T Mobile Case Study

Matthew Dixon
Customers
Chief product and
research officer, Tethr
Reinventing
Customer
Service
How T-Mobile
achieved
record levels
of quality and
productivity
ABOUT THE ART: The images in this article were taken by
Lee Friedlander. They were shot in and around Boston,
Massachusetts, in 1985–1986 and Omaha, Nebraska, in 1995.
© Lee Friedlander, courtesy of Fraenkel Gallery, San Francisco
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Turnover rates for customer service workers are among the
highest in the business world—27% annually, on average.
Customers
VISIT ANY BIG company, and few departments will be as
instantly recognizable as customer service. The call center
usually resembles a factory floor, with row after row of reps,
headsets on, sticking to the script and rushing from call to
call as they try to minimize “handle time.” Supervisors walk
the floor to deal with escalated calls and, every now and
then, take individual reps to a back room to review their
performance. While some organizations have invested in
improving reps’ lot, change has been slow to arrive in the
practice of customer service. It’s no wonder that turnover
rates for customer service workers are among the highest in
the business world—27% annually, on average, according to
Mercer. The reasons departing employees cite most often
include a lack of challenging work, inadequate recognition,
limited career paths, and too little flexibility. For customers,
the experience is hardly better. They are forced to navigate
computerized call trees and, should they get a live person,
they’re often treated robotically and handed from one agent
or department to another if their issue is outside a rep’s
narrow repertoire.
But walk into a T-Mobile contact center. The service
department looks more like the sort of knowledge-work environment you’d expect to see in other parts of the company.
Reps sit together in shared spaces called pods, collaborate
openly, and are trained and encouraged to solve customer
issues as they see fit. Most remarkably, these teams manage
a specific pool of customer accounts, just as a small business
would. Unshackled from legacy metrics like handle time,
they instead think about the best way to solve each caller’s
problem and, ultimately, how best to improve customer
retention, share of wallet, and loyalty. Customers know
how to reach their dedicated teams, and they never have to
go through a call tree. Once connected, they find reps who
actually know them and can reliably help.
IDEA IN BRIEF
84    
THE PROBLEM
In most big companies, customer
service feels like a factory floor, with
rows of reps all working in isolation
and racing to minimize call handle
time. Customer satisfaction is low,
and employee turnover is high.
Harvard Business Review
November–December 2018
The T-Mobile model is paying huge dividends for the
company: In the three years since launch, T-Mobile’s overall
cost to serve is down 13%, its Net Promoter Score (a measure
of customer loyalty) is up by more than half, and its customer
churn rate has dipped to an all-time low. Employees are
happier too; attrition and absenteeism have plummeted.
The Change Imperative
Over the past decade, T-Mobile’s leadership team recognized
that although the company’s investments in self-service
had paid off well, they’d also created a challenge. The basic
transactional calls that once dominated call queues—
balance inquiries, address changes, new-service activation,
and the like—had all but disappeared as customers turned to
self-service options for addressing those matters. Now the
queue was dominated by the complex and varied issues that
customers couldn’t solve on their own—a shift that started
to put real stress on the company’s reps. In response, the
leadership team went to the drawing board and, in 2015,
set to work reinventing the service organization from the
ground up.
The effort was led by Callie Field, the executive vice
president of customer care. She and her colleagues wanted to
improve reps’ ability to handle thorny problems and, in the
process, further differentiate the company in a crowded marketplace. Field, who started at T-Mobile in 2004 as a mallkiosk sales rep and rapidly rose through the ranks, faced an
enormously challenging task. “But,” she explains, “my team
and I had a good sense—just from our own experience as customers and employees—of the kind of service that makes you
feel good about a company. We knew we had to create that.
And we focused on identifying and eliminating the things
that drive customers crazy. In the end, we had a simple goal:
THE SOLUTION
T-Mobile redesigned its call centers by
grouping reps into colocated teams,
each responsible for customers in a
specific region. Reps are encouraged
to collaborate and innovate, with the
goal of solving customers’ problems.
