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Building Customer Loyalty at U.S. Cellular

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Company Background

The Belief ProjectSM

A Winning Strategy

Marketing Positioning

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Corporate Overview: A Brief Profile of US Cellular

• Founded: 1983• Headquarters: Chicago• 6th largest wireless carrier:

• 6.1 million customers• #3 market share in our footprint

• Customer Satisfaction at All Time High:• Consumer Reports magazine, Jan 2011 —U.S. Cellular

highest-ranked wireless carrier• Consumer Reports magazine, June 2010—U.S. Cellular

highest-ranked wireless in-store experience• 10 consecutive J.D Power. and Associates awards

for call quality• PC Magazine Readers’ Choice Award

• Five State-of-the-Art Customer Care Centers: • Bolingbrook, IL; Cedar Rapids, IA; Knoxville, TN;

Tulsa, OK; Waukesha, WI

• Ownership: • U.S. Cellular is publically traded and a majority-owned

business unit of Telephone and Data Systems, Inc.

Revenue (2009):

$3.9 billion

Associates: 9,000

Quality, High-Speed Award-Winning Network

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Corporate Overview: The Dynamic Organization Operating Principle

At U.S. Cellular, our “Dynamic Organization” is a customer-centric business model that is driven by four pillars – Leadership Excellence, Associate Passion, Customer Advocacy and Superior Results.

Our company achieves business results through a focus on these four core pillars and a growth strategy that elevates our customers as an extension of our sales force. Our 9,000 associates embrace these values and work everyday to provide a truly better wireless experience.

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Economic Realities• Cloudy employment picture

• High consumer debt

• Reduced disposable income

Industry Realities• High penetration

• Consolidation

• Commoditization

• Declining switcher pool due to apathy and inertia (vs. loyalty)

Consumer Realities• Low consumer confidence (feeling under siege)

• Cell phone dependent

• Functionally satisfied switchers

• Lack of differentiation between carriers

Multiple Factors Have Created Significant Market PressuresMarketing Positioning: Multiple Factors Have Created Market Pressures

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Understand our target customer

Leverage our understanding to create

a differentiated strategy

Unique value proposition:• Leverage our core strengths – ten years building

customer focused culture

• Show our customers “what’s in it for them” through our touch points, offers and experience

• Focus on building loyal advocates

Multiple Factors Have Created Significant Market PressuresMarketing Positioning: Utilizing Brand Loyalty

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Multiple Factors Have Created Significant Market PressuresMarketing Positioning: A Phased Process

• Quantitative research and in-depth psycho-cultural interviews• New segmentation, targeting, and brand positioning

• Re-launch the brand• Lay foundation for future enterprise strategy• Develop new proof points for future launch

• Launch Battery Swap and Overage Protection• Complete proprietary research to facilitate new benefits• Develop business case to support new strategy

• Complete requirements, development, testing & training• Launch

PHASE 1

PHASE 2

PHASE 3

PHASE 4

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Multiple Factors Have Created Significant Market PressuresMarketing Positioning: A New Model to Build Loyalty

Replace the traditional model of contracts and the penalty of early termination fees with the incentive of rewards

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Multiple Factors Have Created Significant Market PressuresThe Belief Project: Research Validates Our Approach

90% said wireless providers should earn my loyalty, not require it

by having me sign a contract.

87% said they shouldn’t have to sign a service contract just to stay

with my current wireless carrier.

84% said 24 months is too long to wait to get a good deal on a new

cell phone

80% said wireless providers should do something about overages

and the big bills that come from them.

BELIEF REWARDS

NO CONTRACT AFTER THE FIRST

FASTER PHONE UPGRADES

OVERAGE PROTECTION/CAPFORGIVENESS

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• FREE Immediate replacement for a non-working phone (Premium Plans)

PHONE REPLACEMENT

• Simplified, bundled pricing with text & data: 6 rate plans each for single & family plans

SIMPLIFIED PRICING

• Immediate replacement for lost and stolen phones ($100 replacement fee)

• 5% discount for automatic payment and paperless billing

• Customers will earn reward points for spending more and staying longer. Trade points for:

LOYALTY REWARDS PROGRAM

• Overage forgiveness• Free ringtones and ringback tones• Free companion lines

• No contract after the first: customers will not have to sign a contract to earn upgrades & stay

ELIMINATE CONTRACTS

• As a heavy user, I spend a lot of money each month on my wireless service – why can’t they cut me a break?

• Your phone is your lifeline – of course you didn’t lose it on purpose

• Wireless companies make you “work for it,” designing offers to be as confusing as possible

• Taking advantage of simple mistakes has become the name of the game

• How does a $500 phone bill ever make sense?

• New customers get treated better than existing customers: why am I never recognized for my loyalty?

• Technology is moving faster than ever – why should I have to wait two years to upgrade my phone?

• Why do I have to sign a contract to stay with my wireless company?

• I feel powerless, helpless, & anxious - trapped by the rules of the wireless game

• Overage Protection, Overage Cap & Overage Forgiveness

• National Footprint – all plans (postpaid)

• Free phones, free accessories

• Faster phone upgrades - (as little as 10 months)

The Belief Project: Consumer Insights

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The Belief Project: Launch Plan

Launched The Belief Project October 1, 2010, with integrated marketing communications program to generate excitement and buzz

Public Relations – Business, Consumer and Blogger Outreach

Advertising (TV, Print, Outdoor, Mobile, Online)

Online

Events& POS

Customers

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A Winning Strategy for Growth: More Customers, for Longer

Other Subscribers

Customers Staying Longer…Contributes to an improvement in already low

postpaid churn

• Creating a “bank” of value for the customer which reaches highest point at greatest risk of churn

• Walking away means signing up elsewhere with a new two year contract as well as the absence of other benefits

More Customers in Our Stores…Incremental gross postpaid additions

• Value proposition provides remedies for industry’s most consumer dissatisfying pain points

• The customer experience to back up the new value proposition

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• Spent 10 years building a customer focused culture

• Builds on our strengths and extensive research

• Exemplifies smart business by means of cutting edge customer research to deliver programs that solve customer needs and create advocacy

• U.S. Cellular continues to strengthen its reputation not by building walls to keep customers in, but by bringing innovative solutions to consumers that elevate the customer experience and create a human relationship, not a contractual one

• Drive long term profitable growth

A Winning Strategy: Believe in Something Better

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Thank You