Sprint's New Business Model
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In May 2007, J.D. Power and Associates passed out trophies to the nation's wireless service providers. Sprint Nextel came in dead last in customer satisfaction, receiving no acknowledgment whatsoever. Sprint CEO and Chairman Scott Forsee has a plan to turn around his customers' dissatisfaction, though. In a moment of Trump-like clarity, Mr. Forsee has decided to fire his customers!
Apparently Sprint Nextel runs reports on their customers and determines which ones call Customer Service the most. Then it cancels their service. This could actually be a highly efficient model for dealing with customer complaints, or for driving a company into bankruptcy. After all, if your #1 problem is customers, why not just get rid of them?
Now for the part that really makes me angry. Being an old soldier myself, when I read that Sprint Nextel summarily canceled service for an entire unit of soldiers that had recently returned from Iraq, I was dumbfounded. These soldiers were temporarily assigned to West Point, NY upon their return to the U.S. They bought Sprint Nextel "Roaming Included Plans" to keep in touch with families and then had their service canceled for "roaming too much" during their temporary assignment! These soldiers put life and limb on the line for their country halfway around the world, and Sprint Nextel treated them like crap when they got home. I was so upset about this I just had to call 1-800-SPRINT1 and let them know how I feel.
Sprint Nextel's competitors should consider offering these disconnected soldiers and rejected former-Sprint Nextel customers a good deal on a new service. Most of the rejected customer contracts end on July 30, and these soldiers (and civilians) need a home.
Over the last month there has been quite an outcry on various sites and Sprint actually reinstated service for the military members. However they are still cancelling contracts on hundreds more. Is this a good move? Should customers be cancelled when they cost you money? What's your opinion?
More information about Sprint Nextel's customer service theories can be found here:
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I'm counting down the days until I can get my service away from Sprint. Their whole network is buggy as well (which probably necessitates the many phone calls to support). When I get a voicemail and I elect to ignore the notification it re-sends the notification every 5-10 minutes. If anyone sends my wife a text message she gets 2-5 copies of it over the next couple of hours. I mean, I'm all for redundancy, but that's ridiculous. I've called their support to complain about this and was told that they couldn't really trace the source of it and that it was probably my phone (been through several phones with the same problem).
Guess all I need to do is call MORE frequently and I'll be able to get out of my contract early.
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I fired myself from Nextel a couple years ago. I took all my pesky business (and the accompanying pesky cash) to Verizon. Nobody's perfect, but Verizon has treated me better than Nextel did. Which, when you think about it some, isn't saying too much. So I'll say Verizon has been satisfactory in their service of my account.
There is "bad business" out there. It's there for small independent companies (like Me, Inc.) and for large corporations like Sprint-Nextel. When I ran a previous business (circa 1994 - 2001), I did in fact fire a couple customers. Since I started Me, Inc. almost a year ago I haven't fired anyone and I don't plan to.
Why? A couple reasons:
1. Firing customers is expensive. The first customer I fired cost me about $6,500. That's a lot of money for a small business. It represented a lot of work as well - at $35 / hour.
Looking back, it was the only option I had left. It was my only option because I'd done an absolutely lousy job of managing the customer relationship from day one. I failed miserably to negotiate properly and document a work order. I allowed myself to be bullied into a rate that was less than half my normal rate at the time. I did not define deliverables. I failed to manage expectations, making it impossible to please the customer.
I basically sabotaged the entire engagement out of ignorance.
When I think about it, I probably got off cheap.
2. Firing customers doesn't happen in a vacuum.
People talk. A lot. There are pre-internet studies out there that show the US is one big happy community - that people are no more than five other people away from everyone else in the US. I dare say this number has decreased with the advent of the internet and social networking (my LinkedIn page says I'm Three Degrees from 466,800 people).
Couple this with the fact that bad news is the only thing in the universe known to travel faster than the speed of light and you begin to see the problem with "letting customers go".
It's bad business, all the way around.
My advice? Don't let it get that far. Everyone has the customer- or situation-from-hell occassionally. Take the lead. Don't let them define the relationship, you define it. Be you - not the "you" they're trying to make you into.
