In addition to financial and operational pressures, telcos struggle to enhance customer experience and engagement. Net Promoter Scores (NPS) for telcos have lagged behind those of tech companies (techcos), averaging at -1 compared to +60 for techcos. This reflects dissatisfaction among consumers, who are increasingly digital-savvy and demand that brands, including telco operators, meet these evolving needs and preferences.

With digital natives expected to make up 75% of the workforce by 2025, telcos must rapidly innovate to deliver seamless, personalized digital experiences that drive customer satisfaction (CSAT), NPS, and repeat business in a digital-centric world.

Having partnered with telco operators to launch and operate successful digital brands including povo with KDL, Circles has deep expertise in driving telco innovation with a strong emphasis on business outcomes. Central to this capability is its Innovation Engine, which enables telco operators to enhance their consumer offerings quickly, efficiently and profitably.

Circles’ Innovation Engine is powered by Circles’ proprietary Sandbox technology and a rapid experimentation innovation methodology. The Innovation Engine is designed to boost consumer engagement and retention through diverse non-telco offerings that enrich digital lifestyles. The core principle is straightforward: higher user engagement and frequency on digital applications (“apps”) increases the propensity to spend and drives larger purchases. This then turns apps into valuable digital assets that generate new and diversified revenue streams.

With Circles’ Innovation Engine, telco operators can innovate rapidly, drive user engagement and ultimately achieve higher Average Revenues Per User (ARPU), as reflected by KDL’s early indicators. This strategic focus allows telco operators to thrive in an increasingly competitive market while delivering exceptional customer experiences.

3-stage Rapid Experimentation Innovation Methodology

The process begins with the Ideation stage, where Circles collaborates with telco operators to discover and identify opportunity areas that could drive high user engagement and interaction. For povo2.0, these opportunities include entertainment, gaming, retail and FinTech. Circles and telco operators then rigorously generate, evaluate and finalize specific offerings and services to launch as MVPs, based on three success criteria: business potential, engagement potential, and alignment with customer habits and behaviours. Emphasizing speed, innovation and action, the goal is to finalize approximately 20 ideas and launch two to three MVPs per quarter.

In the MVP stage, Circles leverages its proprietary Sandbox technology to not only swiftly deploy and test MVPs and products with actual users, but also make rapid iterations based on live customer behavior and feedback. This is achieved with rapid, target experimentation and early partner integration.

Circles and our telco partners decide to “stop” or “continue” the MVP either by iterating or scaling it, based on four success criteria: Activation, Adoption, Engagement, and Monetization.

MVPs are discontinued if less than 25% of the success criteria are met. Further review happens at the eight-week mark, where MVPs that meet more than 50% of the success criteria will continue to run. This Stop-Iterate-Scale approach emphasizes rapid iteration, feedback loops and adaptive decision-making, with reassessments every four weeks during the initial three months to ensure only successful MVPs advance.

Building on the positive outcomes from the Activation and Adoption phases, Circles and KDL partnered closely to drive business results in the Engagement and Monetization phases, which are the focal points of this case study.

By implementing gamification, rewards, and personalized content, Circles and KDL successfully drove user interaction and adoption on povo2.0. This created a 30% increase in baseline engagement for MVP users, who spent 30% more time on the app compared to non-MVP users. The significant spike in engagement among MVP users on the day of the first interaction further highlights the Innovation Engine's effectiveness in sustaining high levels of user activity and interest.

With sustained higher engagement levels for MVP users, Circles and KDL then shifted focus to Monetization of our engaged user base on povo2.0. By scaling the rewards system and marketplace launched during the MVP phase, Circles and KDL achieved a notable 8% increase in base ARPU for MVP users. There was also a sharp increase in ARPU at the point of first interaction, with MVP users surpassing non-MVP users despite starting from a lower baseline. This sustained upward trend in ARPU for MVP users highlights the Innovation Engine's effectiveness in driving consistent revenue growth through enhanced user engagement. As Circles and KDL continue to scale our innovative rewards system, we anticipate further ARPU growth from povo2.0 users.