Competition in the telecommunications industry is heating up, with T-Mobile and Verizon each touting customer experience as their competitive advantage. However, in a crowded market, whether these efforts will truly pay off remains to be seen.

In their most recent earnings calls, both companies cited customer experience as a key market differentiator. T-Mobile touted its Net Promoter Score (NPS) reachinga record 46, while Verizon emphasized that itsend-to-end customer experienceimprovements effectively reduced customer churn.

In an increasingly tight telecom market, experience can indeed benefit these companies, but according to Daniel O'Sullivan, Director Analyst in Gartner's Global Customer Service and Support research team, business leaders need to ensure that their strong customer experience foundation does not become a smokescreen masking other corporate issues.

"I think there is evidence that service as a differentiator can be linked to metrics such as long-term increases in customer lifetime value, account retention, and account health. But we must be careful not to interpret surface-level tools like NPS as predictive," O'Sullivan told CX Dive.

For T-Mobile, its high NPS comes against a backdrop of slowing customer acquisition—although the score may signal potential for growth in other areas. For Verizon, its simplified plans and emphasis on overall premium experience need to support its just-begun transformation efforts.

O'Sullivan believes the key for both companies is to focus investments on the customer experience touchpoints that truly matter. Customer experience is a differentiator for world-class organizations, but it needs to focus on making a real impact rather than just surface-level efforts.

AT&T will also be a significant player, but the company did not discuss its experience strategy in its recent earnings call. The company is encouraging customers to bundle internet and phone services under its brand,to win customers。

T-Mobile's NPS is a strength, but is it enough?

T-Mobile aims torefine its value propositionwhile reducing the importance of device subsidies, according to President and CEO Srinivasan Gopalan. The company does not plan to completely eliminate the incentive but wants to offer motivations beyond financial ones.

"Our effort is to broaden the reasons why customers choose T-Mobile, not just to offer free phones," Gopalan said on last week's earnings call. "Of course, we will remain competitive on subsidies and such, but that is not what we are relying on."

This is not a strategic shift for T-Mobile, which has long worked to position itself as a customer experience leader. Its strong NPS performance—which leadership also emphasized inprevious quarters—is proof of that.

"I do think this puts it in the high-NPS category," O'Sullivan said. "Especially in the telecom industry, we often see organizations struggling to escape negative NPS."

However, while there is ample evidence that NPS correlates with financial performance, it is not a predictor of long-term financial performance. If NPS predicts anything, he said, it is customer lifetime value and growth within the existing customer base, which does not perfectly align with T-Mobile's results.

"What particularly concerns me in T-Mobile's results is that net account growth is declining, along with poor performance in existing account churn," O'Sullivan said.

It is not all doom and gloom, O'Sullivan noted, as there are mixed signals in some metrics. T-Mobile's efforts to push customers to upgrade to higher-tier plans may financially benefit the company and align with the higher customer lifetime value capability reflected in its NPS—even if it does not lead to a surge in growth.

Verizon's simplification strategy is a starting point

Verizon is also moving away from the subsidy model, and its simplified plans and emphasis on service are part of that effort, according to CEO Dan Schulman.

"I think the basis of competition is fundamentally changing," Schulman said on last week's earnings call. "At least for us, it is shifting from subsidies to the overall end-to-end customer experience, such as what do the product and service look like? How is service support? How are loyalty programs?"

According to Schulman, this simplified model of offering complete wireless plans at a fixed pricehas already achieved a no-subsidy status. This could improve customer experience, Verizon's financial model, and its ability to compete with rivals.

Customer service experience is where simplification truly comes into play. This can include options like choosing a plan, provided customers feel supported and confident they have all the details needed to make their next move.

"Gartner has decades of research showing that customers, when interacting with brands and organizations (especially in the telecom industry), are often motivated by a desire—a wish for things to be accomplished in a way that is perceived as low-effort," O'Sullivan said.

Anything that simplifies the process of contacting the organization, avoids making customers feel they need to repeat themselves, or reduces the significant effort customers invest in complex journeys can be seen as a customer experience win.

"We often find that customers are almost doing unpaid work for the organization—trying to understand confusing policies, or undertaking journeys where they do a lot of information gathering themselves," O'Sullivan said.

He added that there is still room to build on simplification with what Gartner calls "value-centric services." For example, offering customers the opportunity to meet with an advisor to replan their plans to meet needs could add some complexity—and also provide upsell opportunities for customers willing to go further at contract renewal.

The customer journey will determine the winner

The success of Verizon's and T-Mobile's customer experience efforts, and any telecom company aiming to compete on experience, will depend on their customer service performance.

According to O'Sullivan, customer service interactions are often more likely to cause customer disloyalty than to build loyalty. The best customer service is often the kind that requires no service at all.

Gartner's advice is to start from a customer-first strategy, shifting negative emotions from "something went wrong" to returning customers to a neutral emotional state through low-effort service experiences.

"Organizations that get this wrong overfocus on metrics like customer satisfaction, which are thought to aim at exceeding customer expectations for delightful service," O'Sullivan said. "Generally, we find that customers don't particularly care how much you personalize the interaction or whether you exceed expectations."

O'Sullivan believes that if T-Mobile and Verizon want to maximize the impact of their customer service outcomes, they need to think about how to redesign customer journeys to align with customer expectations for wireless carrier products and services.

Options include: advisory guidance on replanning plans, education on how to reduce security risks, and advice on how to make the most of devices, O'Sullivan said.

The goal is not merely to close tickets quickly in pursuit of customer experience scores, but to guide customer behavior in directions that benefit the business.

"An organization's ability to achieve this is based on deep introspection into key moments and customer value drivers, which requires the organization to deeply understand what creates successful and satisfied customers over the long term," O'Sullivan said.