Sunday, October 3, 2010

CRM for MVNOs: Part I

A Mobile Virtual Network Operator or an MVNO is a common term in the telecommunications industry today. MVNOs ride on the Network provided by a traditional telecommunications service provider, i.e. they buy or source minutes from the service providers, package them in a market savvy way and sell to consumers. Some key characteristics that differentiate the MVNO from traditional operators are as follows:
• MVNOs primary Line of Business is not telecommunications. They have an established brand presence in other industries and markets
• Their target market segments are aligned to the overall marketing strategy of their brand. They will not dilute the brand by targeting completely new segments.
• They are highly conscious and cautious about their image and hence have higher quality and performance requirements from their IT and Network partners.
• They pride themselves on their understanding of their customers, they want to be nimble so that they can change quickly with the changing tastes of their target customers
• They are highly oriented towards VAS and other innovative ways to bundle and price products and services, their revenue sharing agreements with VAS partners reflects the importance of the VAS partner to them.

Companies have transitioned overtime from being product oriented to being customer oriented. The days when Ford started mass production of automobiles with Model T, an assembly line production of cars of a single color that opened travel to the common middle-class American have been replaced with an era of mass customization. As search costs have reduced, customers have become more powerful and demanding. Companies have been forced to incorporate customer feedback and behavior as a key component of product and service design.
MVNOs are companies who consider themselves as champions at customer orientation. They believe they are in the telecommunications market to fill a gap and satisfy an unmet need of their target segment. While traditional telecom operators are tied to their products (mainly voice based) and want to sell to as large a customer base as possible, MVNOs consider themselves as partners to their customers trying to fulfill their needs.

MVNO Operator Relationship
On-boarding of MVNOs was a costly affair till a few years back. MVNOs wanted to have control over most of the BSS systems, which meant significant investments around CRM, Rating, Billing, VAS, Self Care, Portals etc. While MVNOs wanted to limit their dependencies on operators, operators themselves were wary of losing Customer base to MVNOs. However, with the MVNO concept gaining ground and providing a steady and new revenue stream for operators, traditional operators today are encouraging MVNOs and preferring to play a wholesale and B2B role in some cases. Lately, operators have started supporting most of the BSS platforms for MVNOs to the extent that some operators even own the portals of MVNOs. Outsourcing BSS systems to operators (in most cases to the operators IT vendor) have resulted in win-win combination for both the operator and the MVNO partner. For the MVNO, the CapEx on infrastructure has been replaced by OpEx, which has reduced their entry barriers. At the same time, the Operator has been able to rent out the existing IT infrastructure they had in place, thereby creating an additional revenue source for them. Thus, the Operator MVNO relationship, which started out as a vertical co-specialization of activities, has moved to the next level of consolidation, with rationalization of resources taking place between the operator and MVNO.

In the second part of this post, I will detail the role CRM plays in MVNOs and share thoughts on how MVNOs can use CRM more effectively.

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