:{> Andy
Andy Leonard, Chief Data Engineer, Enterprise Data & Analytics
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DELETE Customer WHERE (Cost*10) > Profit
Seriously, this is not a new concept. If your customer is costing you far more than you are making from them, then why keep them around? Because they might be profitable before they die? I might win the lottery before I die. But very likely NOT.
Though, terminating the service of returning soldiers is pretty sorry. Though, by no means is the maltreatment of veterans confined to the likes of Sprint-Nextel. The US gov't has been doing a decent job of that lately (among others). But, I digress...
James Stover, McDBA -
Were I one of Sprint's competitors I'd be laughing. And offerring great transfer deals.
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One thing that's really confusing about the Sprint Nextel situation is that the customers they are firing are not bad customers. These appear to be people who pay their bill on time every month, and follow the other terms and conditions in their contract. The reason Sprint Nextel is getting rid of them is because these customers "called customer service too much."
From what I've read, most of these customers called customer service to straighten out billing errors and other problems that originated in the Sprint Nextel billing department. I've also heard that Sprint Nextel is trying to get rid of all customers who had to be grandfathered in under old contracts that offered various discounts. Not sure how true that is, but there are less hostile ways to go about it if that is the case...
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Firing a customer because you have a bad service is not a good idea. I think the customers that talk to you instead of just leaving to a competitor are worth talking to and are an oportunity to improve your service.
Furthermore, firing a customer just when things are really bad sends a bad message to the market (unless you have a very strong market share?).
On the other hand, a bad customer can kill your company. If the customer is not the kind you are targeting, don't accept it just to make money - you will find yourself in a very difficult sittuation. You can explain a customer why you are not the service provider he/she wants to work with - it might be a very good chance to clean your image and for him to understand why you were not understanding each other. If the customer is one of the 20% that is taking 80% of your efforts, just fire him/her with good manners and provide him/her with a way out (offer him/her a competitor's product she/he likes or something like that).
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Some customers might not be a good fit for your business.
However, many organizations are structured such that the sales dept needs the sale to make their numbers. After the sale it becomes a support / operations issue.
In some situations I would say the business is smarter to not have sold to the customer in the first place.
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OK, we all have a story, but I can't resist telling mine... 🙂 When with Alltel back in the early 90's when car phones were all the rage, I caught Alltel billing me incorrectly in their favor. We had been with them over 5 years at the time. They credited my account, and the next month made mistakes again in their favor to the tune of 15 to 25 dollars. I canceled my phone service, and you guessed it, they billed me over 200.00 for allowing me to go to another company that would bill me correctly!
Alltel is probably a good company, but I remember my problems with them, so I never consider Alltel when thinking about a new service provider. I typically stay with a provider at least 5 years, so I'm not one to complain a lot.
However, Verizon recently did a similar thing with me. I got a new cell phone and contract which was my third 2 year contract with them. The cell phone just wasn't right. So I attempted to return it within the 15 day policy. The Verizon rep assured me that this was a great phone, one of the most popular that had the least problems!!! So I decided to keep the phone, which had a maintenance replacement contract. In about 6 months after several trips to the local Verizon service department for various complaints, the phone died. I then requested a new phone, and could they replace the Motorola with an inexpensive LG brand. No way, you can have a new Motorola, but if you want and LG, you have to buy it! To keep from having another 2 year contract, I paid 230 dollars for a phone that would have been free if I had signed a contract!
Now that said... Verizon is a good company with excellent service. However what are the chances I will stay with them when my last contract is up. I had 3 cell phones, and one is still under contract. You do the math... 🙂
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At the end of the day, it is a business' job to make money. If customers are costing you money, even if they are soldiers, they should be turned away. Judging from a business standpoint, Sprint turned them away in one of the most classy fashions they could possibly have. They took the blame and told the soldiers that Sprint could not meet their wireless needs. While customer's who are willing to talk to a company before switching should be talked to, the question is brought in how much would a customer have to call into customer care to begin losing money and become unprofitable? I can't imagine that by calling in for a total of thirty minutes each month that they would become unprofitable, it would most likely have to be in the hours range before the cost of mobile internet and the customer care employee's costs became more than the customer lifetime value. Also, I assume that Sprint isn't stupid and took into account the lost cost of goodwill.
