Sprint Fires Customers

Discussion
Jul 12, 2007

By Tom Ryan

On June 29, Sprint sent letters to more than 1,000 subscribers, saying their service had been terminated because of their excessive calls to customer service.

“While we have worked to resolve your issues and questions to the best of our ability, the number of inquiries you have made to us during this time had led us to determine that we are unable to meet your current wireless needs,” the letters said.

An internal review over the past year identified customers who called an average of 40 to 50 times a month with billing and other service questions.

Sprint found that the subscribers often were calling about the same problems over and over after officials felt they had resolved the issue. Some were repeatedly asking for information from other customers’ accounts, which customer service workers aren’t allowed to divulge. The repeated calls also interfered with Sprint’s ability to serve other customers

“If the average person is calling less than once per month and these people are calling 40 or 50 times more, that takes away from customer service,” Sprint spokeswoman Roni Singleton told the Associated Press.

The axed customers didn’t owe anything and their termination fees were waived, although they have to switch to another wireless carrier by July 30 if they want to keep the same phone number.

Across internet blogs, Sprint was accosted for allegedly penalizing consumers for trying to get what they paid for, and opinion was that the frequent calls only reflected poor service by Sprint itself.

But Lewis Ward, an analyst with industry research firm IDC, told NewsFactor Network, that these calls cost Sprint at least $10 to $20 each.

“The larger story,” he added, “is that Sprint has had several quarters of net customer losses, so they’re trying to find ways to maintain their high-margin customers.”

Sean Ryan, another analyst at IDC, likewise said the action was about average revenue per user, but still called this kind of mass action a “double-edged sword.” You have to “accrue a better customer base,” but, on the other hand, “do you really want to give your customers to, say, T-Mobile?”

The New York State Consumer Protection Board also believes the carrier should reimburse terminated subscribers for their inconvenience.

“These former Sprint customers will have to purchase new phones and incur other expenses and inconveniences if they want to continue receiving wireless service,” said Mindy Bockstein, the board’s chairwoman and executive director. “Sprint Nextel should do more to improve the quality of its customer service and this is a good place to start.”

Discussion Questions: What do you think of Sprint’s move to terminate customers making too many customer service calls? How would you rate their decision from a bottom line, competitive and customer relations standpoint?

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37 Comments on "Sprint Fires Customers"

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Mark Lilien
Guest
10 years 1 month ago

Sprint is smart to get rid of clearly unprofitable customers. Could they have handled the pr better? Probably, but it’s easier to be a critic than to be the person responsible. Some retailers ask certain customers to go away permanently, based on excessive returns. Some car rental firms turn away customers with excessive numbers of accidents. Some bars and restaurants won’t serve people who’ve been drunk and disruptive in the past. Considering the millions of Sprint customers, isn’t it surprising that they only want to get rid of so few?

Craig Sundstrom
Guest

Although it’s true that we don’t have all the facts, it’s also true every business has PITA “customers,” and it seems a safe bet that was the situation here (beyond the 80/20 rule, this group seems to be the 99/01 group)

The bigger question is how broad such a policy should extend: 100x average is a safe margin, but what happens when the margin drops to 20x, 10x, 5x…and finally someone suggests everyone “above average” get the boot?

Clay Funkhouser
Guest
Clay Funkhouser
10 years 1 month ago

Sprint created this problem, not the consumer. They require a customer to sign up for a 2 year contract with a $175 termination fee. Most of the unhappy customers would switch to another service if it weren’t for this huge switching penalty. The fee isn’t even prorated–stop one month early and they still charge $175. My last day with Sprint, after 2 excruciating years of awful service, was a great day.

Kelley Robertson
Guest
Kelley Robertson
10 years 1 month ago

It’s a bold and a courageous move. Low-profit, high-maintenance customers should be fired.

Unfortunately, too many retailers put up with extremely difficult or non-profitable customers because they feel that they don’t have a choice. Or, they are afraid that these individuals will shop at a competitor. I agree with a previous comment that these types of customers should be “encouraged” to buy from a competitor.

Let’s face it–time is money. Sprint’s action means they now have to spend less time dealing with these customers which frees up the CSR’s time to deal with “regular” customers. If I had clients who called me 40 or 50 times a month; I’d fire them too.

