moderately successful. however, to be a successful food marketeer, which supermarket marketeers generally are, as per point one above, you need to have your head in commodities you are selling, and wholesale minutes, mbs and messages will only be a distraction / part time job at best: it needs dedicated resource
  2. The MVNO hires and ex MNO marketeer: this is ironically often the worst mistake, as they are either junior and never had the foresight to understand the end to end process of the MNO, and therefore will struggle to grasp the process in the MVNO, or they are senior enough to have been exposed to the whole marketing budget and reporting process and will inevitably be bored of the lack of MVNO budget sooner or later. That is assuming they can make the jump from MNO (essentially an manufacturer of mobile, high cost production, high margin, depreciating asset) to an MVNO which is at the other end of the industry (low cost production, low margin, no depreciating assets) - the whole paradigm is just very different. hence, you will not see supermarkets poaching marketing staff from their suppliers!
  3. The MVNO has no marketing budget, understanding of market or desire to. I have seen this at the highest levels, where a CEO, 2 years in will ask the marketing person: what's the difference between above and below the line again? My reply, which you will be glad to know I invariably keep to myself, is "your results and your bonus". This lack of understanding usually results in one of two things: too much budget, and it is squandered on above the line, or two little budget and nothing can be done.

How to Market MVNOs more effectively...

My advice for MVNOs, based on having helped many MVNOs to market over the last 10 years, and thankfully they are all still in business, is to start small, measure success and grow the budget in line with results. The reason for this is that I have seen people in mobile spend money to acquire 100,000 25 year olds and achieved 500,000 43 year olds... on evaluation, the result was no where near as "cool" but the fact is that 43 years-olds have more money to spend on mobile than 25 year-olds and are more loyal: keep spending!

Leverage social, leverage on-line! 6 to 7 out of 10 sales in fully fledged and marketed MNO sales are online, this is up from less than 1% in just 2007. Companies such as Telmore in Denmark have grown to 800,000 subscribers in a country with a total population of just 4 people (or so!) mostly online, however:
  1. to do this you need to be "web 2.0 aware" a terrible phrase, but true. Social is cheap as you basically outsource your marketing to the public. the stronger your brand and the better your product, the better you will fair, but as you grow you need to be able to manage this.
  2. To sell MVNO online, you need to be online, that is, you need data and Value Added Services (VAS), another bug bear of MVNOs and a key subject of upcoming MVNO conferences, and one I cover here.

MVNO sales and marketing process:

  1. get an initial budget: to do this you need to be honest about your Subscriber Acquisition Cost (SAC) and attribute an appropriate proportion of that to marketing, I have used different amounts to different success over the years based on the growth plans, size of MVNO, stage of its development, brand, product and market position
  2. hire someone young, enthusiastic, with the capacity and desire for very, very steep learning curves, but for god's sake keep them on track with:
  3. Report on results, this can be growth figures, but also tenure, spend, what customers it attracted. being online and social can help here as the metrics are freely available and easy to process, fixed channels take longer and require full time data crunchers to analyse. Make sure you are keeping churn in check!
  4. re-invest accordingly. A key here is how the MVNO has structured their agreement with suppliers, as if done wrongly, certain types of growth need to be monitored and marketed very carefully as they can cause cash flow issues! I have been asked to assist with MVNOs that have become a victim of their own success, unfortunately it has often been too late...
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