In the end, Sprint just made a numbers decision. Also, as a side note, I say this as an avid Verizon fan. However, when you respond to my post, it is important to look at the situation from a business standpoint, not from a subjective standpoint. We have to face the fact that with the flattening of the world, we have become just numbers. Sure, if we are a long time customer or a large customer, we can become slightly more and have the companies bend over backward to keep our business, however, the avg. customer is just a number. When that customer's perceived lifetime value drops into the negative, you have to make the decision to cut the customer loose. Now, as a final note, I'm sure there is more to the story than what we are being told. There are two sides to every story and there is a great more detail I bet than what was posted. My views reflect a general description of the events, and could or could not be relavent to what actually happened.
-Kyle
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It seems that the consensus here is that, under certain circumstances, firing the customer may the right move. Having seen business keep customers under onerous, money-losing contracts rather than lose the relationship, I can see the other side of the coin.
However, no matter how badly Sprint was motivated to stop wasting money in covering its own faults, they made 2 serious mistakes. Obviously one was lack of customer service. It doesn't take much to explain to a customer why the partnership doesn't work and then provide an alternative. Granted, Sprint most likely saw this as throwing good money after bad. As any beaner will tell you, the negative goodwill that causes far outweighs the cost that would have been incurred in researching and suggesting another option. And lets face it, the wireless providers are close enough that they each know what the offerings of the others are, so Sprint can't claim hardship on that count either.
The other issue, as was obviously experienced by these fired customers, was Sprint's inability to service THEIR OWN PRODUCT. Come on guys, if you are gonna sell wireless to PEOPLE, learn something about customer service. Those customers ARE people, you know. And if your system has THAT many problems, then maybe you all ought to look for another line of work, like subprime lending.
Perhaps this is what Sprint really needs. Either they get a kick in the pants to get it together, or they get kicked out. Either option benefits the wireless public at-large.
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Buy the ticket, take the ride. -- Hunter S. Thompson -
What is this world coming to when you can't complain to a company (who you happen to be PAYING MONEY to) when they give you lousy service?
WHAT'S NEXT?
Have a good day,Norene Malaney
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Norene has a good point.
Let's hope that these "problem customers" were in fact abusing their right to complain.
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Many companies have rules around determining if a contract should be renewed and ways to end it. I was with Travelers for home insurance (had been for 5+ years) when I was broken into and robbed while we were out one day. Of course they paid out the losses as per the contract but when it came to renewal they sent us a notice of non-renewal by using out credit history as the out (same creidt history I had from the beginning BTW) but we knew it was because they had to return some of our money as per the contract. After checking around I found Nationwide and then Eriee who both have been great (Eriee won because of coverage for price and history, plus they have a rule of after so many years they will not drop coverage on you), but in checking I found many companies would not take you if you have any robberies within a 3 or 5 year period. So it isn't just Sprint that does this by far but that only was seen because so many were affected at once. Also, saw an article that stated many of the other vendors do have these outs so they can cut their losses as soon as possible but many have yet to actually use them.
As for the person who stated 30 minutes wasn't much consider they have to pay someone to handle these which can be 10-15 dollars for just 30 minutes. In addition the watts line (800#) has some expense related to it or the cost of dealing with the company via cell while roaming. And I am sure they weighed these out before Sprint said here is a likely candidate. In addition I worked for a Long Distance company before as a Service Rep and found some customers would call in every month about the same number appearing on their bill becuase they either had someone else in the house making the call (usually teens) or misunderstood the number (8XX area codes that are not tolll free). My job was to research the higher amount items to determine validity as well as common reoccurances. I would actually call the number and try to relate who made the call and determine valid or not. I recovered hundreds of thousands of dollars doing this. I also was the first person to notice when the data got mixed around one time from the call switches. But this was still at a loss in many cases because I was being paid and making calls which added to the operating overhead. Of course I made great notes on the account so in many cases we would recover to break even on these customers after a year or so, but that required them to stick around (so I had to resell them sometimes which cost more).
Just keep in mind thou I think this is crooked period when it is there error that has been the root reason but it happens all the time everywhere.
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If nothing else, this guarantees that I will never even look at Sprint for my wireless needs. I would guess it also means that they won't be able to sell their business as no other business will want to associate themselves with such a policy.
I agree that a company probably doesn't want to keep customers that are costing them more than they are making off of them, however it is sort of an unspoken rule that they at least live up to their end of the contract until it has expired.
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