Thursday, October 18, 2007

Churn is a Problem for Sprint

It's official. Sprint definitely has customer service issues. Remember the brouhaha in July when Sprint publicly 'fired' some of its high-maintenance customers? Well, we find Sprint in the news again trying to stem their higher-than-industry-average churn rate.

From CRM Buyer: Sprint to Bandage Bleeding Customer Lists by Adding Service Reps

"Sprint Nextel's churn rate -- the rate of customers who jump ship and sign on to rival networks -- has shrunk over the last quarter, but it's still nearly twice as bad as Verizon's. It's a problem that contributed to the recent ouster of CEO Gary Forsee. To cut churn and keep more customers onboard, Sprint plans to hire 150 additional customer service reps."

It will be interesting to see if throwing more bodies at the problem will be effective. While it certainly won't hurt to cut the hold time when customers call into customer service, I'm hoping that Sprint Nextel is looking at their retention issue more holistically.

Are they asking themselves key questions such as:

  • What are my competitors (namely Verizon Wireless whose churn rate is 1/2 that of Sprints') doing that I'm not?
  • Is it our network?
  • How do price-plans compare?
  • What about our phones--are they as 'cool', or innovative as our competition?
  • How did the negative press generated from the recent customer firing incident impact churn?
Of course, there are teams of bright people at Sprint asking these questions. The real question is--will they find the answers they need to continue to grow and compete with Verizon. I guess we'll all sit back, wait and watch.

Gosh, I bet the folks from the old Nextel who survived that merger are wondering what happened to the good old days when their churn rate was significantly lower than the industry and their Average Revenue per Unit (ARPU) was significantly higher. Perhaps the best question Sprint should be asking is: How do we get back to THOSE 'glory' days?

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