Was Sprint's decision a good CRM move? |
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By Barney Beal, News Director
12 Jul 2007 | SearchCRM.com |
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Sprint Nextel has taken a fair amount of criticism in the wake of its decision to terminate the contracts of more than 1,000 customers who made excessive calls to customer service.
On June 29, Reston, Va.-based Sprint issued a letter to more than 1,000 customers informing them that it was terminating their subscriptions at the end of July and would waive all charges on their accounts.
Bloggers and consumer watchdogs have blasted Sprint for the move, charging the company with blaming customers for its own failings and creating a double-standard by trying to terminate contracts early but charging customers to do the same.
Yet some CRM experts say it was a wise decision.
"Sprint is absolutely right," said Lior Arussy, president of the Strativity Group, a Parsippany, N.J.-based customer experience consultancy. "Every company owes it to their profitable customers and investors to weed out the unprofitable customers. When you have this many calls to the call center every month, this indicates not a service problem but a mismatch in the relationship."
According to Sprint, the targeted customers made 40 to 50 calls a month to customer service. In the wake of the criticism, Sprint has stood by its decision.
"These accounts have been researched very carefully," Sprint spokeswoman Roni Singleton told the Associate Press. "We feel strongly that the decisions we made, we stand by them. These decisions weren't made lightly."
Sprint also gets a vote of support from Liz Roche, managing partner with Stamford, Conn.-based Customers Inc.
"I actually think it's a great move because they've clearly segmented their customers, identified who their high-value customers are and who their low-value customers [are]," Roche said. "I'm sure it's not just that they're calling the call center too much. I'm sure there's a balance of not spending enough to warrant the service time."
However, there is a caveat to the strategy. Sprint would have done better to keep this quieter, according to Roche.
"The PR approach to it was really bad," she said. "You don't publicize it when you fire your customers. You do it quietly."
Fidelity Investments went through a similar exercise five or six years ago, telling customers with smaller account balances that moving forward they should use the new self-service Web site rather than calling investment advisors.
"It was a great move. The problem was they were bragging about it in The Boston Globe," Roche said.
The publicity has already led to some repercussions for the wireless carrier. The New York State Consumer Protection Board has called for the company to pay $200 to each terminated customer -- the amount they would have to pay if they prematurely ended their two-year contract with the company.
When it's all said and done, though, Sprint is likely to come out ahead on two fronts, according to Arussy.
"This is the ultimate win-win, when you take your worst customers and send them to your competition so you can focus on your profitable customers," he said. "In fact, if this is only 1,000 out of 53 million [subscribers], they didn't finish the job yet."
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