Exciting New Wireless Broadband Venture

When Google is part of a new company, I personally perk up and listen.

I was thrilled to see this press release from Sprint, announcing the creation of a new, "next-generation" wireless broadband business.

The high-points from the release:

• Sprint and Clearwire to Combine WiMAX Businesses, Creating a New Mobile Broadband Company
• Intel, Google, Comcast, Time Warner Cable and Bright House Networks to Invest $3.2 Billion in Combined Company, at Target Price of $20.00 per Share
• Formation of New Company Brings Together the Nation's Leaders in Communications, Technology Innovation and Entertainment
• New Company to Speed Deployment of First Nationwide Next-Generation Mobile WiMAX Network

From the release:

Clearwire Chairman Craig O. McCaw, said, "The power of the mobile Internet, which offers speed and mobility, home and away, on any device or screen, will fundamentally transform the communications landscape in our country. We believe that the new Clearwire will operate one of the fastest and most capable broadband wireless networks ever conceived, giving us the opportunity to return the U.S. to a leadership position in the global wireless industry."

"Google is a firm believer in supporting new ways for people to access the Internet," said Eric Schmidt, chief executive officer and chairman of Google. "We are proud to invest in the new Clearwire alongside several leading technology and communications companies, and we believe that its planned WiMAX network will increase the ability for users to get high-speed broadband anytime, anywhere."

I have a couple of thoughts on this announcement:

1. It's high time that the US wireless industry is announcing something new. Wouldn't it be great if the US does return to a global leadership position?
2. It will be interesting to see what Google is up to with their involvement in the new company. Some people are suggesting that they'll become an ISP or a mobile carrier (although they are denying this). Another thought is that this network will allow Google to offer location-specific ads through mobile devices (as they'll now know where the consumer is). Google says, however, that they are most interested in the 'openness' of the new network. From Google's blog: "As we've supported open standards for spectrum and wireless handsets, we're especially excited that Clearwire intends to build and maintain a network that will embrace important openness features."

I look forward to seeing how this new company evolves, and to enjoying an enhanced wireless experience in the near future.

Use of Customer Data to Set Service Strategies

I was pleased to see this round-table discussion on the newly revamped DM News website: Use data to handle the disgruntled

The article presents 4 slightly different takes on how to use customer information and customer preferences to maximize the customer experience. From prioritizing calls to customer service based on customer value, to knowing when (and when not) to offer price discounts as an incentive, the article provides good insight into the use of customer data to make service decisions.

The takeaways from the 4 authors:

1. Use your CRM system to prioritize your customers according to their value.
2. Freebies and discounts can backfire with customers willing to pay a premium.
3. Data can help marketers turn unhappy customers into supporters.
4. Empowered customers with communication choices are happy customers.

As a database marketer, I absolutely believe in using the power of the database to determine customer treatment. Just one word of caution--don't piss off your customers too much!

Remember a few months ago when Sprint 'fired' some of their most irritating customers? Remember the bad press that abounded? Looking back, I firmly believe that this 'firing' incident was just a bad idea, in terms of negative PR and harm to the Sprint brand.

Yet, from a database marketing perspective, AND according to today's article, Sprint did the right thing. They used customer value to determine customer service levels. In Sprint's case, they were unwilling to expend ANY effort on service to a few pesky customers and chose to fire them, instead of serving them at all. And, it backfired on them...

I guess the lesson learned--while it's very smart to vary treatment and service levels based on overall customer value, you need to remember not to go too far. Common sense needs to prevail so that your well-conceived strategies that look great on paper also work in the real world.

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?

Choosing to Lose

Did Sprint Nextel do the right thing when they 'fired' some of their most needy customers?

RRW holds a strong belief that business strategy must be based on customer profitability. We're forever preaching to our clients that it makes no sense whatsoever to implement programs that acquire unprofitable customers. And, we're always trying to push them to direct retention efforts to customer segments that are highly profitable.

Yet, we continue to be amazed at how few companies really have a handle on value or customer profitability.

On the other hand, we are huge proponents of top-notch customer service. We believe that if you treat your customers right then they'll respond in turn with high loyalty. Heck, they may even become evangelists and spew your praises to all of their friends and family, if you treat them the right way.

That's why it's been so tough to develop an opinion on the recent Sprint decision to dump some of their high maintenance clients. This article in Washington Post, however, firmed up my opinion. Sprint Nextel Defends Cutting Customers.

I think that Sprint made the right decision, IF you're only looking at the decision in terms of profitability, or even from a service perspective. Those 1,000 or so customers that Sprint Nextel chose to cut were making 40-50 calls each month to customer service. Clearly this wasn't the right fit (and they may just be kinda wacky to begin with--who has the time to make 50 calls a month??). Handling those calls was certainly detracting from legitimate customer issues.

However, look at all the bad press that this customer-firing incident has caused Sprint Nextel. When you consider that, overall, their subscriber base is more than 50 million customers, how much impact could servicing 1,000 pesky customers really have?
Then, balance service requirements to handle 1,000 wacky customers against the bad press generated from this incident.

Did they do the right thing, overall? The jury is still out, in my opinion.