THE PAYOFF
In the three years since launch,
T-Mobile’s cost to serve and its
customer churn rate have dropped
to all-time lows. Employees
are happier too: Attrition and
absenteeism have plummeted.
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Customers
customer happiness. We figured happy customers would stay
longer, spend more with us, and recommend us to others.”
As Field’s team devised the new model, members identified four questions to ask in assessing the transformation
over time: (1) Are our customers happier? (2) Are they staying
with us longer? (3) Are we deepening our relationship with
them? (4) Are we making their service experience low-effort?
Because the model’s success hinged on T-Mobile’s ability
to engage and mobilize its frontline employees, the same
questions would be used to gauge their experience.
Given its goals, Field’s team reasoned that a version of the
account management model common in B2B settings—in
which a dedicated sales and service team manages a pool of
customers—could work well in B2C customer service. The
question was how to implement such a model at scale across
thousands of reps at dozens of locations serving 40 million
customers around the clock. At the time, it appeared that such
a system had been deployed only in B2B settings where call
volumes are low and issues are resolved in hours or days. It had
rarely, if ever, been attempted in a high-volume B2C support
center like T-Mobile’s, which handles millions of calls each
month and works to resolve issues in minutes or even seconds.
To tackle this, T-Mobile devised the Team of Experts
model, or TEX. This involves cross-functional groups of 47
people who serve a named set of customer accounts in a specific market. The team members are colocated, but they may
be hundreds of miles away from their clients. For instance, a
team in Chattanooga is responsible for 120,000 customers in
Detroit, and a team in Charleston serves a similar number of
customers in Philadelphia.
In addition to the reps themselves, each team has a leader,
four dedicated coaches, eight technology specialists who can
handle more-complex hardware and software issues, a customer resolution expert (who spots trends and helps develop
solutions to persistent issues), and a resource manager
responsible for workforce scheduling and management.
(See the exhibit “A Team of Experts.”)
If call volume is unusually heavy, if a team is shorthanded,
or if T-Mobile’s centers are closed, backup comes from dedicated outsourced teams that likewise follow the TEX model (or
are in the process of adopting it; T-Mobile expects full adoption by early 2019). All teams operate during business hours
aligned to the time zones of the communities they support,
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and customers can reach an account rep directly through a
variety of channels—T-Mobile’s messaging app, the customer
portal on T-Mobile’s website, and the phone. And although
customers may not connect with the same rep each time, they
will always be served by someone from their dedicated team.
That person, moreover, will almost assuredly solve the
problem. Each rep is a generalist who can handle everything
from billing, sales, and line activation to standard technicalsupport inquiries. Transfers are rare; the only time a rep
will hand off a customer is when an outside vendor needs to
address a product issue or, on occasion, when an unusually
complex problem requires the help of the team’s tech specialists. Even then, the rep will stay on the call to learn how to
resolve similar matters in the future.
To ensure that all team members work well together, ​
T-Mobile built collaboration into the model. Teams hold
stand-up meetings three times a week to share best practices,
lessons learned, and ideas for handling recurring customer
concerns. Members also collaborate in real time using an
instant-messaging platform. This allows them to alert
colleagues to emerging issues in the communities they serve
(for instance, weather events and service outages) and to
solicit advice during the course of a customer conversation.
To encourage these exchanges, the pods include a central
table and whiteboard for huddles and coaching sessions.
Teamwork and Creative Solutions
To encourage collaboration and innovation, the TEX model
uses a balanced scorecard that weights both individual and
team performance. (See the exhibit “Rewarding Team Performance.”) This is a dramatic departure from typical schemes
for evaluating customer service agents, which measure only
individual performance, encouraging reps to hoard knowledge and look out for themselves. With the emphasis on team
effectiveness, tenured reps have more incentive to share their
best practices. As one of T-Mobile’s senior account experts
explains, “In the old model, it was sink or swim on your own.
