T-Mobile's novel sell: great cell service

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In the competitive world of cellphone-service providers, where the two category leaders spend more than $3 billion on advertising and the average cost of acquiring a customer is $300 or more, No. 4 player T-Mobile scored more new customers last quarter than top dog Cingular.

More impressive, it did so without iTunes or many of the hot new mobile video and other siren offerings on the marketplace.

T-Mobile's secret sauce: service with a capital S, according to T-Mobile Chief Marketing Officer Mike Butler. "Performance in the category from a consumer point of view is not great," said Mr. Butler in an interview at T-Mobile's Bellevue, Wash., headquarters. "Our ambition is to turn that on its head and to be clearly the most highly regarded service company in wireless. But our ambition is greater than that. Our ultimate ambition is to be America's most highly regarded service company. Period."

T-Mobile took a number of steps internally to move from one of the lowest-ranking service providers to winning top awards from J.D. Power. Firstly, the company clearly identified all employees who have contact with customers-those in customer service, retail and technicians-as the most important in the company. Throughout the building, instead of candy jars, glass jars are filled with blue poker chips celebrating those employees who have contact with customers as "No. 1." Employees are given tags for their badges. Among the slogans on those badges: "Widen the Satisfaction Gap," "Build Lifetime Profitable Customer Relationships" and "I am T-Mobile-Count on Me."

At least once a quarter, Mr. Butler and CEO Robert Dotson visit T-Mobile stores nationally. "We fly in to learn from our frontline employees ... as opposed to flying in to lecture them about what they should be doing different or better. We come away with a list of items we're going to address to help them deliver better customer service in the future," he said.

One such in-store improvement attempts to tackle the long-thorny problem of coverage. A map allows customers to see T-Mobile's level of coverage down to a street level in the areas they work or live. "We want customers to know before they walk out of the T-Mobile retail location that our coverage is right for them. And if it's not right for them, we would rather they went down the street to someone else than sign up with us and be unhappy."

T-Mobile's headquarters building, in fact, is signed "T-Mobile Field Service." "Our job here is to equip our frontline employees in the field with the tools that they need to deliver outstanding customer service. It means you're not going to find marble bathrooms, you're not going to find executive elevators, you're not going to find executive parking spots," said Mr. Butler. In fact, he added, meetings among high-level executives are often held at a greasy spoon known for its pancakes.

Service is one thing, but analysts view T-Mobile's secret sauce as a low cost structure-second only to Verizon Wireless-allowing the company to fight the marketing battle primarily on price. Roger Entner, VP-wireless telecoms for Ovum, compared being the king of service with being the king of an anthill "next to the Rocky Mountains."

Studies have shown that telecom customers pick a carrier based on price, quality and, lastly, service. "If you think all service [from wireless cellphone providers] is not so great, you pick the cheapest," he said. "They're the Southwest Airlines of the wireless space."

Price, not service, he added, will keep T-Mobile viable in the face of the new wave of mobile virtual operators planning to nibble away at one of T-Mobile's core constituencies, the youth and Hispanic market. Mr. Entner said some of those newcomers, such as Mobile ESPN, are expected to hit the marketplace at $70 per month, with a $399 handset after a $100 rebate.


Although there has been talk of another carrier swallowing up T-Mobile as the business consolidates, Mr. Entner thinks T-Mobile will continue as a strong challenger brand. And T-Mobile's giant parent company, Deutsche Telekom, plans to spend $10 billion to upgrade the company so it can compete on the newer data services.

Others are more cautious, given T-Mobile's lack of a third-generation wireless network and an implied bet that talk is the killer app for mobile phones, that consumers will find a chat with friends more entertaining than a live baseball game or a "Simpsons" clip. For now, T-Mobile is downplaying the multimedia options as "vaporware," an old term from the dot-com era deriding promised software products that never come to fruition. "They can call it vaporware, but the industry is splitting," said telecom analyst, Jeff Kagan who said T-Mobile may be limiting its options for growth.

Linda Barrabee, senior analyst, wireless/mobile U.S. for the Yankee Group, agrees with Mr. Entner that service excellence can only go so far. T-Mobile, she said, will be "more disadvantaged in 2006 as Verizon, Sprint and Cingular step up their 3G network plans," leaving T-Mobile, even with its celebrity-lauded Sidekick phone, "on the sidelines."

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