The move to end contracts was a game changer for the telecom industry, said Jill Steinhour, Adobe’s director of industry strategy, high tech, and telecom. “I think T-Mobile knows how to really shake up the industry,” she said. “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 to become the third-largest U.S. carrier. That same year, Verizon went contract-free, followed by Sprint and, later, AT&T.
But while customers reaped the benefits of going contract-free, the future became murkier for carriers, which faced a new challenge: customer predictability.
“They no longer understand when their customer base is going to mature,” Steinhour said. “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. Historically, customers have paid only a fraction of the cost of the phone and carriers subsidized the difference. 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 a monthly installment, resulting in another shift for telecom competitors.
With installment plans to pay for phones came credit checks—which are offputting to customers and a challenge to the carrier. In fact, carriers found that many customers would abandon the purchase when they reached the credit check part of the process. That’s when carriers started to look to third-party data, Steinhour said, which can give insight into potential customers’ credit-worthiness or propensity to purchase certain types of phones and services.
T-Mobile used Adobe Audience Manager (AAM) to build unique audience profiles. In the case of the telecom industry, those profiles can help fill some of the voids that had arisen following the industry changes. For example, say a carrier wants to identify which of its customers may be planning to travel internationally in the next 30 to 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 ball and struggled to see who their future customers might be. With audience tools, businesses are discovering another way to connect with future customers by anticipating their needs.
Still Making Waves
Since Legere uttered those critical words in 2013, sending ripples throughout the industry, T-Mobile has launched more than a dozen “Un-carrier” moves, such as ending overages, free international data roaming, unlimited music and video streaming and, most recently, “KickBack.” 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 the customer can now find a plan that avoids 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, T-Mobile scored the highest in customer satisfaction among the four major carriers in the American Customer Satisfaction Index, with its score increasing 6% from the previous year’s result.
In the aforementioned 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 move itself, and the industry, forward. It’s a lesson that all segments could put to use.