Could a security breach de-rail the magenta express train?

T-Mobile, ably led by wild-eyed CEO John Legere, has been causing chaos throughout the US wireless market, but a data-breach could impact the brands credibility in the eyes of customers.

Customer opinion is a fickle thing. It can sometimes only take a minor incident and all of a sudden the brand is as attractive as a turd in a washing machine. T-Mobile has been generating some serious momentum over the last few years, readily stealing subscribers from the likes of AT&T and Verizon by undercutting tariffs, though how much of an impact with a data-breach have on brand perception?

“Out of an abundance of caution, we wanted to let you know about an incident that we recently handled that may have impacted some of your personal information,” T-Mobile wrote in a statement to customers.

“On August 20, our cyber-security team discovered and shut down an unauthorized access to certain information, including yours, and we promptly reported it to authorities. None of your financial data (including credit card information) or social security numbers were involved, and no passwords were compromised. However, you should know that some of your personal information may have been exposed, which may have included one or more of the following: name, billing zip code, phone number, email address, account number and account type (prepaid or postpaid).”

According to reports and rumours across the industry, the breach could have left as many as 2.5 million subscribers exposed to the attack. According a T-Mobile spokesperson talking to Motherboard, the incident occurred after hackers compromised company servers through an API, although no further technical details have been disclosed. The attackers are believed to be international.

This is not the first time T-Mobile US has been exposed for security flaws. In May, researcher Ryan Stephenson found a bug which allowed external parties to access customer information just using a phone number. An API used by T-Mobile staff allowed them to look up customer details simply by entering their phone number, though it was not password protected meaning anyone could take advantage of the short-cut if they found the sub-domain. The oversight unveiled a customer’s name, address, billing account number, and in some cases, information about tax identification numbers, as well as security question information.

Every company will have flaws in the system, the perimeters are simply too vast nowadays making the concept of 100% secure almost impossible. The issue here is about credibility; how much of an impact will the news have on customers perception of T-Mobile as a brand and a trusted guardian of their personal information?

As mentioned before, customers are very fickle, especially when much of the attraction to a brand is based on price. Some customers might be asking a simple question now; are a few saved dollars each month worth the risk of my personal information being exposed? T-Mobile has been excellent at hoovering up new subscribers over the last couple of years, but this has been due to highly aggressive marketing moves focused on acquisition. The retention capabilities of the brand have not genuinely been put to the test.

With data protection and privacy high on the agenda following several scandals, most notably the Facebook Cambridge Analytica saga, customers are becoming more sensitive to such incidents. Whether this is enough to de-rail the magenta steam train remains to be seen, but it does ask questions over the company’s credentials.

Legere gives up the weird and wonderful for loyalty-focused Uncarrier move

Revamping customer services and launching a loyalty programme might be very intelligent plays by T-Mobile, but it isn’t quite the grandeur of kick-starting an assault onto the TV content market.

Whenever CEO John Legere pulls on the magenta t-shirt, applies the gallons of mousse to the hair and presumably drinks 15 shots of espresso to get the authentic wired look, the industry has come to expect big, disruptive and combative things with Uncarrier announcements. The latest ‘challenge’ is somewhat more traditional than we are now used to as the norm with the eccentric CEO.

Back in January, when T-Mobile US completed the acquisition of Layer3 TV, it paved the way for the magenta army to tackle the convergence market. T-Mobile has been promising a disruptive TV service and is yet to deliver. When Legere decided to stoke the fire of excitement by telling us the next Uncarrier move was coming this week, assuming it would be the TV embrace would have been a fair bet. The reality is functionally a great route for the business, but it isn’t anywhere near as stimulating as what we imagined, even if Legere does his relatively-shallow excitable-puppy routine.

The banner for the new initiatives is ‘Rock Star Treatment’, which does seem to be a rip-off of the Virgin Atlantic adverts of yesteryear. The first prong will be to revamp the customer services operations, creating a proposition where the customer feels valued. Despite Legere claiming this is disruptive, it is something which should have been done anyway. The song-and-dance surrounding the upgrade just illustrates how little telcos think of their customers in the first place. Secondly, the loyalty programme is very similar to the proposition which O2 has built in Priority. It’s a very effective loyalty programme for O2, so we have no issue with Legere ripping off the UK market leader.

“Our customers get treated like rock stars with Team of Experts, and we believe they ought to be treated like that everywhere they go,” said Mike Sievert, COO at T-Mobile US. “Music connects us, so we’re connecting our rock star customers with exclusive magenta extras at Live Nation events and with Pandora. Now, when they turn on their tunes or head to a show, they’ll get an elevated experience, just for being with T-Mobile.”

On the customer services side of things, the T-Mobile Team of Experts has been launched nationwide which promises no robots or automated phone menus, and a dedicated customer services representative who will be assigned to a customer. As part of the initiative, Legere has promised you will talk to an actual person, no bouncing from department to department, 24/7 call centres, call-back features will be introduced and integration with Alexa or Google who will be able to assist negotiating the beige maze.

