T-Mobile's Customer Service Business Innovations

SUMMARY

Matthew Dixon writes in the most recent issue of Harvard Business Review about how, over the past three years, T-Mobile has transformed its customer service call centers using an innovating management model.

WHAT'S THE BIG DEAL?

T-Mobile's call center transformation is impressive because of the results it delivered to the business: "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. 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 [customer service] teams can manage their own schedules and tailor shifts to members’ needs, absenteeism has dropped 24%. The four outsourcing partners who have adopted the [new] 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."

HOW DID THEY DO IT?

Starting Conditions

"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."

The Goals

Instead of persisting with focusing performance on reducing old metrics such as customer-call handle time, managers changed focused performance on the following: "(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? "

The Plan

To meet these goals, Callie Field, T-Mobile's executive vice president of customer care, and her 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 Reorganization

"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."

"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. "

"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."

Operational Improvement

"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."

Performance Measurement

"TEX teams are expected to manage their own profit and loss statements. Field says, 'Our team leads used to look at 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."