Earlier this year, T-Mobile launched a “Kickback” program that actually credits customers up to $10 a month for their unused data. Just five years ago, such a move would have been unheard of, but it’s just the latest ‘un-carrier’ move from the company that has made its name by giving customers what they want — and transforming the industry in the process. In recent years, T-Mobile has illustrated, time and again, that a win for the customer can also be a win for the business.
Think back to 2012 when it seemed that death was the only surefire way to get out of a cellphone contract. Those early termination fees (the dreaded ETFs) could cost up to $350. The odds of hearing a friend grumble about his wireless carrier far outweighed the odds of a positive anecdote. The industry was, in the words of one insider, “stupid, broken, and arrogant.”
That insider was John Legere — the energetic, unfiltered CEO of T-Mobile who is known for unabashedly dropping the f-bomb and stirring things up with competitors. He spoke those words at a press conference in 2013, and they were reported far and wide. Just a few months prior, T-Mobile had launched its rebellious campaign as the un-carrier when it banished those despised phone contracts along with subsidized phones. The move would turn a “stupid, broken, and arrogant” industry on its head, and the reverberations would benefit customers for years to come.
Legere spoke those words less than a year after he’d been hired by T-Mobile, and he was determined to disrupt an industry that was practically synonymous with customer frustration. In an interview he conducted for Business Insider, Richard Feloni learned that — even when René Obermann, CEO of Deutsche Telekom (the company that owns T-Mobile) was interviewing Legere for the job — Legere was candid from the very start: “Right after hello, I told him that it was my opinion that he could only fail one way in the US. I said, “Do exactly what you’re doing — nothing.””
At the time, T-Mobile was the smallest of the four major wireless players in the US (the others were Sprint, AT&T, and Verizon). However, under Legere, it also proved to be the most daring when it dropped contracts, allowing customers to pay month to month. That decision was made after T-Mobile not only asked customers what they wanted, but also then listened to them — and it wasn’t just the customers who benefited.
The Ripple Effect and the Changes That Followed
The move was a game changer for the telecom industry, says Jill Steinhour, Adobe’s director of industry strategy, high tech, and telecom. “I think T-Mobile knows how to really shake up the industry,” says Steinhour. “It changed the dynamics for the other players in terms of how they were going to go to market.”
In 2015, T-Mobile surpassed Sprint, becoming the third-largest US carrier. That same year, Verizon went contract-free, followed by Sprint and AT&T.
But, while customers reaped the benefits of going contract-free, the future became murky for carriers, which now faced a new challenge: customer predictability.
“They no longer understand when their customer base is going to mature,” says Steinhour. “Historically, they would understand when your contract is coming up and then they would know when to engage and market to you, get you to extend or upsell you to a new phone. That key trigger is fading away.”
On top of that, phone subsidies are disappearing. Traditionally, customers have paid only a fraction of the cost of the phone, and carriers subsidized the differences. Starting in 2013, carriers — led by T-Mobile — moved away from this approach and began to unbundle the cost of the phone from the monthly service. Customers now pay for the phone up front or through monthly installments, resulting in another shift for telecom competitors.
Along with the new installment plans to pay for phones came credit checks — which are incredibly off-putting to customers and a challenge for carriers. In fact, carriers found that many customers would abandon the purchase once they reached the credit-check part of the process. Steinhour claims that’s when carriers began looking to third-party data, which can provide insight into the creditworthiness of potential customers as well as their tendencies to purchase certain types of phones and services.
Adobe’s Ability to Create Effective Solutions
That’s where Adobe comes in. Adobe excels at creating solutions that can help businesses build unique audience profiles. In the case of the telecom industry, those distinctive profiles can help fill some of the voids that had arisen due to industry changes.
“We provide the tools so that the business can work through these issues,” says Steinhour. Adobe’s data management platform, Adobe Audience Manager (AAM), helps businesses better understand their current customers while also identifying new segments to target.
For example, let’s say a carrier wants to identify which of its customers may be planning to travel internationally in the next 30–90 days and, thus, might need an international calling plan. AAM brings together first-, second-, and third-party data that enables the carrier to identify such a segment. The carrier can then target those customers with offers for international plans or products that would appeal to travelers.
When the telecom industry moved away from contracts and subsidized phones, the big four lost their crystal balls and struggled to see who their future customers might be. With audience tools, such as those Adobe provides, businesses are discovering new ways to connect with future customers by anticipating their needs and proactively offering solutions.
Still Making Waves
Since Legere first uttered those critical words in 2013 — sending ripples throughout the industry — T-Mobile has launched more than one dozen un-carrier moves, including:
- Ending overages;
- Providing free international data roaming, unlimited music, and video streaming; and most recently,
- Creating their Kickback program.
The rest of the industry has copied some of those moves — contracts and switching fees have become a thing of the past, roaming charges have decreased, and customers can now find plans that avoid overage charges.
Along the way, T-Mobile has become the fastest-growing carrier in the country. When Legere started, the company had 33 million customers. Today, that number has more than doubled. In 2016, according to the American Customer Satisfaction Index, T-Mobile scored the highest in customer satisfaction among the four major carriers — with its score increasing six percent over the previous year’s result.
In a 2016 interview, Legere told Business Insider, “… if you ask your customers what they want and you give it to them, you shouldn’t be shocked if they love it.” By putting the customer first, by being nimble, and by working to understand and connect with its audience, T-Mobile helped not only move itself forward, but also the industry as a whole. It’s a lesson that all segments could put to good use.
To learn more about T-Mobile’s path to creating exceptional customer experiences, download Experience Counts: Exceptional experiences happen at the intersection of data and design.
Note: All quotes and statistics attributed to Jill Steinhour within this article were taken from an in-person interview with Steinhour, conducted by Kate Silver, journalist and author, on March 1, 2017.