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Legere is Right – Customer Care IS a Big Deal: Strategy Analytics Says it Could Drive More than $80 Million in EBIDTA at T-Mobile on Churn Reduction Alone

by Susan Welsh de Grimaldo | Aug 16, 2018

T-Mobile US Team of Experts – Customer Care Revamped at Un-carrier Next on 15 August 2018

By Susan Welsh de Grimaldo, Director, Service Provider Strategies

Sure, it’s not the freebie mode of giving things away to happy customers (Un-carrier Next ticked off that box with its Pandora Plus and Live Nation benefits for its customers) – but customer care can really move the needle for key business metrics.

Care is important not to get wrong, and done well is an opportunity for upsell even. With increasing size of its mobile customer base, T-Mobile needs to keep customer satisfaction (CSAT) high and negative image low to help manage churn and continue growth. Showing you care for customers and giving personal attention to address pain points is brand image T-Mobile needs to keep up. T-Mobile just recently got its postpaid churn level to the realm of Verizon Wireless and AT&T, and with new entrants like the cable MVNOs it needs to keep up its game on retention. Check out our latest Service Provider benchmarking report here.

And that new low churn level of .95% in Q2, according to T-Mobile EVP of Customer Care Callie Field, was impacted by the deployment of Team of Experts in initial roll outs prior to nationwide launch.

We conducted a survey among Android users in the US (from our AppOptix panel) back in July 2016 after the T-Mobile Tuesday’s launch, and this confirmed our view that customer care is an important part of the mix for both churn reduction and gaining new subscribers.

  • 7.7% of users said a “priority customer care line with no wait times” would most influence their decision to stay with current provider
  • 68% of users said quality of customer service an important factor when choosing provider  (6th place behind quality of network 86%, price of services 82%, price of data 80%, speed of data 78%, and up-front phone cost 69%).


So a lot of users value customer service and view it as an important factor in their decisions about their wireless service provider. If the priority customer care line (as asked in our survey) is a decent proxy for the Team of Experts (or at least a good indication that users really value a high quality, effective, customer care experience) then cutting churn by 8% is a decent return – over the last year that would equate to over 400,000 fewer postpaid phone customers churning away from T-Mobile, which would have lifted its EBITDA margin by $80 million. That’s a good figure when you consider that Verizon Wireless managed 880,000 postpaid phone net adds in total over that period, Sprint 605,000, and AT&T 256,000 – and new entrant Comcast with its Xfinity Mobile grew to 780,000 subs by end of Q2 from its launch in May 2017. And EBIDTA would be further impacted with savings in customer care costs – according to Callie Field, “Team of Experts model has yielded a 13 percent reduction in costs over a year earlier, thanks to fewer calls” reports CNET. She also said in areas where it was in place, Net Promoter Score among subscribers rose by 56%.

Many operators say in their strategy that they are customer centric, but implementing that well can be a competitive differentiator. With network parity and high smartphone penetration in the US, carriers need to find ways to differentiate and manage churn. Reducing customer frustration is a good move. Getting the right tools with predictive analytics for customer care teams is essential. So it is combining human and digital for the best of both that is needed.

After a tour of the T-Mobile Customer Care Center in Charleston, SC, I am truly impressed with the behind the scenes, really taking care of employees with opportunities for R&R at work and free education. The team competition focus and physical set up of work space are structured to foster teamwork and a sense of community to solve customer problems. It's not just hype, it's a new way of working in customer care and the front- line teams show their enthusiasm, with care treated as a career not just a job. “Front-line first to be customer first” is a good motto.

I like the idea of T-Mobile Team of Experts. Our survey also shows lots of people want fast self-service –and for this digital and AI have a big role to play (see Telefonica Aura as a good example). But tough problems need real people. Pairing AI and analytics with good care experts needs to be part of solution-giving care teams the right tools is key. (We will be writing more on analytics and AI for customer engagement soon, so reach out if you want to chat about that).

As Legere said, we are in a “post-unlimited, pre-5G” era – a time that requires new ways to focus on differentiation of service to stay competitive. And Legere hinted this getting the customer care right is important for the TV side too, with more to come on that – so stay tuned. We will be watching for that in the next Un-Carrier move. T-Mobile is smart to up its customer care game now in advance of both 5G and the competitive flurry that will unleash and its upcoming TV play based on its Layer3 TV acquisition.

Contact us at custom@strategyanalytics.com to find out how Strategy Analytics can help you understand your competitors’ customer segments and satisfaction, to test consumer choices and efficacy of different loyalty campaigns or explore 5G and PayTV consumer strategies.

 

 

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