A new MVNO, Donate Mobile, has been launched on the Vodafone UK network which allows customers to donate 10 percent of their mobile phone bill to a charity of their choice. The goal of Donate Mobile, which will allow subscribers to donate to any of the over 160,000 registered UK charities, is to raise £15 million for charitable causes in the next five years. Donate Mobile is also offering a recycling service for used mobile devices, which would contribute additional revenue for charity.

Tarifica’s Take

In previous Stories of the Week, we’ve focused on the difficulties MVNOs face entering the market. Unless they happen to be connected to, or launched by, a major player with a well recognized brand, they have a hard time attracting enough “quality” business to compete successfully in the mobile arena. If an independent MVNO is ever going to succeed, we think the best approach it can take is to create for itself some distinction amid all the competition. A charitable orientation, such as that employed by Donate Mobile, is certainly a creative way to create such distinction.  Similar to a charity-oriented initiative, and we feel a possibly better alternative, would be for an aspiring or existing MVNO to create some type of affinity program linked to customers’ interests, affiliations or allegiances.

Credit-card companies, which have been operating for many years in a saturated market, are already doing very well with this approach. In fact, we think MNOs, and not just MVNOs, should take a page out of their book. Among the possibilities for affinity linkage are universities, nonprofit foundations, even very large entities such as governments (for example, the Postal Service). The affinity partner would get a small piece of all the revenue, or some other direct benefit, that results from subscribers who sign up with an MVNO or MNO for their specific affinity program. On the flip side, the operator can also link the mobile customer’s account to activities or interests for which the customer could accumulate redeemable points, as credit cards do with air travel. Workable options include travel miles, sports tickets, museum privileges, etc. (In the aforementioned Postal Service example, points that can be redeemed for postage.)

Given that the mobile phone market is saturated, all providers – MVNOs and MNOs alike – need to distinguish themselves from the competition. Providing potential customers with such affinity incentives is in our view one of the better ways to accomplish this objective.