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T-Mobile Found Out That Customers Don't Like To Change

It’s expensive to create, market, deliver, and support a product. Having customers who make your life more difficult and the whole process more expensive does not help matters.

Since we’re bright, smart product managers it sure seems as though when we spot an opportunity to change something about our product that will benefit everyone we should just go ahead and do it and not have to wait for our customers to ask us to make the change, right? Well that’s what the product managers over at T-Mobile thought before the lawsuit…

The Problem With Going Green

… is that where as everyone agrees that it is a nice idea in concept, most of us are too lazy to actually do anything about it. This is the problem that T-Mobile’s product managers were staring at awhile ago when they started hunting around for ways to cut the costs associated with delivering their service.

That paper bill that shows up in your mail every month looked like a nice juicy target for getting rid of. I mean come on, it’s the 21st Century after all and we’re talking about a customer base that is at least progressive enough to have a cell phone. Think about all of the costs involved: printing, folding, mailing, and dealing with returns. If you could get everyone to drop paper bills and go with electronic billing then the savings could be huge!

As most companies tend to do, T-Mobile at first tried taking a “green” approach. They told their customers that they’d plant a tree for every customer who agreed to drop their paper bill and go paperless. This really didn’t motivate very many people to sign up. See – what did I tell you about us being more lazy than green?

T-Mobile’s next step was to start to charge an extra $1.99 for those customers who wanted a detailed printout of their bill. The exception to this charge was existing customers who could choose to get it without having to pay extra. Once again, this didn’t really cause any major change in customer behavior.

The Big Stick

Clearly the message was not getting through to T-Mobile’s customers – stop asking for paper bills and agree to switch over to electronic bills. In August of 2009 T-Mobile finally got serious.

They started charging an extra $1.50 monthly fee for all customers who had not switched over to electronic billing and who were still receiving paper bills. This fee was applied to all bills, both short and long, and it also covered existing customers – nobody got to escape it.

What’s interesting about this big stick approach is that it worked! Before the new fee was announced, T-Mobile had about 1,000 customers sign up for paperless billing every day. Once the new fee was announced, this number shot up to 33,000 per day.

It turns out that T-Mobile sends out 16.5 million invoices every month. At this new accelerated rate they had the possibility that they could converted their entire customer base to paperless billing in as little as 15 months.

A Lawsuit Can Wreck The Best Plans

Of course there always has to be an unhappy customer somewhere, right? In this case an unhappy customer was so unhappy that they went to the effort to file a lawsuit against T-Mobile. The suit said that the new fee was a “…material modification to the contract by T-Mobile.” For those of you not up on contract language, it turns out that it’s a no-no to make changes to a contract after both sides have signed it.

The T-Mobil lawyers took a look at this lawsuit and realized that they had a problem on their hands – it was legit. T-Mobile then promptly backed off and announced that they were dropping the $1.50 fee. Dang!

What Went Wrong Here?

So there are a couple of interesting things that a savvy product manager can lean from this T-Mobile case study. Here they are:

• The Big Stick Works: to an extent. Having an extra 32,000 customers sign up for paperless billing every day, even if it was only for awhile, will result in a fantastic cost savings for the company. However, clearly customers didn’t like feeling that they didn’t have a choice.

• Always Check With Legal First: Sure, nobody likes the folks who work in the legal department. However, when you are messing around with a big stick approach to anything, it’s probably a good idea to touch base with them before you pull the trigger.

• Carrots Work Better Than Sticks: Sure a stick is easier to use, but carrots work better. In this case waiting until a contract was over, and then making the $1.50 fee part of the new contract would have been ok – as long as T-Mobile also offered a gift or upgrade at the same time for customers who opted to go paperless.

Final Thoughts

If the number of people signing up for paperless billing now returns to their previous levels, T-Mobile estimates that it’s going to take just over 41 years to move all of their customers to paperless billing.

Clearly the T-Mobile product managers had their hearts in the right place, it’s just that it appears that their brains weren’t there also. Using the big stick approach can work, but it generally only works in the short term. If you want to have a long term positive relationship with your customers, then you’re going to have to take the time to find ways to motivate them to take the action that you want them to take.

What do you think that T-Mobile should have done to get it’s customers to go to paperless billing?

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What We’ll Be Talking About Next Time

Would you sleep with your customer if they offered you a million dollars to do it? That was the question that was asked in the blockbuster movie “Indecent Proposal” with Robert Redford, Demi Moore, and Woody Harrelson.

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Products Need To Have A Little Green Added To Them

Economic downturns don’t last forever, but boy-oh-boy do they hurt while they are happening! I’m not sure about your products, but my the customer that I’ve been consulting with are all scrambling to find ways to make their products easier for their customers to buy. Would you be interested in some tips on how to go about doing this?

