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Did Sprint do the right thing?
Posted by Becky Carroll on July 18, 2007
You may have heard about Sprint “firing” of some of its customers in the last few weeks. If not, just go do a search, and you will come up with articles from many blogs and journals. Quite a buzz!
The buzz
Most posts/articles focus on those 1000 or so customers who were sent letters to let them know their service would be terminated. These were apparently customers who called customer service too often (substantially more than other customers). Sprint paid off any outstanding bill for them, did not charge them an early termination fee, and gave them one month to find a new carrier.
From the customer viewpoint, I have read articles stating that some of these customers were calling in legitimately about problems with Sprint’s billing, problems that were not corrected month after month. I also read that each “transfer” made to a different Sprint call center agent, due to the wrong department or Sprint’s need to transfer the caller, counted as one call. It is conceivable, then, that some of these folks could have made 5-6 “calls” with just one call in.
Another story shares how Sprint renewed the contract of one customer only a short time before sending out the termination letter. She had just bought a new phone with that new contract.
Did Sprint do the right thing?
It is not a problem to take action on your low-to-no profit customers. It is actually a business necessity. One should either change the value proposition for those customers or find a way to let them go to your competitors.
Perhaps it would have made more sense (and less publicity!) for Sprint to warn of termination at the next contract renewal. Sprint doesn’t have to renew those very low-priced contracts if their business model has changed. In that case, customers could have upgraded their contract to something else or could have chosen not to renew and go to another carrier.
What about those that remain?
I wonder what the outcome will be for Sprint’s remaining customers? Here are some questions to ponder:
Will those who are unhappy (or who want an iPhone) try to game the system and get “kicked out” rather than pay an early termination fee?
If so, are those really the customers Sprint wants to have around? More than likely they are not loyal; they are just looking for the cheapest deal.
Will customers with real problems hear about this and be afraid to call in?
Overall, it can be a good thing to either fire your customers or change the value proposition to improve the relationship. Time will tell whether or not this works for Sprint.
(Photo credit: 3pod)
Customers Rock! 
Katie Konrath said
Hi Becky,
While I agree that some companies have a right to fire customers who are gaming the system, or who have needs that the company can’t fill, I think this wasn’t a very good idea for Sprint.
They’re already known for poor quality service, and this move is unusual enough that it makes a big splash in the media. No matter their justifications, Sprint has just sent a huge message to customers that (a)”our service is so bad that some customers call in 30+ times a month for service”, and (b)”when you have real problems with our service, we don’t have to fix them–we’ll just fire you.”
As Seth Godin wrote: “Before you start firing customers, you better be committed to satisfying the rest of your customers. The giant flaw in Sprint’s logic, as many readers have pointed out, is that plenty (almost half) of their customers don’t like them. Getting rid of a nasty group of 1,000 isn’t going to change that very much.”
(http://sethgodin.typepad.com/seths_blog/2007/07/the-first-thing.html)
Sprint will be spending a lot more money on fixing the bad PR than they would have spent dealing with those customers in a more-sensitive manner–or even (gasp!) improving their service so people don’t have to call in so much.
On my blog, http://www.getfreshminds.com, I’ve been writing a series on how Sprint is missing opportunities by choosing to view customer service as a negative. (Part 1: http://www.getfreshminds.com/2007/07/does-thinking-o.html)
Like you said, I think they would have much better results from changing their value propositions to improve their customer relationship.
Suzanne Obermire said
Well, there are a lot of customers that remain. Sprint ‘fired’ around 1,000 and they have over 50 million subscribers. I believe that this high-profile firing will backfire on Sprint, and cause many of those 50 million+ to question their loyalty.
I’m a firm believer in cherishing profitable customers and trying to make unprofitable customers turn a profit. This can be done, over time, through a careful review of customer service patterns (maybe there was a better way to handle all those calls), tweaking calling plans when the contract came up for renewal and who knows what other strategies. Again, the bad press generated from this firing simply wasn’t worth it, IMO.
Carolyn Manning said
No matter if there was some semblance of legitimacy behind the deed, I think Sprint handled this poorly. Customer dissatisfaction is no secret; they’re losing something like 200,000 clients each quarter (if I’m wrong there, maybe Katie has better info?). It just doesn’t make sense to me that a company already in trouble would ask for more of it.
Tim Jackson said
I have to say that this is a “bad idea” for Sprint. I mean, it just doesn’t make real sense, but it will make real cents.
I worked for a company with a very technical product and it was very service intensive, due to the nature of the product and how it was used. Most of our customers were fairly service-heavy. However, we viewed the ones who were over the top as just being part of the equation- we built in for them because we knew we’d have them. When I hired new service personnel, I explained to them up front that service was something the company prided itself on, even with the folks who were serial offenders. I counseled them on techniques to work with the customers and to use “reflective listening” so that they could diffuse situations and/or get to the real root of the problem.
