Sprint – Third Inning and Hesse is Up At Bat

Implications: Dan Hesse ought to be proud of what he has done to date. The game is not over and there is lot that can still go wrong.

Analysis: It may seem amazing that something as simple as customer care can be so easily ignored but it is not.  People have an overwhelming ability to be rude, uncaring, and looking to pass the buck.

I recently shopped at a national retail store chain.  As I paid at the cash register I discovered that the products I was purchasing were in fact $0.80 more expensive than the sign said.  I noted the difference to the cashier who then proceeded to tell me the computer said the price I was seeing on the register was correct.  I asked the cashier o have someone check my story by going to the product shelving itself.  The cashier looked to a colleague of hers and said “Can you go check the price? Oh you can’t”, “Sorry sir no one is available”.  The insulting thing about this incident was that the person she was speaking to was chatting to someone else and never heard the question and did not even acknowledge the cashier.  The cashier asked and answered the question herself – I guess she did not think I would notice.  I asked to see the manager and the cashier said there was no manager on duty.  Guess what?  The cashier never even bothered to check to see if the manager was on duty or not.  By the way at the entrance of the store was a picture of the store manager on duty.  When I tried to find the manager, no one could find him but he was on duty that day.   The cashier disrespected me and lied to me.  How angry am I?  I have every intention of never shopping at that store again.  I will go out of my way to steer business away from that retail chain by telling every civic group I belong to how I was treated.  This store made me their worse nightmare.  Yes it was only $0.80, but it was my money.  It is called “fighting over a principle”.

As I have said in my books, once you tick off a customer you can kiss that business goodbye.  I have absolutely every intention of writing a nice long letter to the chairman of that national retail chain.  I have already gone online and filed a complaint with the store.  I have absolutely every intention of reporting this branch to the Better Business Bureau.  I work hard for my money and you darn well will treat me with respect especially if you want my money.

Now what was so hard about learning that at Sprint?  The answer is once the employees think they can get away with ignoring and mistreating customers they will do it.  Please don’t tell me I need to understand how difficult it is to be in customer service because the customer could care less.  I used to have customer care under me.  Sprint Nextel learned that lesson the hard way by losing customers, losing revenue, and losing half its share price.  First rule in customer care at a carrier:  The customer is yelling at you; unless they are saying something racist, sexist, or are physically threatening you, the customer care rep needs to shut their mouth and take it.

I would love to see what Hesse did to turn the employees around.  He probably showed a few key people the front door and said to the remaining customer care staff “you are next if things don’t change”.  Yep, that would work.  Come to think of it Hesse did show a few key employees the door.  Wit this major hurdle taken care of he can sleep easier; believing his customer care folks will not drive customers away.  

Hesse obviously understands that the new joint venture now called Clearwire is enabling him to build a WiMAX network and also gives him greater access to the capital markets.  Hesse has also given all of us a very big clue as where he sees the company being in a few years.

Hesse sees Sprint as the next leader in wireless data in 3 years.  This makes sense since it will at least 2011 before we see any significant LTE (long term evolution) deployments.  Given the recent news regarding LTE intellectual property rights issues, I would say that the LTE folks are becoming their own worse enemy.  See my past analysis entitled, LTE Stumbles Right Out of the Gate.

In regard to flat rate pricing; I have been vindicated.  Read my past analysis entitled Flat Rate Pricing – Nothing New Here.  However, the flat rate plans are necessary for subscriber stickiness.   Flat rate pricing is great for the subscriber.  Typically it means one fee per month for as many calls or as much Internet service provider network time as you want; of course per month.  Flat rate can choke a service provider’s network because it encourages users to use the network for long periods of time for a single fee.

The best thing carriers can do in order to avoid leaving money on the table, is to charge some small nominal amount to cover the cost of data and use advertising to pay for the majority of the media services.  The charge could be a small scaled fee based on data tiers or pricing based on packages.  In other words, you pay a small single fixed fee for certain media packages.  Imagine basic versus premium packages.  The fee is not high but a price for entry.  Once you pay the monthly fee for some number of channels or media packages the rest of the carrier’s cost is borne by the advertisers.

You cannot implement usage based data pricing without some type of tier plan.  The dollars rack up too quickly for even a casual user and the service quickly becomes cost prohibitive.  The plans all have to have a cap.

Hesse has a long road ahead of himself.  As long as he stays the course and stays focused on recovery he can do it.

What can go wrong?  Some of the issues include the following.  The business recovery requires that Sprint execute a new technology plan that must be in synch with the company’s new business model.  Hesse needs to raise cash by selling of Nextel.  Hesse still needs to replace Sprint executives.  In other words he needs a refreshed management team.