Now we all spend time helping the less-tenured team members
and the new folks coming out of training, to make sure they’re
successful. At the end of the day, we succeed or fail as a team.”
TEX teams are expected to manage their own profit and
loss statements. Field says, “Our team leads used to look at
A Team of Experts
things like handle time and schedule adherence. Now they
look at their P&L—are they keeping and growing customer
business? Are they reducing calls per account and cost to
serve? They’re like mini-CEOs running their own businesses.”
Team leaders now engage in quarterly business reviews with
senior managers, much as a business unit general manager
reviews financial and operating performance with the CEO.
As a result, coaching conversations with reps often focus
on the business impact of individual decisions and how a
decision for a given customer will affect that customer’s
loyalty and the team’s financial performance. Such coaching
enhances reps’ skill sets; one team leader said, “I have no
doubt that any of my team members could leave tomorrow
and open their own business—and be really successful at it.”
With group performance top of mind, account teams are
encouraged to come up with innovative solutions to persistent
service issues. A team serving Salt Lake City, for instance,
noticed unusually high churn among younger customers. A
deeper dive into the data revealed that a primary cause was the
defection of young Mormons about to head out on their twoyear missions, during which time they are prohibited from
having a phone. The team determined that although phones
are not allowed, missionaries can have tablets. So when customers called to deactivate, reps offered them a tablet for the
duration of their mission—a solution that helped the customers retain their phone numbers and accounts for their return.
This clever solution generated one of the highest improvements in profitability for that particular customer base—and
had a meaningful impact on team members’ bonuses.
Similarly, when the company rolled out its T-Mobile ONE
Military plan, which provides members of the armed forces
with a 50% discount on family lines, TEX members serving
communities with heavy military populations thought proactively about managing the effects of the discounted plan on
their business objectives. The question was how to balance the
obvious customer savings benefit with the potential revenue
loss impacting their business goals. The solution: helping
customers understand that the savings could be put toward an
additional phone line that would keep family members connected. One team migrated 30% of its military customers to
the new plan and increased average new-line sales from four
per rep per hour to seven—while simultaneously increasing
the Net Promoter Score among those customers by five points.
T-Mobile’s cross-functional customer-service TEX teams each
serve a specific pool of customers in a given market and
operate like a small business, with members collaborating to
improve financial and operating performance.
4 coaches
1 resource
manager
32 customer service reps
1 team
leader
1 customer
resolution
expert
8 tech
specialists
Rewarding Team Performance
Traditional customer-service performance-management
schemes measure only individual performance. To encourage
teamwork and innovation, compensation for TEX team
members is variably weighted according to both individual
and team performance.
Customer service rep
Senior customer
service rep
Coach
Team leader
TEAM
PERFORMANCE
INDIVIDUAL
PERFORMANCE
50%
60%
70%
100%
50%
40%
30%
0%
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Satisfied Customers, Happier Staff
In the three years since T-Mobile introduced its customer service teams, performance has improved on a host of measures.
71%
31%
25%
56%
48%
decrease in transferred
customer calls
reduction in calls
escalated to supervisors
drop in postpaid
customer churn
increase in Net
Promoter Score
decrease in annual
rep attrition
(from 14% to 4%)
(from 2.9% to 2.0%)
(from 1.27% to 0.95%)
(from 43% to 67%)
(from 42% to 22%)
Making It Local
No matter how far TEX teams are from the communities they
support, members are intimately familiar with the places their
customers live. Teams decorate their workspaces to reflect
the markets they serve. The Chattanooga-based team serving
Detroit, for example, has decked out its work area with
“Motor City” signage and memorabilia. And the Salem, Oregon, pod that serves San Francisco built a Golden Gate Bridge
out of Legos. Says a senior rep in Idaho whose team serves
San Diego, “We’re constantly talking about what’s happening
there. I’ve never been to San Diego, but I know what’s going
on in the local news, where the best place is for fish tacos, and
what the surf report looks like for the next few days.”
