Behind T-Mobile's customer service success

(Fortune Magazine) -- Marry me, Sue!" We've just pulled into the parking lot of Albuquerque's Jefferson Commons call center, home to 800 T-Mobile USA customer-service representatives, and outside there's mayhem. Hundreds of screaming, chanting people are standing in front of the building, bedecked in a wild array of hot-pink clothing (T-Mobile's signature color) ranging from T-shirts to cowboy hats to feather boas. They're waving signs, holding up camera phones, and generally acting like starstruck teenagers. One guy's wearing a fuchsia bathrobe; another, in a fluorescent-pink wig, is screaming, "We love you!" over and over.

All this booty shaking and flag waving might seem a bit extreme, given that technically today's event features a middle-aged woman on a routine visit from headquarters. But this isn't just any suit: It's Sue Nokes. She's the flashy, feisty spark plug of a woman who runs sales and customer service at T-Mobile USA, the fast-growing $17 billion subsidiary of Deutsche Telekom.

Nokes has boosted morale among customer-service reps.

More from Fortune

Will Mmmhops be a hit? NBA confirms L.A. Clippers sale to ex-Microsoft CEO Steve Ballmer FBI and SEC probe into Carl Icahn and golfer Phil Mickelson

FORTUNE 500 Current Issue Subscribe to Fortune

Employee relations

Listen

The folks on the front line are the only ones to hear the customer firsthand. Listen to what they say and make changes based on their input.

Develop

Lay out a clear career path so that they can achieve their personal goals.

Educate

Give them the coaching and training they need to do their jobs.

Celebrate

Define success in terms of the customer. Then reward and recognize it.

In that capacity she's in charge of more than 15,000 employees around the U.S. Why the rousing welcome? Well, it has something to do with her outsized personality, an inspiring, wacky combination of Rosie O'Donnell, Evita Perón, and Auntie Mame.

But mostly it's a result of her lifelong belief that making the customer happy is a lot easier to do when employees actually like their jobs and feel that what they do matters. "Sue's zeal for always putting the customer first is absolutely infectious," says René Obermann, CEO of Deutsche Telekom.

Serving a hot lunch to your employees, as Nokes usually does on her site visits - or repeating, like a mantra, "You are No. 1, and the customer is why" - could easily come across as meaningless corporate doublespeak. But not only does Nokes pull it off, she seems to have a blast doing it. "I'm just a kid from downstate Michigan who knows where I come from," she says. "I didn't start out wanting to be Sue Nokes, SVP of anything. It just happened because I did what I loved."

Customers seem to love what she does too. À la Southwest Airlines or Nordstrom, T-Mobile's heavy service focus, led by CEO Robert Dotson, has become a key differentiating strategy, along with an emphasis on the "young and social" and smart branding.

Though T-Mobile is ranked fourth, with 11% of the U.S. market, behind Verizon (Charts, Fortune 500), AT&T (Charts), and Sprint Nextel (Charts, Fortune 500), since the end of 2002 it has gained more than five share points, according to Mark Cardwell of Sanford C. Bernstein.

Even more impressive, within two years of Nokes's arrival in 2002, the company catapulted to the top of J.D. Power's rankings of customer care in the wireless industry. It has now won the biannual title six times in a row. "It's pretty amazing, actually," says Kirk Parsons, senior director of wireless services at J.D. Power. "They have great customer care, they handle the folks they do have, and they're growing at a pretty good clip."

That's a huge turnaround from 2002, when T-Mobile ranked dead last according to internal surveys. (J.D. Power started its national wireless surveys in 2003.) Dotson, who had just been named CEO, reached out to Nokes, then at Wal-Mart.com, telling her that the company's customer organization needed a complete overhaul.

Before committing to the job, Nokes visited a few call centers and was horrified by what she saw. Absenteeism averaged 12% daily; turnover was a staggering 100%-plus annually. The company used "neighborhood seating," a common technique at call centers in which employees don't have desks but instead drag their stuff from cubicle to cubicle.

"I asked [managers], 'Are you losing any good people?' They said, 'Yeah,'" Nokes says. "I said, 'Anybody feeling bad about that?'" Karen Viola, general manager of the Menaul call center, also in Albuquerque, describes what happened next. "She walked up to the board and wrote sue nokes. Then she sat back down, put her feet up on the desk, and said, 'There's a new sheriff in town.'"

Although Nokes loves to talk, she actually spends much of her day listening. In a focus group in the Menaul center, dressed in a natty black jacket with white trim, tons of gold jewelry, and funky black-and-white-checked glasses to match, Nokes, 52, says what she says at virtually every such meeting (after, that is, making a bunch of wisecracks about her weight, age, and declining mental functions). "I have two questions: What's going well, and what's broken?"