My point is that companies need to have a culture of understanding their customers and their products. In my estimation, cell phone service providers constitute a service intensive product/ service. If they do not build in for that kind of relationship, they are missing the point. I’ll be honest, I hate Cingular/ AT&T with the white hot intensity of a thousand burning suns… but I always get exceptional service on the phone when I call… and when I call again to fix the same problem… and again… etc. They treat me so good that I forgive them for the service problems. THAT is how you make money off of customers like me- you retain them (and keep them paying their bills).
Becky Carroll said
Katie, thank you for your observations and for your great ideas for Sprint on your blog! However, I have a sneaky suspicion that Sprint call center reps are doing when they are incented to do: get customers off the phone quickly. Until companies change their metrics to be more customer-focused, it will be very difficult to see true customer resolution of issues.
Becky Carroll said
Suzanne, we are on the same page! Those remaining customers have had their trust shaken by seeing what happened to the “fired” customers. This may have longer repurcussions for Sprint than they thought, and likely not in the direction they were hoping.
Becky Carroll said
Carolyn, I agree that this was handled poorly on Sprint’s part. The telecomm industry has a very high turnover rate, mostly due to the fact (I believe) that customers are “hold hostage” to their carrier or cable company. Many times, there are not a lot of choices, or customers are locked in with huge fees for leaving.
Customers prefer the carrot over the stick. Building customer relationships through great service, great offerings, and customer-focused business strategy will generally work much better than penalties!
Becky Carroll said
Tim, I love your real-world examples of customer service challenges for companies. We can treat our customers with respect even if we are frustrated with them. It may be the difference between keeping and losing a valued customer.
Sprint did not value the customers it fired, for whatever reason. I would encourage anyone looking to lose certain customers to do it respectfully, carefully, and in such a way that there aren’t any burned bridges with these customers or with others.
Katie Konrath said
Hi Becky,
I agree that Sprint call center reps have incentives to get people off the phone as quickly as possible. But it doesn’t seem like a very smart move.
Yes, that reduces time spent talking to customers so more can call in. But does it solve their problem, or will they have to call again? From what I’ve been hearing, Sprint is the worst US cell phone service provider in the US, and their recent “firings” are not helping their image.
It just boggles my mind that companies view poor service as a way to save money. Unhappy, unhelped customers–many of whom are locked in with a service agreement and just trying to get what they signed-up for–will have to keep calling (getting more frustrated every time) and the company will have to keep paying for service reps to speak to them. In the long run, getting customers off the phone ASAP is more costly… especially considering that unhappy customers will not renew their contracts and will warn others.
My major irritant about the whole issue is that no one is even bothering to think of new ideas about how to serve their customers better. 1000 customers calling in over 30 times a month–figure out what makes them call and fix it! Call volume too high at certain periods of the day–figure out ways to encourage people to call at lower-traffic times.
Sprint’s actions are just a result of lazy thinking. There are better solutions than firing customers, and more innovative ways of lowering high costs.
Only problem is, Sprint has no incentive to change. Poor customer service is an industry standard in the US cell phone business. Until they feel threatened, they’ll probably just continue what they’re doing.
getFreshMinds.com | Creativity | Innovation | Ideas so fresh--they should be slapped! said
Why they just don’t care…
4 out of 5 customers agree… calling a company’s customer service line is a frustrating experience.5 out of 5 companies agree… they don’t care.The last time I helped my parents sign-up for a cell phone plan, we were the lucky
Neil Sethi said
It’s been a month since this PR nightmare. I wonder if any of the ‘fired’ customers have come forward to defend themselves, or if they had to sign some sort of NDA.
This whole story reeks of some consultant misdiagnosing the problem. Sure it’ll be a band-aid for now, but eventually the root cause of the problem, whatever it is, will probably manifest itself again.
Katie Konrath said
By the way, in response to Carolyn…
Doug of Next Up (http://nextup.wordpress.com/) wrote in on my blog to give some specifics:
“A May, 2007 study (http://tinyurl.com/2kutoh) showed that the wireless industry in general improved CS scores, but is still one of the lower ranking industries. Sprint was the only carrier to show decline (3%) in their service score over the previous year.”
Hope this helps.
NAJ said
Hey Customers Rock, many folks are upset or confused about the issuse of Sprint firing it’s customers. Measuredup.com would like to introduce itself:)
Measuredup.com is a new social networking site where CONSUMERS get the LAST WORD In Customer Service. This is a leading free and independent site where consumers read and write outrageous, funny or complimentary reviews about customer service and brand experiences.
Please check out http://www.measuredup.com and spread the word to your loyal audience.
Becky Carroll said
Neil and Katie, time will tell with Sprint – will their customers stay, will they be upset and leave, will this be a wake-up call for improved customer service? Stay tuned!
NAJ, thanks for the heads-up on measuredup. I will check it out.