This local connection helps the TEX team members manage
community-level situations. For instance, the San Diego team
was recently deluged with calls about a widespread outage
caused by a local brush fire. “In the old world,” one rep said, “I
wouldn’t have had any idea that this was happening—or that it
was happening to more than one customer—so I’d have said,
‘I’m really sorry about the inconvenience. Let me submit a
ticket to engineering.’” But the new model enabled the rep to
deliver a tailored response: “Yes, we’re aware that a brush fire
outside the city is affecting your service, and we’re working on
the issue. I’ve been in touch with the engineers on the ground,
and they’re working to restore service as we speak. They’re
telling me it should be up and running within 24 hours.”
One leader on a team serving Seattle customers said that
local knowledge and connections have enabled his group to
deliver the kind of service you’d expect from a mom-and-pop
store. “If a customer orders a new device and wants to pick
it up in the store, we need to make that as easy as possible.
Because I know all the store managers in my area, I can call
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the local manager and ask that he have the phone ready to
go. It makes a big impression when the store manager meets
a customer as she walks in and says, ‘Hey there—Nick from
your Team of Experts called me to say you were coming by.
Here’s your new phone; you’re all set.’”
The Payoff
The new model’s business results speak for themselves. In
the first quarter of 2018, the company recorded the lowest
cost to serve in its history (a 13% decline since 2016). Liberated from legacy metrics like handle time, reps now take a
little longer on each call to make sure they’ve not only solved
the customer’s immediate issue but also anticipated and
addressed in advance issues the customer might call back
about. The result: a 21% reduction in calls per account, which
more than offsets the longer length of calls.
And because customers are now receiving better service,
reps no longer have to issue credits for previous missteps.
Such “apology credits” are down 37% across the board. The
results are also seen in rec­ord levels of customer retention
(an all-time low in customer churn in Q1 2018) and increased
customer loyalty (see the exhibit “Satisfied Customers, Happier Staff”). Reflecting customers’ satisfaction, T-Mobile has
been ranked the number one wireless company for customer
service by Nielsen for the past 24 months and has received—
twice in a row—the highest score ever awarded by JD Power
in its rankings of wireless-provider customer-service quality.
The company has also seen positive effects among
employees, including rec­ord highs in rep engagement and
rec­ord lows in turnover (from 42% annually before the
rollout to 22% today). Absenteeism—typically a trouble spot
for most contact centers—has plummeted too: Because TEX
Customers
teams can manage their own schedules and tailor shifts to
members’ needs, absenteeism has dropped 24%. The four
outsourcing partners who have adopted the TEX model have
seen an even steeper decline in turnover: Historical frontline
turnover levels in partners’ call centers had been more than
100% annually; today, average turnover is at 14%—below that
of T-Mobile’s in-house customer-care centers.
Getting Started
T-Mobile executed this transformation with its existing talent—there was no wholesale revamping of the hiring profile
and no mass exodus of frontline staffers who couldn’t cut it.
Instead, the company found that most reps were up to the
task and wanted to do well. What they needed was freedom
from the old model that had been holding them back, coupled
with the training to succeed in the new world. As Field sees
it, “If all you ask people to do is bring down their handle time,
they can do that. But if you empower them to do more—to
think like a small-business owner who is focused on the
customer’s happiness and the strategic management of their
P&L—they can do that too. And they’ll do it really well if you
give them the tools and get out of their way.”
That said, a wholesale transformation from factory floor
to knowledge-work environment hasn’t been without challenges. One lesson T-Mobile learned early on is that colocation
is essential. Field explains, “We originally thought we could
pull this off by setting up virtual teams and leveraging collaboration tools, but it turned out to be easier said than done. We
didn’t get the level of collaboration we needed, and the teams
failed to gel when they were spread all over the country. So we
decided that the teams needed to sit together, which meant
investing in a new physical layout for our contact centers.”