One rep suggests a feature that lets customers turn off incoming text messages so that they don't have to be charged; another, Sergio Juardo, wonders why T-Mobile.com has no web page in Spanish. Nokes listens carefully, seemingly unfazed by the fact that Juardo's cheek is painted with the words I HEART SUE NOKES.

In the focus groups and in the larger town hall meetings, Nokes is brutally honest, telling the group, for instance, that the company erred by not adding enough service reps to support T-Mobile's new pay-as-you-go service. Responding to a complaint that it's too time-consuming to log in to the system, she tells employees that a quick fix is impossible given the company's other technological priorities. "It's important that we build an environment where you can tell me my baby is ugly," Nokes says, her hard A's revealing her Midwestern roots. "And when you ask what's wrong, you'd better fix some stuff."

One reason Nokes is so good at communicating with her reps is that - unlike most senior executives - she has sat in their chair. After starting at Michigan Bell as an engineering clerk out of high school (she never finished college), she was promoted to customer-service rep.

She spent 26 years in the Bell system, moving up to director of quality and then, by 1998, to regional director of customer service for what became Ameritech. She moved on to Ameritech subsidiary Tele Danmark, in Copenhagen, where she attracted attention walking the halls in a Santa suit at Christmas - and still managed to straighten out the back office and boost customer satisfaction by 25% in less than a year.

Some up-by-the-bootstraps executives, when they succeed, try desperately to escape the world they came from. Nokes, by contrast, embraces it. She constantly brings up her factory-worker parents, Vivian (Vi) and Lewie: "Vi is still my No. 1 coach," Nokes says. "She says, 'Put on a little lipstick - you'll feel better.'"

Connecting to everyday workers was particularly important when Nokes landed at Wal-Mart.com, working for then-CEO Jeanne Jackson to build a customer-service organization nearly from scratch. "Sue, to me, is the world's perfect executive," says Jackson, now with MSP Capital. "You don't have to go to sleep at night worrying about her decisions. And on the other hand she makes you feel like a brilliant boss - not by sucking up but by giving you honest feedback."

Jackson recalls Nokes "reading me the riot act" one day. "I was spending most of my time with the engineering staff, and she said [I needed to] get out there and show my face to call-center employees. She was absolutely right."

Indeed, once in the door at T-Mobile, Nokes immediately launched a listening campaign, asking what customers were complaining about - and what employees needed improved in their workplace. "I remember the first focus group," says call-center manager Viola. "Everybody came out crying. The people said they had never felt so inspired in their lives, and that they had never met with any leader at that level who [they felt] cared."

Nokes quickly gave workers their own seats and asked for $17 million to bring salaries up to the 50th percentile. She also overhauled the training process (reps now go through 132 hours of training and team meetings each year) and began hiring based more on attitude than experience. She also created a standard set of metrics to measure reps on, tracking call quality, attendance, and schedule reliability along with the speed of the call resolution.

"I will never hold you accountable for things that don't matter to your customer or to fellow employees," Nokes tells her Albuquerque acolytes before explaining - in her own inimitable way - what she's looking for. Absenteeism ("pimping your peers," she calls it) is bad. Solving problems in one phone call (one-call resolution, or OCR), she says, is critical. "We have frigged up [our customers'] day," she says. "They need to go to the john and do other things."

To motivate employees in what has long been considered a dead-end job, Nokes promised when she joined that 80% of promotions would eventually go to existing employees. By August 2007 that number had hit 82%. Her team also created a new "rewards and recognition system " in which high performers - using the new metrics - were rewarded with trips to Las Vegas or Hawaii and prizes. Today absenteeism is at 3% annually and attrition is at 42%. Employee satisfaction - at 80% - is the highest it's ever been.

In addition to her fans from below, Nokes has found plenty of support from above. Dotson requires that all director-level executives travel to local markets quarterly, where they visit some of the 20 call centers (all in the U.S.) or retail stores. They must complete retail sales training and work in a retail store several days a year as well.

For the past year Nokes has also been running a large chunk of T-Mobile's sales organization, which includes the company's vast network of dealers, outside retailers, e-commerce operations, and B-to-B reps. That means more problems to solve.

Will the iPhone cut into T-Mobile's hip, young audience? Will the retooled retail stores be a success? Will other players catch on to some of her customer-service tricks? Nokes brushes back a piece of her hair that has turned pink from hugging so many magenta-hued reps. "I am the head of the department of worry," she says. Then she breaks into a huge grin.