The Power Of Green

We all know that all other things being equal, most customers will choose an environmentally friendly product (“green product“) over others. Product managers are currently looking for ways to make their products more green in order to boost sales during tough economic times.

I’m sure that this all seems pretty basic to you; however, the real trick for a product manager is just exactly HOW you go about doing this. It turns out that there are three things that you need to do for your product:

• Offer A Wider Variety Of Green Services: If you just suddenly show up and offer a single product that you tout as being green, your potential customers probably won’t believe that you are sincere. However, if you add green services to multiple products at the same time, then your entire product line(s) will start to take on a green look &  feel.

• Hone Your Message: This is a job that is well suited to a product manager. Your product message needs to be “tweaked” so that you work a green component into all of your product communications. No single message is going to get your message across; however, hearing it over and over again will make your potential customers believe in your “green-ness”.

Find A Niche, Fill A Niche

One critical fact that a product manager needs to understand is that your product will never be able to be a 100% green product (unless you are selling plants, and that’s a separate story). Instead, you need to pick your green battles. Here’s how you do it:

• Find & Master a Niche: Pick one particular way that your product can be viewed as being green and then expand on that niche. There are an almost unlimited number of ways to do this: less electricity usage, smaller carbon footprint, recyclable packaging materials, etc. Once you have picked your niche, make sure that your product roadmap includes plans for expanding how you fill your new green niche.

• Monitor Your Product’s Financials: Product managers know that going green with their products takes time. You may initially see less demand for your product especially if you have to boost prices to cover the green features. However, track your financials and you should see sales start to come back as your green message gets out to your potential customers.

Final Thoughts

Going green and then finding a green niche that your product can fill are the ways that a product manger can stay successful in tough economic times. You have to examine whether your market is shifting and how your customer’s core needs align with your company’s current product offerings. Going green is something that no customer will object to and they will then be more motivated to buy from you.

Questions For You

What services could you add to your product that would enhance its green profile? Is your green message a sharp and clear message right now or is it all over the place? What green niche could your product fill? Leave me a comment and let me know what you are thinking.

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What We’ll Be Talking About Next Time

Sigh, ok – I guess that it’s time that I finally get around to talking about the Internet fad-du-jour: Twitter. The Internet is all abuzz about just what the heck Twitter is (a micro-blogging service), who should be using it (apparently everyone), and just how product mangers should get the most out of it (a tad bit unclear here). I’ve spent some time looking into these questions and I think that I’ve discovered the answers that you need.

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Product Managers Need To Make Their Suppliers Go Green Also

Product mangers who decide to turn their products “green” in order to make less of an environmental impact need to look beyond their own shop. The initial challenge in taking a product green is to get the processes that you control to become more environmentally sensitive. The next step is to look at your suppliers.

How Far Does A Product Manager Have To Look?

Final assembly is what most product mangers are involved in. No matter whether it’s a router or a shrink-wrapped piece of software, generally a   product manager is only responsible for the last few steps. However, innovative product managers know to look farther.

Your suppliers often have an enormous capability to improve your  product’s green image. However, as a product manager you have to convince them to do so. The simplest way to do this is to make it part of the initial supplier selection process.

Getting suppliers to participate will also require a product manager to marshal internal forces. This will include shipping & receiving as well as finance in order to confirm that the supplier has gone green and that any cost changes end up saving the company money in the long run.

That’s Not Waste, That’s A Product!

One green area where a product manager is especailly well-suited to proving help is in determining what to do with the waste that is produced by his / her product. A great example of this can be found at a Subaru plant in Indiana where a wall of water is used to catch paint that misses a car as it is  painted. The paint lands on the racing water, falls to the floor and is then separated from the water and reused.

Going Green IS A Competative Advantage

In the end, the main reason that any Product Manger would go green needs to be because it  provides his / her  product with a competative advantage. This advantage can be gotten in two different ways: cost savings and regulatory advantage. Going green should cut down on waste and scrap, this will directly improve your product’s contribution to the company’s bottom line. Additonally, as global regulations regading waste and recycling become more and more strict, already having a green product is a key advantage.

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Product Mangers Need Boss Support To Go Green

With “going green” being all the rage right now, product managers should give it some serious consideration for their products. Although we all SHOULD want to make the planet a better place for current and future generations to live, from a practical product management point of view having a green product may reduce costs and increase sales. Not bad, eh?

The first thing to realize is that product mangers can’t go green all by themselves. This is one area where you really, truly, do need the buy in of your senior management. This is especially critical in two different areas.

