Competition in the telecommunications industry is reaching a peak, and T-Mobile and Verizon each see their experiences as points of strength. What remains to be seen is whether their efforts will pay off in a crowded market.
In their most recent earnings calls, both companies cited customer experience as a core market differentiator. T-Mobile boasted about its record-high NPS of 46, while Verizon highlighted improvements to its end-to-end customer experience that helped reduce churn.
Experience can serve these companies well in the tightening telecoms market, but leaders need to make sure their strong CX foundation doesn’t become a smokescreen for problems elsewhere in the enterprise, according to Daniel O'Sullivan, director analyst in Gartner's global customer service and support research group.
“I think there is definitely evidence to suggest service as a differentiator can be associated with improvements to long-term customer lifetime value and account retention and health and so on and so forth, but I just think we have to be careful about interpreting superficial tools like NPS as being a forecast of any kind,” O’Sullivan told CX Dive.
For T-Mobile, its high NPS belies a slowing customer acquisition rate — though the score may be a sign it can grow in other areas. For Verizon, its simplified plans and emphasis on an overall strong experience will need to help it complete a turnaround effort that is just getting started.
The key for both companies will be investing in CX where it matters, according to O’Sullivan. CX is a differentiator for world-class organizations, but there needs to be a focus on making a real impact versus creating surface-level changes .
AT&T will be an important player as well, but the company didn’t discuss its experience in its latest earnings call. The company is working on winning customers by encouraging customers to consolidate their internet and phone services under the brand.
T-Mobile’s NPS is a strength. Is that enough?
T-Mobile’s goal is to round out its value proposition as it reduces the importance of device subsidies, according to President and CEO Srinivasan Gopalan. The company doesn’t plan on moving away from the incentive entirely, but wants to present incentives beyond the financial.
“So our effort really is to broaden out the reasons why people should choose T-Mobile rather than purely a free phone,” Gopalan said on an earnings call last week. “Of course, we'll be competitive on things like subsidies, but that's not kind of what we're leaning in on.”
This isn’t necessarily a change in strategy for T-Mobile, which has been working to position itself as a CX leader for a long time. The company’s strong NPS performance, which leaders highlighted in prior quarters, too, is proof of that.
“I do think that that puts them into the upper echelons of high scores for NPS,” O’Sullivan said. “And I think in particular in telecom, we've seen organizations typically struggle often with negative NPS stats.”
However, while there is plenty of evidence that suggests NPS has a correlation with financial performance, it’s not a predictor for long-term financial performance.
If NPS can predict anything, he said, it’s customer lifetime value and growth within the existing customer base, which doesn’t necessarily line up with T-Mobile’s results.
“What I have seen in the T-Mobile results in particular that would concern me, would be the fact that the net account growth is declining, and I think in particular poor performance against existing account churn,” O’Sullivan said.
The story isn’t necessarily all bad, as certain metrics are muddled, according to O’Sullivan. T-Mobile’s effort to get customers onto higher paid plans could financially benefit the company and would line up with NPS’ ability to enable higher customer lifetime value — even if it doesn’t spike growth.
Verizon’s focus on simplicity is a starting point
Verizon is also moving away from subsidies, and its simplified plans and emphasis on service are part of the effort, according to CEO Dan Schulman.
“I think the basis of competition is fundamentally changing,” Schulman said on an earnings call last week. “It's moving away from subsidies, at least for us, and it's moving to the overall end-to-end customer experience, like what do the products and services look like? What does your servicing look like? What does your loyalty look like?”
The simplicity model, which offers a complete wireless package for a set price, is already subsidy free, according to Schulman. This may improve the customer experience, Verizon’s financial model and the company’s ability to compete with its rivals.
The customer service experience is where simplicity truly matters. This can include options like choosing a plan, provided customers feel supported and confident that they have all the details they need to take the next steps.
“There are decades of research on the Gartner side that suggests that what motivates customers very often, when it comes to their interaction with brands and organizations and certainly within telecom, is this desire for things to be achievable in a way that feels perceptually low effort to the customer,” O’Sullivan said.
Anything that can simplify the process of reaching out to the organization, avoid making customers feel like they have to repeat themselves, or minimize the feeling that customers have to put a lot of effort into a complex journey can be a CX win.
“Often we find that customers are almost doing unpaid work for organizations when it comes to trying to understand their confusing policies or navigate through journeys where they have to do a lot of the information gathering themselves,” O’Sullivan said.
There is still an opportunity to build on top of the simplicity with what Gartner calls value-centered service, he said.
For instance, offering customers a chance to meet with a consultant on how to reorganize their plan to meet their needs could add a bit of complexity — and a chance to upsell — for customers open to going a bit further with their contract renewal.
The customer journey will determine the victor
The success of Verizon and T-Mobile’s CX efforts, as well as any telecom aiming to compete on its experience, will hinge on their customer service.
Customer service interactions are usually more likely to drive customers to disloyalty than they are to build loyalty, according to O’Sullivan. The best customer service is often not needing any service at all.
Gartner’s recommendation is to start with a customer first strategy that takes the negative sentiment from something going wrong and focuses on moving the customer back to a neutral sentiment by making the service experience low effort.
“Organizations who get this wrong over-index on metrics like customer satisfaction, which are perceived to be all about exceeding the customer's expectation for wonderful and delightful service,” O’Sullivan said. “Generally speaking, we find that customers are not necessarily particularly motivated by how personalized you can make the interaction and your ability to kind of go above and beyond.”
If T-Mobile and Verizon want to maximize the impact of their customer service wins, they need to think about how they can re-engineer the customer journey to align with what customers want out of the wireless carriers’ products and service, according to O’Sullivan.
Options include consultative guidance on reorganizing plans, education on how to mitigate security risks, and recommendations on how to get the most out of a device, according to O’Sullivan.
The goal isn’t just to close tickets quickly in pursuit of CX scores, it’s to nudge customer behavior in a direction that benefits the business.
“The ability for organizations to do that is based on a real hard look internally at critical moments that matter and customer value drivers based on deep organizational understanding of what makes a successful happy customer for the long term,” O’Sullivan said.