Some of these features are welcome additions to the customer services mix, while other are something the telco should have been doing anyway. Although this is hardly the most exciting aspect of the communications world, it is a critical one. Telcos who take customer services seriously are the ones who have the lowest churn and highest Net Promoter Score (NPS). Many business experts will tell you it is more profitable to keep current customers happy that constantly chasing acquisitions to replace the churn. It seems like an obvious thing to say, but with the attitudes of the telcos, you wonder whether it has hit home. T-Mobile is seemingly making efforts to improve here, and the second aspect of the Uncarrier launch will also add to momentum.

The second aspect is a loyalty programme. Here, a partnership with Pandora will offer Uncarrier customers a year-long Pandora Plus subscription, and through a tie-up with Live Nation, will have exclusive and early access to gigs, as well as discounted tickets. This is an approach to retention and rewarding customers which we really like and smells very similar to O2’s strategy.

When looking at free value-adds for customers, some telcos look at big ticket items like sports. While this might attract certain customers, the risk is there is little interest from others. A focus on music offers breadth and accessibility. With Pandora, customers can choose their genre, or tap into alternative content such as podcasts and radio stations. It offers something for everyone. With the Live Nation tie up, this is relatively risk free as it gives the consumer the choice of what to purchase. T-Mobile is offering value to the customer through discounts and early access, though it is placing the financial commitments on the consumer. They choose what they want, but are receiving value through being a T-Mobile customer.

Overall, this is an alternative approach to convergence. The ventures into content are not to generate revenue directly through increasing ARPU, but focused on retention of customers. Offering value-adds for free makes the customer feel rewarded and an indirect boost for the bottom line. Securing customers for the long-term is an excellent way to improve profitability, and a better relationship with customers will only create more brand ambassadors.

While this is not the devilish and enticing Uncarrier move which we have become accustomed to with Legere and his wild eyes, it is a pragmatic business strategy to secure the user base and improve the foundations. If T-Mobile US can take it retention capabilities up to the same level as its subscriber acquisition, the duopoly might not be that far on the horizon after all.

Three looks to complimentary brands to focus on retention

Three has announced the launch of a new two-year partnership with EasyJet to build out its loyalty programme for customers.

As part of the agreement, Three customers will be able to check in hand luggage for free, while also taking advantage of priority boarding amongst other benefits including a free tote bag for carry-on essentials. This partnership is the latest to buffer the Three customer experience strategy which also includes tie-ups with Snapchat.

The partnership could said to be based on O2’s Priority engagement strategy, which has been incredibly successful over the years. It also demonstrates a different mentality to what we are used to when it comes to telcos; reward current customers with incentives, as opposed to simply focusing on bolstering subscriber numbers.

The loyalty app itself, Wuntu, now has 1.1 million active users, up from 350,000 over the last twelve months, and features 400 partners. Over the course of the first six months of 2018, there was a total of 1.5 million offer redemptions from customers, up from 400,000 in the same period of 2017. Partners include the likes of Hotel Chocolat, Dominos and Belle Italia, though EasyJet could arguably be described as one of the more significant wins.

“The EasyJet partnership gives us a big chance to influence our customer’s experience in the airport,” said Three CEO Dave Dyson. “It’s a company which has a very like-minded audience, and is a chance to bring extra value to customers.”

For the moment, the scope of the partnership is limited, but there are two years to play around with new ideas; Dyson said to expect a variety of new offers. Snapchat is another example of a partnership which could work out very well for the business. In both examples, Three has identified brands with similar audiences and identified a pain-point to address; queues in the airport and data consumption with Snapchat users. These are two examples of a company pragmatically identifying how it can add value to the experience, without making risky plays through diversification.

Like O2’s Priority initiative, Three is playing a low risk game. The value is being presented to the customer, though it is an option. Some telcos have gone down the content route to enhance the experience, but this could prove to be expensive (just ask Gavin Patterson). By offering other brands access to its subscriber base, and in return gaining exclusive offers for customers, it is a win-win situation.

The idea of brands audience sharing is not new, but it is extremely effective. By asking customers to download an app, its less intrusive than the traditional means of spamming, and opens up a huge number of opportunities. More importantly, Three is looking inwards, caring for the customers it has, not simply reserving attractive offers for new customers; this is an excellent way to isolate a current customer and destroy a relationship.

There are of course numerous studies online which argue the point of customer retention versus acquisition, with some claiming acquiring new customers can be five times more expensive than retention. Caring for a customer, creating a relationship which makes them feel valued, is also an excellent way to increase revenues in other areas of the business. Just look at the brand and loyal customer which Apple has created over the years; many of these iLifers would choose to purchase Apple products over others irrelevant whether there are better or cheaper options.

Loyalty programmes are not uncommon, but many seem to be slap-dash and only present because it seems to be the right thing to do. That said, we get the impression Three has seen the light and might start treating current customers with the attention they deserve.