International Process and Performance Institute

Virgin Mobile entered the US market with a bang, by offering a newly defined cellular service value proposition - pay as you go (and more).

Certainly the number one customer expectation that Virgin identified as a competitive differentiator was the elimination of the onerous “cellular service contract.” The service contract is a characteristic of the existing cellular service market loosely disguised as a “customer benefit.” This “benefit” is created by making non-contract service unattractive from a pricing standpoint. Why does the service contract exist in this form? It exists as a mechanism for cellular service providers to “push” a product of predetermined customer lifecycle duration because the industry as a whole has been unable to establish profitable customer lifecycle duration due to consistent failure on customer expectations.

The practice (and product) exists as a mechanism to ensure some profit to the cellular service provider. Virgin saw this as an opportunity to define a new customer value proposition that would place it at a competitive advantage for a meaningful portion of the cellular service market. Virgin introduced a new service, pay as you go that requires no service contract. You simply pay as you go.

If you documented the “process” you go through as a customer in “buying” cellular service in the traditional form you would find it fraught with Moments of Truth. It was not that long ago that most people experienced a “process” that took in excess of 30 minutes to complete just to get a cell phone and service.

With Virgin Mobile USA’s approach it can literally take 5 minutes or less. Buy a phone, any phone you want, and go. Charge it any number of ways. No contracts, no credit history, no credit cards, very few Moments of Truth.

The results of the strategy are compelling with Virgin Mobile USA touting an averaged growth rate of 1 million new customers per year.