The “Sprint Effect” — A Customer Service Case Study

It’s been a hard couple of months for Sprint Corporation. In December 2014, stock prices took a severe dip after the release of quarterly reports, showing a 60% drop in investor confidence. To make matters worse, a recent Consumer Reports survey named Sprint the worst customer service provider for the phone industry – for the second year in a row.

What’s surprising is that these low numbers come at a time when the phone company has been bending over backwards to improve their customer service. Over the last three years, Sprint has closed 99.9% of its complaints with the Better Business Bureau (BBB), earning an A- rating for customer service. In addition, Sprint’s “Cut Your Bill in Half” campaign has been very effective, adding 527,000 new customers over the last three months. And still, Sprint is bleeding out post-paid customers.

The question is, why?

Although Sprint is offering better deals, beating revenue estimates, and increasing its competitive edge, it is still suffering from a disease that is potentially fatal: a toxic customer service reputation. By using Sprint as a case study, you can learn how to avoid this threat and build your business despite customer service setbacks.

Rewriting Customer Service History? The Sprint Story

In the last decade, Sprint has been attempting to bounce back from its bad customer service reputation little by little. Even though it has put up some good customer service numbers in recent years, a spate of poor customer service rankings by J.D. Power and Associates and Consumer Reports put Sprint in a negative light as early as 2009.

 

Although problem resolution is very high, this 2009 ranking still puts Sprint neck-and-neck for last place. This is the kind of reputation they’re currently trying to change.

Through a series of mergers – the acquisition of Nextel (2005) and the Sprint purchase by Softbank (2013) – the company has attempted to “make dramatic changes in the two areas that matter most to customers – price and network.” (Glenn Derene, Consumer Reports 2014) Unfortunately, low prices and increased technology infrastructure has meant layoffs of over 2,700 call center workers and 330 technicians, as well as the end of 55 retail stores.

Although this has led to increased profits, it has also led to the public perception that Sprint cares more about their bottom line than their customers.

Sprint has actively tried to turn public perception around a few times, most recently with the announcement of a new company president and CEO, billionaire Marcelo Claure. Despite these attempts, this is the second consecutive year that Consumer Reports puts them last for customer service rankings. And, as of 2015, Sprint has the highest post-paid “churn rate” (rate of contracted customers switching to another carrier) in the nation. This equates to a shocking loss of 272,000 customers in the last 3 months alone.

In short, Sprint is learning a lesson taught eloquently by Business Trainer Kate Zabrieskie: “Although your customers won’t love it if you give bad service, your competitors will.” And, phone carriers – both big and small – are reveling in the billions that Sprint’s bad reputation is affording them.

Fatal Customer Care Flaws

Although Sprint is struggling to change the public opinion of their customer care, they’ve made some key mistakes that could cost them in the end. Unfortunately, while they have been spending time and effort to gain the confidence of both consumers and investors, they may have been placing their momentum in the wrong direction.

• Cutting Costs By Cutting Customer Support – One of the key areas that Sprint has increased their revenue is through cutting staff and support. Unfortunately, these are the front line of the consumer experience.

• Back-End Service – In 2012, J.D. Power and Associates named Sprint the Best Customer Buying Experience for the phone industry, highlighting the excellent front end for new customers. Still, the post-paid churn rate of 2.18% suggests that back-end service leaves much to be desired.

• Merger Growing Pains – Sprint’s attempt to strengthen through acquisition has led to unwitting customer fallout. In the 2013 J.D. Power Customer Experience Survey, Sprint fell to third place, with many customers’ service affected by the tumultuous changes at the head of the company – a merger with Softbank and the acquisition of Clearwire.

• Online Grievance – According to a survey by Dimensional Research, 86% of respondents say that negative online reviews affect their buying decisions. While Sprint has kept up with their BBB complaints, their negative online reviews go unresolved.

• Forgetting the Base – Although Sprint has been actively recruiting new customers, its incentives have been largely unavailable for current subscribers. This has added to the churn rate, and motivated some of the post-paid losses.

• Perceived Company-Centric Pricing – Price is a pain point for Sprint customers, which is why the organization has attempted to lower prices considerably over the past year. Still, Sprint can’t compete with the positive buzz of customer-centric models like the T-Mobile “Un-carrier” program, which provides customers with the freedom of no contract and no early termination fee.

Sprinting Towards Customer Care: 5 Solutions for the “Sprint Effect”

Businesses who undervalue the importance of customer care are doomed to lose their competitive edge. And, improving customer care can be wasted if customer perception isn’t actively challenged. Here are some ways to overcome the “Sprint Effect” so that any business can get a new opportunity to make a positive lasting impression.

1. Clean up your online house. Be proactive about negative online reviews. If necessary, have a dedicated employee to find and manage negative spin. Being honest and approachable in a public forum is a great start to recharging positive public perception.

2. Invest in customer-centric behavior. Instead of putting emphasis only on revenue, invest in training that will lead to exceptional customer experiences. Ensure that every level of your organization knows that customers are the priority, by offering sales bonuses and incentives for positive reviews and customer retention.

3. Make changes with customers in mind. Growing your business through mergers can be a volatile time for customers. Ensure a smooth consumer experience far in advance of major organizational changes by having a transparent process that makes them feel safe and confident.

4. Build brand integrity – Negative customer perception often comes as a result of feeling that there has been misrepresentation on the part of the organization. Create a brand image that is consistently honest, friendly, and customer-centered – whether or not customers ever see it.

5. Revitalize your image – When customer perception becomes toxic, there is nothing left to do but aggressively redesign your image. Honestly admitting past mistakes and providing “good faith” incentives (i.e., past customers get a free month of service for giving the business a second chance), go a long way to proving to customers that your business is ready to make them a priority.

No matter what a company’s reputation is, there is always a way to win back the hearts of the people. In the case of Sprint, they are slowly making their way back into the spotlight. With a little more customer care and investment in brand consistency, even Sprint can turn their toxic public perception into a lucrative customer-centric juggernaut.