A few weeks ago, the third-largest mobile phone company, T-Mobile (Nasdaq: TMUS), made history. It did something that no other public company has done before.

It turned its customers into shareholders.

Every existing subscriber has been offered one share of T-Mobile stock. And customers can collect additional shares for each new customer referral, up to 100 per year.

[ad#Google Adsense 336×280-IA]It’s certainly a good deal for T-Mobile’s customers.

But it may be an even better deal for the company’s existing shareholders.

Here’s why.

What’s Old Is New Again… With a Twist

Whether the company knows it or not, T-Mobile is pioneering a new hybrid business model – the public cooperative.

Co-ops are not new business models, and they’re not usually publicly traded. But a customer-centric co-op like T-Mobile is unique because customers become members or shareholders.

That means they share in the company’s profits… and don’t just complain about them.

As a result, the customers gain more influence over the business’s products and services, as well as its operations. Much more influence than they would have if T-Mobile were a traditional corporation.

Remember, many public companies tend to put their shareholders first, often at the expense of their customers.

That’s not the case with this hybrid model.

Thriving in a Dying Industry

Sporting goods retailer REI is a well-known, privately held example of the consumer co-op model. And it’s managed to survive while competitors like Sports Authority and Sports Chalet have been forced out of business.

Why? Because the interests of its members are aligned with its customer base. They are one and the same, which gives it a major advantage.

REI’s customers pay $20 to become members of the co-op. As members, they’re eligible to receive a portion of the business’s profits based on their purchases and vote on the company’s board of directors to influence the direction of the business.

So far, REI’s business model has paid off for both the company and its members. Between 2010 and 2015, revenue grew from $1.6 billion to $2.4 billion – a healthy 50% surge.

The dividends members enjoy have grown too, from $129 million to $185.3 million during the same time frame.

More Than a Marketing Gimmick

T-Mobile’s stock program works a lot like REI’s membership model, except that T-Mobile’s involves publicly traded stock. Like REI’s co-op, T-Mobile’s model is designed to capitalize on the natural synergy between customers and shareholders to increase loyalty, boost sales and ultimately expand profits.

It’s a great idea.

Since T-Mobile’s customers now have a stake in the telecom’s profits, they’ll undoubtedly become more engaged. And as stakeholders, they are more likely to remain customers.

T-Mobile has taken an important step toward eliminating the “us versus them” mentality. And by taking care of its customers, T-Mobile’s revenues and profits will likely increase.

Everybody wins.

Happy customers remain loyal. And in a crowded industry, with lots of competition, retention is just as important as new business. So T-Mobile should gain a leg up against its rivals.

If it works, you will see many public companies adopt this hybrid public co-op business model.

Keep an eye on T-Mobile. The innovative telecom upstart may have just pioneered one of the most ingenious business models in recent history.

Good investing,



Source: Wealthy Retirement