The first area that needs upper management participation is to come up with an agreed on way of measuring how green your product is. You’ve got to do this both before you start and while you are making improvements – both will show you and your customers how far you’ve come.

Next you need the support of senior management in order to get the cooperation of other departments. Just because you’ve been bitten by the green bug, does not mean that the folks over in shipping will share your new found outlook on life. Pressure to conform from above will help you to meet your green product goals.

Finally, it’s the worker bees that really need to be engaged in turning your product into a green product. A great example of this is to do some dumpster diving where your product is created. By laying out everything that is in the trash containers where you work, you’ll discover what is going into to creating your product.

Some of the more inventive product managers have discovered lots of shipping containers for parts that are used by their products. With help from the rest of the company, they’ve gone ahead and shipped the packing material back to the sending company for reuse.

There are lots of different ways to make your product go green. Remember the three R’s to the process: reduce, reuse, and recycle. It’s always better to reduce or eliminate instead of reusing. It’s always better to reuse instead of recycling. Finally, it’s better to recycle than to send material to a landfill. Go green!

Do you feel that your senior management would support turning your product “green”? Why would they or why wouldn’t they? Would you have trouble getting other departments to go along with the program? Do you think that you would learn anything from dumpster diving in your workplace? Leave me a comment and let me know what you are thinking.

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Making Green Changes To A Product Can Result In Higher Short Term Costs

Pity the poor product manager who’s firm has decided to do the trendy thing and “go green”. Why you say? Simple – going green can boost profits in the long run, but sadly it can take some serious time before you see results.

Alan Robinson and Dean Schroeder over at the Wall Street Journal have taken a look at just what happens when a company goes green and they’ve got some interesting things for product mangers to consider.

The first thing that a product manger needs to realize is that it can be very easy to implement some early green initiatives for his / her product. Two quick hits can revolve around the amount of energy that is used to create the product (even software products can benefit by turning lights off when nobody is there) and recycling old materials (copies of last version’s user guide anyone?).

It’s when you knuckle down and take a look at the whole process that you go through to design the product that a green redesign starts to take on some serious costs. If you look farther down your supply chain and start to get your suppliers to go green, this could end up costing you more in the short run.

The goal for all product mangers that are thinking about going green is to make sure that any green changes that they make to their products end up lead to either cost savings or break even.

A case in point from a Subaru plant in Indiana that went green is that they discovered that all of those little sparks that fly off during the welding of a car are actually little pieces of metal that end up having to be picked up. When they implemented a new green welding process that caused fewer sparks, they suddenly had to pick up a lot less metal.

Do you know of any green changes that you can make that will provide a quick hit and improve your product’s green image? Have you implemented any green product changes that boosted your costs in the short term? Did these costs go down over time? Leave me a comment and let me know what you are thinking.

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Products That Go "Green" Can Become Magically Delicious To Customers

Ok, I’ll admit it – sometimes I throw away a plastic bottle that I know could have been recycled. I do it just because it’s too much effort to walk the extra distance to hunt down the recycle bin and put it where it’s supposed to go. So if I’m willing to sin this much, is there any hope for us product mangers to ever “go green“?

It turns out that the world of products and product mangers isn’t so much driven by a desire to be a good citizen of this planet (something that apparently I still need to learn), but rather by hard, cold bottom line results. That being said, some interesting things are starting to happen out there in the marketplace.

Once upon a time everyone thought that if you boosted the quality of your product, then of course you had to raise your prices also. It turns out that not only was this wrong, but it was dead wrong – a bunch of companies showed everyone that they could not only boost quality but that they could also cut prices. Case(s) in point: Dell, Apple, Toyota, etc.

Now it’s starting to look like we might have to learn this lesson all over when it comes to going green with our products.

Here’s the secret: if you’ve been focusing on the costs of making your product more environmentally friendly, then you’ve been looking in the wrong direction. The trick is to look for ways to make less of a mess when your product is being created. Oh, and you service product mangers need to get in on this also.

Just in case you think that this really can’t be done, think again. The poster child for going green in a big way is a Subaru plant located in Indiana. There 3,000 employees make about 800 cars a day. They’ve been able to reduce the amount of electricity that they use per car by 14% (that’s a LOT of electricity) and (here’s the big one) they have not shipped any waste to a landfill since 2004.

If a big old car plant can do that, then just imagine what a high tech product team should be able to do. I’ve got some tips that just might make your product a bit more green, a bit more profitable, and a bit more attractive to your customers. More next time.

Do you think that your product is “green” right now? Do your customers seem to care about buying green products? Is a product’s green qualities something that they consider when making a purchasing decision? Are you planning any changes to make your product more green? Leave me a comment and let me know what you are thinking.

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