Although the cost of redesigning the contact center floor
wasn’t extraordinary (“We knocked down some cube walls,”
Field said, “and bought everybody better headsets so they
could roam”), the company’s investment in talent was significant. In addition to modestly increasing pay for reps in recognition of their expanded responsibilities, T-Mobile doubled
down on training to help reps transition from a narrow focus
on specialized lines of business—such as billing, collections,
and tech support—into generalist roles. For new hires, the
cost of more training (10 weeks instead of eight) was offset by
reductions in ramp-up time. The company also gave managers
more time to deliver coaching, which meant increasing the
ratio of managers to reps. In the first year of the new model,
T-Mobile promoted more than 2,100 employees to management positions, providing commensurate raises and management training. Although those investments were expensive,
Field notes that the resulting reductions in cost to serve and
the improvements in customer retention and wallet share have
delivered an ROI that far surpassed original projections.
However, while most reps embraced the training and
gamely transitioned to the team-based model, not all did. As
the incentive structure shifted from emphasizing individual
performance to rewarding team performance, some reps who
had shined as individual workers ended up being frustrated
when their rankings dipped as a result of softer team performance. Some balked at the perceived unfairness of the new
system, and a few left.
A final word of caution from T-Mobile’s leaders: Before
heading down this path, companies should consider their
cultural readiness. One team leader explains, “We never
believed in scripting our people and were always very
focused on hiring people who really wanted to deliver great
service. So we had the basics, from a cultural and talent
standpoint, already in place. That’s probably not the case
for many other companies.” Even for T-Mobile, the leader
acknowledged, it took some time for reps to feel comfortable
with the level of ownership they were offered: “In the beginning, we told them to make decisions on their own and do
what they felt made sense for the customer, but we still had a
lot of folks who would put the customer on hold and ask their
supervisor for permission anyway.”
The Bigger Story
T-Mobile has established itself as the “Un-carrier”—a
company not afraid to challenge standard industry practices
that it sees as flawed and unfair to customers. It was the first
to stop locking customers into two-year service contracts
and the first to stop charging usurious fees for exceeding data
limits. As CEO John Legere said in testimony before Congress
in June 2018, “We set out to fix a stupid, broken, arrogant
industry.” The TEX model of customer care is in keeping
with that mission.
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New Service Technologies Cut Both Ways
WHILE SOME organizations are
leveraging new technologies such
as artificial intelligence (AI) to
bring greater analytic power and
predictability to service interactions,
others are using them to reinforce
legacy operating models, potentially
discouraging innovation.
One large insurer is using AI to
provide reps with real-time sentiment
analysis—a coffee cup appears on
the rep’s screen if she needs to pick
up the energy when handling a call,
and a scowling face tells her that the
customer is getting agitated and she
must act fast to turn the conversation
around. Another company, in the
telecommunications industry, deploys
AI to remind reps to use companyapproved greetings, thank customers
for their loyalty, and pitch special upsell and cross-sell offers.
But some companies see such
monitoring and control as a modern
twist on an outdated management
philosophy. This view is well-supported
by research. CEB (now part of Gartner)
found that the single biggest driver of
frontline service rep performance—
more than IQ or emotional
intelligence—is something called
control quotient. That’s shorthand for
reps feeling empowered to use their
own judgment to engage customers
and resolve issues. (See The Effortless
Experience: Conquering the New
Battleground for Customer Loyalty,
by Matthew Dixon, Nick Toman, and
Rick DeLisi.)
Unfortunately, the research also
shows that a high percentage of
customer service organizations actively
discourage reps from exercising their
judgment. When managers tell reps
to “stick to the script,” audit their
performance using rigid qualityassurance checklists, and implement
screen alerts telling them what to say
and do, it squelches any impulse to
use judgment.