Kai Clarke
BrainTrust

Sprint did the right thing. All customers are not important, and they clearly analyzed this and made a smart business decision. Just because a customer complains, doesn’t make their complaint valid or even valuable. Sprint clearly identified customers who had complaints that were excessive and said “Thanks, but no thanks.” This prioritized their other customers, while establishing a minimum customer service level for their organization. More companies should consider this tactic as they seek to maximize their customer service performance.

James Tenser
BrainTrust

I find the quantity – and polarity – of responses to this discussion fascinating. Clearly Sprint’s decision strikes an emotional chord in many of us.

What’s interesting is why this is news. One thousand customers out of 54 million is two-one-thousandths of one percent. Barely a speck on the ledger, even if the company loses $100 each per month.

On its face, this may seem like a PR blunder for Sprint, but if you are one of the 1,000 losers, who are you going to tell that you haven’t complained to already?

The one-to-one and CRM marketers have argued for years that companies should fire their worst (read: least profitable) customers. There are at least three interesting arguments in favor of this: 1) Bad customers are costly in their own right; 2) Bad customers use up a disproportionate part of customer-facing resources, which impairs experience and raises costs for all the other customers; 3) Bad customers infect the enterprise with bad will.

Assuming Sprint has taken all reasonable steps to assure itself that the bad 1,000 are not somehow victims of company failure, it has acted reasonably. Next time, it should act more quietly.

Eliott Olson
Guest
Eliott Olson
10 years 1 month ago

I was taught that “the customer is always right.” While this attitude worked well in the past it appears that more people are gaming the system. Target has toughened their return policies and are now tracking frequent returners.

Anybody who has stood in line at an airline ticket counter while a customer continues to argue with an agent knows how seemingly obtuse some customer’s thought process can become.

While there are unreasonable customers many of them spring up like mushrooms on the lawn only when the conditions are right.

Both the airline industry and cell phone industry have two elements that bring out the worst in customers. These are ever changing formula driven pricing systems that are or seem unfair to some people and poor levels of customer service with poorly trained store employees and disgruntled flight attendants.

While most of us would like to complain we found that it does no good and like sheep we accept the poor service and keep quiet in fear of ending up in some jail cell or anger management class. However, we are waiting for the day when something better comes along and we will be gone in a New York minute.

Bonny Baldwin
Guest
Bonny Baldwin
10 years 1 month ago

If someone is so dissatisfied with a product or service that they’re calling about it 40-50 times per month, it’s likely time for them to move on to a different solution. I’m curious to know how many of these people would have already done that had Sprint just offered to quietly let them out of their contracts without penalty. Maybe the contract terms and penalties for early service termination are as much of Sprint’s issue as service problems or whiny customers….

Edward Herrera
Guest
Edward Herrera
10 years 1 month ago

I think this is dangerous for Sprint and other cell phone companies. If I want to get out of my cell phone contract I just call everyday with an issue? They also have to be careful with the characteristics of who was terminated. I agree that customers believe “They are always right” and have entitlements that don’t exist but I believe customers also need to understand they can add cost for everybody.

Thomas L Potts
Guest
Thomas L Potts
10 years 1 month ago

Just one summary comment: Pretty stupid from a public relations standpoint.

Maybe Sprint should think of some other disincentives to cause the undesirable customers to leave on their own accord. (i.e. financial penalties for excessive customer support line usage?).

Tony Papaleo
Guest
Tony Papaleo
10 years 1 month ago
The first, emotional, gut reaction is: Hooray for Sprint. But play this tape all the way to end, and you see that this is a cost-cutting move by a service provider with an already shrinking customer base. One comment above divided these “abusers” into two camps: The Nuts just wanting talk or whine, and the Cheapskates who wanted discounts or freebies. Yes, for this round, it was easy to pick the most obvious abusers of customer service process. Of course Sprint and everyone else has usage and profitability data on every customer. For next round then, it will be a mixture of factors beside calls to the CSR. Expect the competition to follow along the same road until one service provider offers a “welcome home” campaign for the disaffected or under-serviced customer base with friendly voices on the other end. There is a third camp that these so-called CS abusers can also represent: The Revenge Seekers. When you over-charge for your service and it becomes patently obvious that the your service plans are designed to confuse and entice you to sign up for something just short of involuntary servitude, then you feel justified in wringing every last bit of service… Read more »
Race Cowgill
Guest
Race Cowgill
10 years 1 month ago
Let’s turn aside for a moment from the main story and instead look at how we have discussed this issue today. Understandably, we have very little information about what has happened in this situation. As some insightful panelists have pointed out, we don’t know the details of these customers or how they were handled or what other solutions may have been tried. Interestingly, though, with so little information, we have made sweeping conclusions about Sprint’s right-ness or wrong-ness, and then drawn broad parallels with business in general, proposing customer service principles that this story is purportedly evidence of. I think I may see the following assumptions at the bottom of our discussion: – “Customers who ask too much do so because of their own problems. Their over-asking has nothing to do with the company or how the company may have treated them.” – “Over-demanding customers cannot be influenced. You can only get rid of them.” – “Businesses are motivated only to make money.” Please note, respondents, the following: – According to a leading non-profit consumer research organization, the wireless industry has some of the lowest customer service scores of any business segment. The company in question has also been rated… Read more »
Al McClain
Guest
Al McClain
10 years 1 month ago

