With a carrier-agnostic iPhone coming to market later this summer, the conventional wisdom is that AT&T will lose customers (its phone coverage and iPhone service haven't been stellar) and a lot of profits (some say the iPhone has been not only its brightest but biggest single source of earnings).

I say it doesn't have to work out this way. There's a post-generification breakout strategy for AT&T, but it would require a massive rethinking of its brand and marketing communications. Here are the three core realizations the company's brain trust would have to reach:

  • Acknowledge that the iPhone isn't just another phone. It comes from Apple, which has a much deeper and more compelling relationship with its customers than, say, Motorola or Nokia. With iPad just starting its growth curve its likely that AT&T will have even more customers who live in multiple Apple gizmo households. Does its pricing strategy reflect this reality? Are there upgrade/replacement deals that should be struck with Apple, since those behaviors are predictable? Does a dedicated team within AT&T look at the exigencies of the market, and have the authority and autonomy to craft the company's strategy?
  • Admit that smartphones aren't terribly smart. With multiple providers putting things on them, the gizmos run a high risk of conflicting or crashing, yet no entity supports the devices in their entirety. I know this from personal experience, as a problem with the third-party email service on my iPhone meant that I had to check with three help desks (none of which were much help). There's a ghost in these machines for which nobody is responsible, so imagine if AT&T figured out how to step up to the plate? Multiple years of operating experience would make it heads-and-shoulders more qualified to provide that support than any carrier who gets into the game tomorrow.
  • Understand customer service as benefits, not fixes. One of the most damaging conventional wisdom approaches to customer service is that it's all about fixing the squeaky wheels: considerable time and resources get wasted trying to track and reverse the limited number of dissatisfied customers (or simply critics) who share their disappointments via Twitter or other social media tools. The logic is that these negatives impact sales negatively, so turning them around supports sales. Not so much. For every tweeted complaint there are usually many more that suffer in silence, only to vote later by skipping a repurchase, upgrade, or subscription renewal. AT&T could do well to find ways to fix these problems before they happen (start with simplifying the overly-complicated IVR) and, more importantly, find ways to offer added-value (or simply recognized value) for all the good things it can/could do. 

In other words, AT&T's breakout strategy could be to keep its iPhone customers instead of accepting that they'll switch with the same (or greater) frequency than average users. It could rethink its plans based on the unique context of its customer relationships. Different deals. Pricing. Service. Added benefits. Make doing it a corporate priority.  

It's probably too late, of course. It should have started this strategy the day it signed its deal with Apple a few years ago and, as a current customer, I can tell you that I don't see any evidence that it did so. Perhaps AT&T wants to get out of the iPhone business because, as one Dim Bulber suggested to me, it has strained its system and distracted it from building a truly integrated offering (another reader said that she thought volume-based data usage charges were coming, which would be a sign that AT&T isn't happy with the current arrangement anyway).

So its breakout strategy is to encourage iPhone users to defect? Naw. It wants the customers, I bet, but it doesn't know how to keep them. It has paid a lot of money to assorted experts who've advised it how to do the absolutely right, best, most strategic things in branding and marketing communications...with the result that it has the affections of a handful of users. 

What a missed opportunity! The company literally bought exclusive access to highly motivated and profitable customers, and then squandered its resources instead of earning the right to call them dedicated, happy AT&T customers. 

Still, I believe that taking even small steps in the direction of a breakout strategy might help save some of those customers and profits. How isn't the question at this point, but rather why not? Only AT&T can answer that one.

Image source: SeeMidTN.com (aka Brent) 

Original Post: http://www.dimbulb.net/my_weblog/2010/04/atts-breakout-strategy.html

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