But T-Mobile’s service transformation is part of a larger
story of reinvention that’s been playing out in other corporate functions—at many companies—over the past few
decades. HR leaders, for instance, once faced an existential
threat from the automation of transactional processes such
as payroll and benefits. Progressive HR executives transformed themselves and their departments into strategic
partners to the board and the CEO by handing off transactional work to human resource management systems and
outsourcing business processes, while simultaneously
developing new capabilities such as strategic workforce
planning, leadership development, employee engagement,
and succession management.
Customer service organizations that emphasize knowledge work haven’t abandoned their core function: handling
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Customers
Transformative companies are
investing time and resources in
technologies that enable a knowledgework environment for service reps
instead of reinforcing a factory floor
atmosphere. Allstate, for instance,
has built an AI-powered digital
assistant that supports reps by
retrieving information during service
interactions—saving them time that
would otherwise be spent rooting
around knowledge bases for answers
to callers’ sometimes arcane and
complex inquiries. The lawn care
company TruGreen is utilizing machine
learning to dissect the language used
by its best service and sales reps—the
specific phrases and conversational
techniques that lead to positive
customer outcomes—in order to
overhaul the training and coaching
reps receive. They’re getting insights
that help them better exercise their
judgment, rather than edicts about
what to say when.
and addressing customer issues. But companies that adopt
models like T-Mobile’s TEX will be more competitive in an
environment characterized by increasingly complex
customer issues and high expectations. At the same time,
they’ll discover new ways to deliver value to employees,
customers, and business partners, deepening their
relationships across the board.
HBR Reprint R1806F
MATTHEW DIXON is the chief product and research officer at
Tethr, which uses artificial intelligence to mine customer voice
data in order to help companies improve service, sales, marketing,
products, and compliance. He is a coauthor of The Effortless
Experience, The Challenger Sale, and The Challenger Customer.
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Assignment:
The attached Harvard Business Review article highlights how T-Mobile dramatically
improved its customer service and illustrates how those changes improved customer
satisfaction, employee retention, and profitability.
Last week, we discussed Dr. W. Edward Deming’s “14 Points” philosophy of Total
Quality Management. His work is a great resource for you as you develop your final
project as well as prepare for working in business. With that in mind, I would like you to
begin thinking about how you can apply theory to your case studies. Additionally, I
would like you to work through the process of providing a written report to express the
findings and recommendations you ultimately will be making.
For this assignment, please provide a 400-word executive summary
Writing the Executive Summary
Framing:
T-Mobile developed their new model of customer service around four quality
management pillars (p. 86);
(1) Are our customers happier?
(2) Are they staying with us longer?
(3) Are we deepening our relationship with them?
(4) Are we making their service experience low-effort?
I would like you to pick the one of these four questions and write how T-Mobile was able
to improve performance in that area.
Content:
Write your introductory paragraph based on the question you chose.
Of Deming’s 14 points, pick two that you believe the T-Mobile case study
exemplifies. Explain the two points you chose in general terms by defining them and
explaining why they are relevant to quality management in customer service, generally
(These paragraphs should explain these ideas to someone who does not have the
theoretical knowledge you possess – you are the expert here!)
Use specific examples from the article to reflect how T-Mobile implemented changes
consistent with the two Deming points. Be sure to cite specific actions T-Mobile took
and outcomes that resulted to make the case.
Grading Rubric
A: Writing is clear, has good transitions, and flows from introduction through a logical
conclusion. All content areas are included. Demonstrates clear understanding of
Deming’s theory. Uses T-Mobile examples to illustrate the theory.
B: Writing is clear and mostly strong transitions and flow. There may be some
uncertainty but does not prevent the overall effectiveness of the writing. Demonstrates
clear understanding of Deming’s theory. T-Mobile examples illustrate theory fairly well,
though there may be some weaknesses.
C: Writing has general clarity though there may be some uncertainty as to meaning or
phrasing. Some of the content areas are omitted. Deming’s theory is addressed, but
theory is not accurately articulated. T-Mobile examples do not fully illustrate the theory.
D: Writing lacks clarity or flow. Deming’s theory is not addressed. Does not provide
examples from T-Mobile.

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