Years from now business students will still be studying the T-Mobile revolution.
Fueled by a hefty breakup fee from AT&T and led by outspoken CEO John Legere, the company went from a distant fourth five years ago to become the fastest-growing wireless carrier in customer count, revenue and coverage, upending an entire industry in the process.
Earlier this month management made its first formal appearance at CES since 2014 to launch another in its series of disruptive “Un-Carrier” initiatives. This time, it would fold taxes and fees into the base price of its singular T-Mobile One plan without a concomitant increase in cost — and refund customers $10 a month if they keep their data usage below 2GB.
Following an F-bomb-laced press conference that began with a special Weekend Update by “Saturday Night Live”‘s Michael Che and Colin Jost, TWICE caught up with executive VP/chief marketing officer J. Andrew Sherrard.
A West Point graduate and former Clorox marketing manager responsible for all product development, pricing programs and, of course, marketing for the T-Mobile and prepaid MetroPCS brands, Sherrard spoke to the creation of T-Mo’s rebel persona; its masterful use of social media; making money amid customer concessions; and rumors of its imminent acquisition.
TWICE: How can you afford to give up so many profitable industry practices?
People have been asking us that ever since Un-carrier One four years ago, and it’s really pretty simple: When you listen to customers and do what they want, they’re more satisfied, they recommend you more, they stay with you longer. That means you grow faster, and you can see from our results we’ve gone from a turnaround story to a success story. We are absolutely delivering on all our commitments from a revenue, a profit and a cash flow perspective.
TWICE: Do you ever get pushback from shareholders on customer concessions?
Our stock is growing quite nicely and I think people believe in our story and the guidance we’ve given.
We know the math works. When we are able to grow faster and get more customers we invest that extra dividend back into fueling our growth. That’s the best way to give the customers what they want and to change the industry for good.
TWICE: What about your parent company, Deutsche Telekom? What was their reaction to the Un-carrier concept?
As we talked it through with them they understood that we were in a different place. They’re the AT&T of Germany, and so they knew we needed to be disruptive and shake things up and fundamentally change our approach.
And so that’s what we did. We innovated on the business model and said we’re gonna give customers what they want. We’re gonna make it easy for a customer to be our customer; we’re gonna make things simple and clean.
TWICE: So you had a master plan, a road map five years ago?
TWICE: How close have you come to achieving all your goals?
We’ve joked about it. I think we’ve checked off almost all of them. Maybe we still have one or two up our sleeves. But you know what? We found that there’s a lot more we could do that we didn’t imagine then, and we’ve trail-blazed in new areas.
There are so many exciting things happening, like the Digits beta we just launched which really reimagined what the phone number can be.
And now we announced All In, where taxes and fees are included on your monthly service plan. It’s incredible — carriers charge customers $17 billion annually [in added fees and taxes]; it’s crazy, it needs to stop, so we’re stopping it. And we’re challenging everyone else to do the same, just like when we ended contracts and overages and switching fees. One hundred-fifty million people now free from contracts; that $2 billion that used to be spent on overages, gone.
When you look out across all social [media] of things people asked us to do, taxes and fees were one of the top ones, and so we’re able to deliver on it. It’s one we’ve had on our list for a long time, one that we’ve been thinking about since we started this revolution and launched T-Mobile One. It’s like, “Ahh! This is how we can finally do it.”
TWICE: But that’s still more money out of your shareholders’ pockets.
Look, we believe that if you give customers what they want they’re gonna stay longer, and they do. We had record low churn in Q4. We grew faster. It’s because people are satisfied, they recommend us, and then we reinvest it back in the customer, giving you more without asking for more. It’s a virtuous circle, and I think that’s part of the magic.
Four years ago we had zero LTE. We had no iPhone. Certainly a little bit of a bruised culture, right? And now we’re vibrant, the fastest-growing in the industry for three years running. Quarter after quarter after quarter of fast growth.
And LTE — it’s a stop-the-presses moment for me. Our LTE coverage this year will cover more people than Verizon’s. It’s like, “Are you kidding me? Why do they exist anymore?”
We’re here to advocate for the customer, to listen to them and do what’s right; to be transparent, fair and a great value. You don’t use too much data? We’re the first wireless carrier to give you $10 back when you use less than 2GB.
TWICE: And the criticism over down-res’ing video?
We’ve had Binge On [unlimited video streaming when down-res’d to 480p] since the previous November. Tens of millions of customers have been using it and less than 1 percent have opted out, because on a screen that small you can’t tell the difference between 480p and HD. The usage of video on our network has gone up dramatically; more people are watching more video.
Now some might want to connect it to their TV or use it for a bigger screen. That’s great, we’re gonna give you options [to stream native video]. You can do a Day Pass for $3 a day, or for $15 a month you can get unlimited Day Passes.
TWICE: How much of the brand’s rebel persona was devised as a way to target young and hopefully lifetime customers, and how much is a reflection of your CEO John Legere’s personality?
It’s all of those things. It’s very conscious and deliberate. It’s about appealing to millennials and being where customers are. Today customers want to engage in social, and if you’re gonna listen to the customer you go where they are and you listen to them in social.
I’m on Twitter ’cause I hear from customers and I find out what’s going wrong, just like John does, and he has over 3 million followers. That is a huge megaphone back to our company and that helps us to change and change better and faster. Because if somebody’s complaining about it there’s probably a thousand who are just putting up with it, and that’s something we need to fix and get right and get better.
So yes, the brand personality is absolutely very thoughtfully done. If you’re gonna be the disrupter you want to be a little irreverent, you want to be street smart, you want to respect and cherish and honor your customers. You want have that in your voice and in your brand.
You also want to be willing to kick down the walls and break the rules, and be the crazy kid who challenges the bully on the playground and wins.
TWICE: That’s a tricky balance.
You want to have fun with it but you don’t want to be mean spirited. We spend a lot of time as a communications team, as a brand team, as a marketing team and with John, just finding that tone and the right voice.
See:The Un-Carrier’s Un-Orthodox Heart
And what’s great today is the amount of feedback you get. You can have live conversations and you find out if you’re a little bit off and you correct it.
We have also grown an amazing skill within our customer care team, which has been a key part of this revolution we have gone through the past four years, where we now have literally hundreds of folks who are listening and watching and ready to respond to you where you’re at, whether you’re on Facebook or Twitter or go through our app or you text our customer care. They’ll respond to you, and you can get problems resolved, which is pretty incredible.
TWICE: Is consolidation inevitable for T-Mobile? Do market forces compel you to acquire or be acquired?
We see a vibrant and great path for us organically. We think we have all kinds of options organically and inorganically, and we’re going to pick what is absolutely best for our shareholders and our company going forward.
We started this revolution to change wireless for good; we’re going to continue that however it goes.