Why roaming is a customer loyalty killer for MVNOs – and how to fix it

A strong reputation for customer experience (CX) is highly prized by mobile virtual network operators (MVNOs) to differentiate their brands, drive loyalty and protect margins. The latest American Customer Satisfaction Index (ACSI) benchmark for value MVNOs is a healthy 77/100, and much of this comes from slick, low-effort digital journeys that emphasize ease of self-service via apps and websites. But there’s a customer effort paradox at the heart of the MVNO proposition – a blindspot in the digital customer journey where the CX is extremely high effort.

That blindspot is international roaming; specifically data roaming to countries and regions where the MVNO’s MNO partner can’t facilitate anything like competitive $ per GB rates, giving subscribers no choice but to find alternative workarounds for their next foreign trip.

In this post, we explore the rigid and widespread nature of this paradox and what MVNOs can do to break out of it – eradicating data roaming blindspots to create a universally low-effort CX for the first time, and all without undermining the MNO commercials that underpin their whole business model.

The MVNO business model is selling access to a network asset that the MVNO doesn’t own or operate itself. Optimizing the customer service is therefore critical for customer loyalty.

The other consequence of the MVNO approach is operating on relatively slim margins. It’s generally accepted that MVNOs can profit from a subscriber as long as they don’t consume additional resources. Accordingly, any subscriber who returns a faulty handset, needs technical assistance from a human, or presents with unusual requirements will wipe out their associated margin by doing so.

Finally, MVNOs compete in a crowded market that’s often driven by commodity-based pricing. Winning or retaining customers based on lowest price increases the pressures on cost-to-serve. Hence MVNOs try to position themselves as offering the simplest, most hassle-free, flexible, and easy-to-consume CX.

These virtues are closely linked to the concept of effortless experience popularized by the leading tech and retail brands, and enabled by digital customer journeys. Common features of which are high levels of self-service, great user experience (UX), and total reliability.

MVNOs go to extreme lengths to maximize the perceived value of their customer experience. Major investments are put into making customer journeys – particularly around user onboarding and selling service add-ons – fast, frictionless, and intuitive. At the same time, creating something distinctive and aligned with a unique brand personality.

Customer feedback is essential to evaluating the success of these initiatives. MVNOs frequently deploy the ‘big 3’ CX metrics and correlate trends with changes in underlying business performance (particularly customer retention rates):

• CSAT (customer satisfaction) score: a measure of how satisfied customers are with their experience
• NPS (Net Promoter Score): a measure of how loyal customers are on the basis of their experience
• CES (customer effort score): a measure of how much effort customers must exert in the course of their experience

MVNOs use these customer feedback metrics to gauge how well designed their digital CX is, and make adjustments accordingly.

The MVNO customer effort paradox in action

Meet Franz.

Franz enjoys the near-invisibility of his 30GB/month domestic mobile phone contract with a German MVNO. He signed up years ago and is happy to renew his commitment annually. Managing his account via an app takes very little effort. Since becoming a customer, Franz has been to the UK, Czech Republic and Spain, using his phone as normal in these places because his MVNO includes them in its list of ‘level 1’ roaming destinations. Franz was charged less than $1 per day for this service; a premium he barely noticed or cared about.

Now Franz is planning a two-week vacation to Japan, a ‘level 3’ destination, where the MVNO will charge roaming fees of $5,000 per 1GB of data. “This is crazy!” says Franz, and he has no choice but to seek an alternative.

Why MVNOs feel powerless to change data roaming offers

Nobody likes the situation described above, not Franz (and millions like him all over the world) and certainly not his MVNO. Each time, MVNOs risk losing out on roaming revenues when their costs aren’t competitive. Customer effort goes up and satisfaction and loyalty go down – with Franz more likely to look elsewhere for longer-term fixes that don’t cause future inconvenience.

MVNOs do this because their hands are tied. Every MVNO relies on an MNO (mobile network operator, i.e. one that owns and operates its own physical mobile network) to base its connectivity service upon. In Germany that could be T-Mobile, Vodafone or Telefonica (O2). Each of these will have roaming agreements in place with MNOs in other countries, governing how much they charge each other when a subscriber roams abroad. MVNOs are compelled to charge their subscribers based on the costs their MNO passes on to them.

The solution lies in offering customers an alternative that won’t break the MVNO’s MNO partner model. Namely, travel eSIMs. MVNOs can offer this within their own branded experience, creating simple customer buying journeys that require little effort.

Partnering with eSIM Go provides this capability either via API or collaborating on more of a co-branded or affiliate model – with the approach tailored to the MVNO’s objectives and development capabilities. This brings the following benefits:

Increased customer loyalty

By removing the customer’s pain and giving them what they want, MVNOs can measure the positive impact in terms of revenue retention, churn and NPS. This is especially important as more MVNOs act on first-mover advantage, leaving others at a competitive disadvantage.

Customers should be more satisfied because the hassle factor has been reduced and a major trigger for switching to another MVNO has been removed.

Revenue optimization

Uncompetitive roaming costs ($000’s per GB) equate to losing almost all of the associated revenue available. MVNOs who solve this issue can recover lost wallet share and make decent margins on a substantial new revenue stream.

Being stronger in this area benefits the overall profit model, while also giving the MVNO greater flexibility over pricing strategy.

Seamless, low-effort brand experience

In Franz’s example, the likely alternative for him would have been finding a Japanese eSIM data bundle on a popular travel eSIM store for a fraction of the MVNO’s price.

The opportunity for the MVNO is to offer a far faster and simpler purchase journey to an equivalent conclusion, branded or co-branded under the auspices of a digital experience the MVNO controls. This aligns with every MVNO’s data and digital strategy.

The result is the low effort CX the customer expects, with all the data roaming bundle choice they want, without really leaving the confines of the MVNO’s branded offering.

No conflict with the MNO partner model

Whatever the terms of the MVNO/MNO partner agreement, the fact remains that nobody makes any money offering data roaming for hundreds or even thousands of dollars per GB. This is because no customer ever consumes roaming data at that price, other than unwittingly or with deep resentment.

In other words, neither MVNOs nor MNOs have anything to gain from the status quo. And therefore it shouldn’t stand in the way of dynamic MVNOs wishing to innovate their businesses by offering travel eSIM alternatives.

Buying and activating a travel eSIM is extremely simple. However, nothing beats the zero-effort experience of just showing up in a foreign country and using your phone as you would at home. The pity is that MVNOs (and MNOs) can only offer that in certain places.

For everywhere else, their subscribers are crying out for an alternative. eSIM Go helps MVNOs offer it to them. Get in touch with an expert today to discuss your options and see how fast you can offer this capability.