Tuesday, July 10, 2007

Think... higher profits.......

There are those times in my life when I would just love to be a fly on the wall. Well, not just any wall but those walls where I could enjoy the verbal thought process that goes into some new ideas lately. The wall in the corporate headquarters for Sprint would be a good choice I think. I might have heard something like this:

"I think you can see from the reports in front of you, we lost approximately 220,000 subscribers in our first quarter this year. I'm hoping that today, we can brain storm some solutions for this problem."

"Crap! 220,000....... ?"

"Heck, that is a lot less than I figured we lost."

"With all those cute little stores we have and the uummm rather young staff, we lost customers? "

"It seems that quite a few suscribers have been complaining about their service. The dropped calls, poor service and they even have been catching our billing mistakes and complaining about those."

About this time I am sure that I would be rubbing my front feet together while i keep an eye on those donuts down there..............

"We should just haul butt out there and do our best to improve service, that way, we wouldn't be stuck in third, we'd be on top with happy customers."

"You have got to be kidding me..... that costs money, a lot of money. We already are way over budget in customer service."

"I was thinking....... why not just get rid of the ones who are just uummmm costing us time and money? The boys over at ING did it a while back, cut their costs."

"Does anyone remember what our tee-time is?"

According to BetaNews, letters were sent out to Sprint customers on June 29 2007, informing them that their service would be cancelled effective July 30. Yes, a company that lost that many suscribers in their first quarter this year has decided to rid themselves of those customers who frequent their customer service lines too often.

"The number of inquiries you made to us during this time has led us to determine that we are unable to meet your current wireless needs." the letters said.

Sprint claims that it is small group that it has decided to end their contracts with, in order to service others, as in less frequent complainers, better. It is true that ING Direct has done that in the past but they are a no-frills service and that is how they offer the low cost. AOL has also done that with their offer of free service, it comes with no-frills as well.

The service offered by Sprint though doesn't have any advantages over their direct compitition and it isn't any cheaper than them. For a company that is hurting for customers in an already flooded marketplace, I would think that they would be bending over backwards to get and keep anyone who signed a contract with them.

Those contracts do raise another question with me. They charge upwards of $200 if a customer wants to break their contract for service... how does that work when they break the contract early? Sprint has said that they are offering a "service credit" to those people they are firing and this part I do have to admit I like..... they are not going to charge the customer an early termination fee. That was mighty nice of them to not tack that charge on, since it wasn't the customer who cut the contract short.

If I were a Sprint customer who received one of those letters, I'm pretty sure I would sending my "early termination fee" bill right out in the mail to them.

Update: Sprint Nextel talks

Sprint Nextel has come out in defense of their "firing" of some 1,000 customers. They have been told that they will owe nothing on their final bill, the company is waiving early termination fees and the customers have until July 30 2007 to find another carrier or they will not be able to keep the same number.

Roni Singleton, Sprint spokeswoman, has said that each of the targeted subscribers had made between 40 to 50 calls a month to customer service. She didn't provide information as to how that number compares with the overall number of calls made in a month to customer service. She did say that their internal review showed that many of the "fired" customers were calling repeatedly about the same problems, problems that Sprint felt had been resolved, while some of the others were calling repeatedly to request information on other individuals accounts.

"If the average person is calling less than once per month and these people are calling 40 or 50 times more, that takes away from customer service. Our priority is to improve the customer experience," said Singleton.

CIBC World Marketing analyst Tim Horan stated that he didn't find the move by Sprint to be alarming. They have taken a number of steps to improve the "quality" of it's customer base. Sprint which has about 54 million subscribers, has tightened credit requirements and is attempting to attract customers who will spend more money on services such as data services, Internet browsing, streaming video and music downloads. In the most recent quarter, Sprint gained only 600,000 new customers.

AT&T and Verizon, gained 1.2 million and 1.7 new customers respectively in the last quarter. Both companies have said that they may terminate a customer for abusing customer service operators or for violating the terms of their service agreement but not for the number of customer service calls they make.

I think I am begining to see the overall plan by Sprint. If they decide to "fire" their worst customers each quarter, they will be left with.... fewer subscribers, the same third-place service and the few high quality subscribers who will soon be too afraid to call even with a legitimate complaint.

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