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MVNO Loyalty Schemes Give Customers What They Want

This week, Three announced that it was partnering with High Street cosmetics chain Superdrug, to launch the UK’s newest Mobile Virtual Network Operator (MVNO).

Superdrug Mobile will be available exclusively to Superdrug’s Health and Beauty Club loyalty programme, using Three’s state of the art network architecture.

Lining up behind Superdrug are a host of other companies looking to launch their own MVNOs, with everything from The Post office to Premier League football clubs rumoured to be keen on cashing in on this type of arrangement.

In doing so, brands have identified mobile data as a currency that their customers are keen to receive. Superdrug mobile will offer its subscribers a whopping 4Gb of data, as well as unlimited voice minutes and texts, for only £10 per month. When compared to Three’s ownbrand £10 pay as you go offering – 1Gb of data, 3,000 minutes and 3,000 texts – Superdrug Mobile offers a serious amount of bang for very little buck. This is clearly not going to be a huge money spinner for the High Street chain, but compared to the cost of offering money off vouchers to its loyalty club members, it is likely to be a cost-effective way of engaging with its customers and encouraging serious brand loyalty.

The MVNO model was launched in the UK in the late 1990s and essentially allows the operator to provide mobile phone services without owning the network architecture. Some analysts estimate that there are more than 100 MVNOs in the UK marketplace, accounting for approximately 12 million of the UK’s total mobile subscribers.

Elsewhere, MVNOs have been launched with the sole intention of disrupting markets. Last month, FreedomPop announced plans to launch Unreal Mobile, an MVNO which will provide an unlimited data tariff in the US for just $15 per month.

In this instance, FreedomPop claims that it is leveraging the proposed merger between Sprint and T-Mobile, using it as a springboard to launch Unreal Mobile.

While Superdrug Mobile is unlikely to disrupt the UK market to the same extent, it’s potential reach is surprisingly large. With over 12 million members, Superdrug’s Health and Beauty loyalty club represents a significant market in its own right.

What is in it for the operator?

The trend of MVNOs being set up exclusively for High Street loyalty schemes could be a money spinner for telcos and mobile network operators. While Superdrug is hardly the first retailer to set up its own MVNO – Asda, Tesco and Sainsbury’s all offer pay as you go mobile phone services – it is among the first to link it to its customer loyalty scheme.

If MNOs can help retailers negotiate the hurdles to setting up their MVNOs it could represent a key revenue stream.

“We are very excited about Superdrug Mobile which is a great example of an already strong brand further strengthening its customer engagement model through a mobile offering.  We worked closely together on the complex task of integrating their loyalty scheme into a mobile offering to deliver a great product,” said Three, director of wholesale, Lynda Burton.

“We understand that brand owners are not always telecoms experts, so we make things simple so that our partners can focus on managing their customers while we take care of everything else.”

In the months ahead, a whole range of retail companies look set to launch their own MVNOs as a cost effective way of rewarding their customers and cultivating brand loyalty. If they can offer the same levels of low priced data as Superdrug Mobile, uptake is likely to be huge – which is good news for wholesale operators across the country. – Total Telecom

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