Three cheers for Sprint! There is a small percentage of customers of every business that the business would be better off without. If Sprint’s worst 1,000 customers go to another carrier, that’s actually a net plus for them–let someone else deal with their “Demon” customers.

The P.R. task is a little tougher but the bottom line is, it shows that customer databases can and should be used not just to reward top customers but to get rid of the least desirable ones. In theory at least, wait times for Sprint customer service should shorten. Or, at least the morale in their call centers will go up a tad.

Mel Kleiman
BrainTrust

Interesting that this post has gotten so much response with almost 100% saying great move.

Two points I would like to make:

1. I hope Sprint did not forget that all complaints are free consulting and did what ever they need to do to fix the problem if it was something they were doing wrong.

2. Why did they turn this into a PR problem? Was it a conscious decision for some reason to fire all 1,000 or what ever number they fired at one time? What if they just started to eliminate X number of customers a day? No big news, just a decision on individual accounts. Lots of my clients and even I myself have fired customers in the past. It’s always been a profitable decision.

Li McClelland
Guest
Li McClelland
10 years 1 month ago

They jettisoned 1,000 problem customers but are also, in effect, sending a shot across the bow to other customers who may also call Sprint’s CS department often in an effort to “retrain” them into changing their habits. It may well backfire on them, but all of us who have wished a problem customer would just disappear are on one level secretly cheering Sprint on. But–I hope that Sprint executives listened to recordings of most of the 40 per month callers’ interactions with their customer service representatives for insight and did not just mine data from a spread sheet or read CS rep notes on a contact screen.

Sprint is not alone. And customer service abuse is not a one way street. Hardly a week goes by without hearing a friend, co-worker or family member rail about a horror story related to their telephone dealings with the customer service people from some company or the other.

Finally, it is not considered politically correct to say so, but language and hard to understand accent issues seem to play an ever larger role in discontent with customer service departments in general and problem resolution in particular.

Kunal Puri
Guest
Kunal Puri
10 years 1 month ago

I smell lawsuit–especially if the targeted 1,000 are primarily from a specific ethnicity…and if thats true, then Sprint’s had it…. If the current PR is bad, imagine what that will be like.

I wholeheartedly disagree on what Sprint has done–this, if extrapolated, could lead to the next 1,000 ‘baddest’ customers being culled and if every carrier starts doing this, soon some folks will not be allowed to sign up for a phone, and that will bring in the Congress folks with their legislative handbooks….

Stuart Armstrong
Guest
Stuart Armstrong
10 years 1 month ago

My first reaction was, “Yes makes good business sense.” My thoughts started to align with the idea that lower cost should translate to better service and value for the existing customers. But that is way too egalitarian and a bit naïve on my part.

My thoughts then landed on the fact that we–consumers of mobile phone services–have been universally unhappy with the service for years as network technology and infrastructure have caught up to all the marketing hype. We have been held victims of dropped calls, over-charging, unfair cancellation fees, unsolicited sales calls, etc. Everyone has their horror stories. So…if Sprint wants to fire high-maintenance customers they should pay that customer a termination fee that covers the cost of a new phone, activation fee for another provider and the inconvenience. Do the math, if each call cost Sprint $10/call and they call 40 times a month. Split the savings with the customer gained in one year, equals $2,400. But be quiet about it…don’t want to motivate customers to be a pain in the patootie.

Peter Fader
BrainTrust

Three questions I haven’t seen answered in the press coverage of this interesting story:

(1) Did Sprint take the revenue from these customers into account, or did they base this decision purely on costs?

