There are almost 600 mobile virtual network operators (MVNOs) across Europe*, and over 60 in the UK alone. In such a competitive space, what marks the line between success and failure? 

MVNOs are under pressure to achieve sustainable success alongside their Goliath MNO counterparts. We have identified three areas that underpin this achievement:

  1. understand your target
  2. channels and distribution
  3. keep your operation lean.

Applied effectively, these three ingredients can be used to create competitive advantage especially for those that would benefit from more marketing, distribution, and financial resources. Here, we unpick the first of these:

Understand your target
As MVNOs are reliant upon mobile network operators (MNOs) for access to infrastructure, they are limited in their ability to differentiate their product in areas such as speed, capacity or coverage. Their main target of competitive advantage is to identify target customer segments which competitors either find challenging to address or have addressed in a different manner.

If they want to stand alone, MVNOs can often be challenged in having the resources required to experiment in the market. The concept of ‘getting it right first time’ can be more paramount for them than their MNO counterparts. Identifying, understanding and using a target niche as a foundation for investment and decision-making across the operating model is crucial to achieving this objective.

Giffgaff, an MVNO owned by O2, has adopted a proposition targeted at tech-savvy, cost-conscious millennials. Their pay-as-you-go, data heavy, offering is complemented by an online-only platform that resonates with their target market. Capability and experience improvements are identified through direct contact and insight from their customers through their community forums, ensuring a significantly reduced chance of getting it wrong.

In comparison, Truphone, a B2B MVNO, targets the global business market through their ‘global SIM’ offering – aligning roaming capability with customer travel, networking, and cost management needs. They also offer a call recording facility, which can be of particular use to the financial services sector. With competition in the roaming category increasing due to regulation of costs, using niche insight to balance commercial interests alongside meeting customer needs is key.

Similarly, Lebara’s offerings target the global migrant community. With its roots beginning in the international calling card market they have expanded into the MVNO model focusing on international calling rates. Using this key market in its decision making has seen the Lebara brand presence focused on independent corner-shops frequented by their target migrant communities.

Understanding your niche market isn’t about restricting the offering of MVNOs but specialising in order to focus strategy, marketing and product development across the business. MVNOs cannot afford to be all things to all people. Knowing who your customer is becomes as important as knowing who your customer is not.

The use of an established target audience is a key input into the next piece of this series: getting your product out there. Understanding your customer is part one, accessing them is next.

* GSMA, ‘The global MVNO footprint: a changing environment’, February 2015

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