Enhancing mobile customer experiences and growth strategies with eSIM

The past several years have ushered in significant growth for eSIM devices, and the surge since the launch of eSIM-only iPhones in 2022 signaled a transformative shift in the mobile industry. To foster market competition, the Federal Communications Commission (FCC) is pushing for devices to be unlocked shortly after they’re sold. Carriers should position themselves strategically to help capitalize on this opportunity and mitigate potential threats. eSim can help.

Now is the time to develop a strong eSIM strategy by:

• Focusing on marketing campaigns for both new and existing customers.
• Operationalizing eSIM systems and capabilities across the organization to help reduce costs and deliver better customer experiences.
• Developing new product and service offerings enabled by eSIM to help solve customer pain points while generating incremental revenue streams.

eSIM market overview

The US mobile market is saturated: 97% of adults own a cellphone and 90% own a smartphone¹, and the number of mobile devices among consumers globally is forecast to reach 10 billion in 2027. Mobile service operators, particularly in retail, remain a key channel for device swaps (including those for upgrades and broken devices) and new service activations, often involving customers switching from other carriers. Historically, a big product management challenge for carriers has been the need to insert a physical SIM card into a mobile device.

While the device industry has adopted eSIMs to reduce costs and improve flexibility, carriers are evolving their workflows to keep pace with the technology. The real opportunity lies in leveraging eSIM for innovative, revenue-generating products that can help address customer pain points.

Bring your own device (BYOD) — a strategic advantage

BYOD is a key strategy component for mobile virtual network operators (MVNOs) and companies with prepaid service offerings. These providers are embracing eSIM to more easily add subscribers with unlocked mobile devices without having to absorb costs associated with device subsidies or to provide equipment installment plans (EIPs).

A BYOD model can help make it easier for cost-conscious customers to switch carriers: it can be as simple as scanning a QR code. This model works especially well at the lower end of the market where customers don’t typically demonstrate significant carrier loyalty. But BYOD isn’t just about offsetting low-cost service activation. It’s an approach that can also help capture share at the high end of the market. As carriers and other broadband service providers have moved into the mobile category, many of their activations have come from BYOD customers, enabling them to grow at an impressive pace with lower average subscriber acquisition costs.

But there’s a catch. Depending on the types of products and services a carrier wants to provide, they may have to invest in more streamlined back-end systems to help embrace eSIM device management. A more pressing issue is customers with “carrier locked” devices that limit their ability to change to the carrier of their choice. Customers with outstanding EIPs are often locked into lengthy contracts that contribute to the average three-year phone replacement cycle. These EIP customers carry balances they may have to pay off before a carrier unlocks their device, typically only upon request. Furthermore, the time it takes to make the request can vary, sometimes taking 48 hours. These factors create friction and often lead to frustrating customer experiences.

But the market may be changing. At its Open Commission Meeting on July 18, the FCC released an NPRM (Notice of Proposed Rule Making) seeking comments on establishing a set of guidelines that would require carriers to unlock their devices 60 days after activation. While this approach to increased competition and less confusion in the market may serve the public interest, many carriers will need to have clear operating models for how they manage EIP customers. They’ll also need well-developed acquisition models and lower-cost eSIM strategies for BYOD customers no longer restricted by locked devices.

Churn concerns

eSIM has the potential to disrupt the market with new entrants, offering lower switching complexity, in terms of time, effort and cost. These factors, among others, make carriers hesitant to promote eSIM more broadly, and many customers remain largely uninformed. For now, eSIM isn’t making a significant impact on churn, but that’s likely to change in the near future. Some carriers are starting to explore new customer capture programs for transient users to try a carrier’s service on a trial basis.

Improving customer experiences

eSIM can help solve customer problems, particularly with device swaps, while also boosting operational efficiencies.

Most of us have experienced that moment of panic when we’re suddenly no longer able to connect because our phone is lost or broken. We can either wait for a new device to arrive in a few days or drop everything we’re doing and run to the nearest mobile carrier store, hoping there’s no wait and the device we want is in stock.

But what if you could simply load your phone credentials onto another device, even temporarily, until you can arrange for a convenient delivery or in-store pickup of a new device? It’s possible. Most modern phones allow for multiple phone profiles to be active on a single device, allowing a user to “share” their device. eSIM helps alleviate a significant customer pain point and creates a customer experience that can build loyalty — and might even prevent losing a customer to the competition. This scenario is just one way eSIM can help commercialize product and service offerings.

Mobile operators should think about the role that eSIM is going to play in their products and services as well as how they can manage the operational complexities and unique customer needs around device management. This technology can help streamline in-store processes and reduce costs by virtualizing high-volume transactions like device activations and swaps. Beyond operational and customer efficiencies, eSIM can also offer carriers an opportunity to develop products that leverage investments in networks and adjacent technologies — and to create differentiation in the market. eSIM could be one way to help reshape the traditional integrated carrier model.

Many global operators around the world have already started to promote the benefits that accompany eSIM and integrate them into their sales and marketing campaigns. Even carriers that have already developed an eSIM strategy should consider refinements that include customer acquisition and retention programs to help grow their market share and create new revenue streams.

_{1. “Mobile Fact Sheet.” Pew Research Center, Washington, D.C. (January 31, 2024) https://www.pewresearch.org/internet/fact-sheet/mobile/}