WOW, Did T-Mobile Pull an Apple and Revolutionize the $400 Billion Global Call Center Business
By Chris DeLambo and David Zierman
Over the past few months T-Mobile’s customer service operations have been written about in the Harvard Business Review, presented at a webinar with the Execs In The Know and covered by The Motley Fool. Their new approach to customer interaction has resulted in external recognition from companies like J.D. Power and others. It is a success story about simplifying the process while treating customers and employees with respect.
Their Team of Experts (TEX) model consists of a dedicated group of customer service and technical specialists which support a set geographical area of the country so much so that the team is well versed in local weather and news. In his Harvard Business Review article, Matthew Dixon writes about one group that, “delivers the kind of service you’d expect from a mom-and-pop store.” We all know what it is like to be served by your small, locally owned business with a sole proprietor vested in the satisfaction of their customers and guests. Here the owners and employees are rooted in their community and know their neighbors personally. They provide a level of personalized service behemoth companies traditionally can’t or won’t provide and are rewarded with a loyal customer base that possesses a sense of affinity for the business and its success.
The TEX model really resonates and reminds us of when Steve Jobs at Apple simplified a product design by making it intuitively easy to use. When Apple shipped products, there were no printed copies of manuals because they were confident their products didn’t need user manuals. The Team of Experts has that same intuitive design. By empowering employees with the right tools, providing them with knowledge and developing the right culture, it will create a better more satisfying experience for everyone - - no user manual necessary.
The results from the TEX model have been very impressive:
· 13% reduction in overall cost to serve
· 79% decrease in transferred calls
· 31% reduction in escalated calls to supervisors
· 56% increase in Net Promoter scores
· 22% drop in postpaid churn
· 48% decrease in annual representative attrition
The move to this simplified model has resulted in an impressive financial ROI for both T-Mobile and its outsourced vendor partners who support some of their business. The financial metrics for churn and attrition alone are quite powerful.
CHURN
An oldie but goodie, “The Financial Case for Reducing Churn" was written back when carriers paid for handsets in exchange for a two-year contract. The article lays out the cost of acquiring new customers in relation to the cost of keeping an existing customer and concludes that new customer acquisition will cost somewhere between 5x and 10x the cost of retaining a customer. “Cost to Acquire a Customer (CAC) is calculated differently by providers and obviously one that companies prefer not to share externally, it’s difficult to determine a useful CAC benchmark, but figures that I’ve come across include a low of around $350 to a high of about $720 for wireless carriers. At those numbers, the new customer must contribute many months of revenue in order for the brand to earn a payback on the acquisition investment, and early attrition can often leave the provider in a net loss position on that subscriber.”
A survey from Strategy Analytics in August, 2018 had an 8% reduction in churn equal to approximately 400,000 fewer subscriber losses for T-Mobile over the course of a year. This would result in $80 million in additional EBITDA. The actual churn reduction numbers that T-Mobile has published since are even more impressive.
ATTRITION TRAINING
If we look at agent attrition and make a few informed assumptions we can estimate staggering savings for T-Mobile simply by not having to replace agents. Assumptions: T-Mobile has 10,000 internal agents paid $16/hour and outsourced partners with 10,000 agents being paid $11/hour. They are all based in the US. See the table below.
The cost savings in churn and attrition alone makes T-Mobile’s Team of Experts “Applesque.” Their outsourced vendors must be enjoying huge financial wins with this lower attrition - - not to mention the benefit of being able to hold on to their most knowledgeable workers who are proven to provide higher customer satisfaction then new agents.
This simplified model is an imperative all big enterprise companies need to investigate to determine how they can best operate like that mom-and-pop shop to garner unwavering loyalty.
At the end of the day, the question is: How did T-Mobile make this work? Other companies have tried "geo routing" so customers spoke with folks who are like them, but the organizations never seemed to stick with it. T-Mobile has an internal culture which supports its external brand and this facilitates a unique way of getting their employees’ buy-in for change. This type of change is not possible without employees truly believing and that is a big part of why the Team of Experts model is successful. These customer service concepts aren't original. It’s T-Mobile’s execution that has been spectacular. Every company has a contact center and all vendors in the BPO space need to be investigating this model. And – oh, by the way - T-Mobile has publicly stated they will gladly share their secret sauce with anyone who asks.
Let me know what you think!
Senior Director of Client Services | Expert in Healthcare IT Solutions | Leading PM & EHR Innovations
5yAmazing!!!
Integrated Marketing, Brand Storytelling, and Campaign Strategy for Award-Winning Audience Engagement
5yI think the “sauce” is the brand. Frontline employees that believe in their brand and management that empowers employees to act within that brand. I’ve seen it firsthand. T-Mo employees live and breath magenta.
Great article with even better things to come!
Provider of high quality general contractor services
5yReading this article from a T-Mobile call center as we speak from a vendor perspective. There is more to come from T-Mobile as far as revolutionizing the way they do things to impact their bottom line and create better Experts. Fun times
Driving IT and GRC service delivery excellence: guiding future leaders and organisations to transform supplier and partner management, products, services & solutions
5ygreat article