(2) And on the cost side did they do any projections to estimate future costs for these folks, or is it based entirely on history (which might not be indicative of future behavior)?

(3) Did Sprint first give them a chance to “opt out” of their contracts voluntarily before firing them? That might make much more sense, particularly from a PR standpoint (and might have gotten them to change their behavior in a more positive manner).

There’s gotta be more to this story than the splashy headline, and these are the issues that we should be discussing.

J. Peter Deeb
BrainTrust

This is an interesting situation. How many businesses out there actually have the depth of knowledge about their customers that Sprint has? With all the data collection going on today somebody is doing something with it! I think Sprint is justified in managing their customer base. They should have the right to eliminate unprofitable customers, let alone those that are potentially damaging their customer service program by putting unreasonable demands on the system. The only caveat here is that Sprint should refund the cost of the phone since these customers cannot use them with another carrier.

Dan Raftery
BrainTrust

Chalk one up for the Intelligent Loss of Business advocates. The obvious answer the question “Does Sprint want to give these customers to a competitor?” is “You betcha.” Let them clog up some other customer service center.

Abusive customer practices are becoming increasingly difficult to handle as irrational entitlement behavior spreads through our society. Any business that opens their doors to The Public must deal with the consequences when they walk through.

Retailers are so fixated on securing their targeted market, that they tolerate the abusers often without considering the negative effect that the rotten apples can have on the rest of the barrel. It’s a tough decision to fire a customer, but one that makes a lot of sense on both sides of the P&L ledger.

David Biernbaum
BrainTrust

The “Sprint Fires Customers” scenario will become a classic! In this case, everyone involved is wrong, and right! This solution to fire pain-in-the-neck customers is Accounting vs. Marketing; Pragmatism vs. Public Relations; and above all, it’s a case of irony.

Sprint, and other similar service and utility types of companies, do have customers that are unreasonable, obnoxious, and costly. We all have customers of that ilk.

There is so much irony in this scenario. A few annoying customers got what they probably deserved. However, I hope that Sprint’s management did diligence in an objective way to find out what life really is like to be a customer that can’t get resolutions when using Sprint’s customer service systems that are in place.

Nikki Baird
BrainTrust

I agree with the comments so far–bravo for Sprint for taking the very gutsy step of firing unprofitable and/or abusive customers. The PR probably wasn’t handled as well as it could have been, and there will be some fall out for that. Perhaps it will signal a rise in a new kind of customer tracking–just as employers have to document all the things that employees did to justify firing for cause, retailers are going to have to document that they did a reasonable amount of due diligence before firing customers “for cause,” if only to avoid things like investigations by states’ consumer protection agencies….

Camille P. Schuster, PhD.
BrainTrust

Amazing!!! Of course companies do not want to spend a lot of resources on unprofitable customers. However, since Sprint knows so much about these customers, maybe getting rid of them wasn’t the only solution. For those customers who want to find out how many minutes they have left, couldn’t they be given an automated way to find that out? Couldn’t the computer system identify the “costly” callers and shift them to an automated system that allows them to access the information they need? If neither of these work, could customers be charged a fee for asking the same question more than five times in a month to recover costs?

Were any of these solutions tried? Was any attempt made to determine why these customers were having problems or asking the same question over and over? Was the decision to eliminate them as Sprint customers the first solution? They may be missing some pervasive customer issues that need to be solved.

Doron Levy
Guest
Doron Levy
10 years 1 month ago

This action can be considered the antithesis of what customer service should be. Sprint will (and I do stress will) lose more than the 1000 customers they turfed on their own. Even from a money standpoint, why would any company turn away customers (paying customers as well) to their competition? The U.S. cell phone industry already has a tarnished customer service reputation and this move will just add fuel to the fire. Sprint should reconsider this move on all levels. There is no benefit, short or long term, in ‘dismissing’ customers. So what if they are more expensive to maintain? Statistically speaking, each of those 1000 people will tell 10 of their friends about their experiences with Sprint. So now there is a possibility of 10,000 people leaving Sprint and going to the competition. Who in their right minds would give up that number to the competition? I think the bean counters have made a terrible mistake here and this will affect their business on a grand scale.

Charlie Moro
Guest
Charlie Moro
10 years 1 month ago

My first impression was “wow can you really do that?” but if there is a way to carve out customers that hinder the overall experience for everyone else, then I am not so sure it’s a bad thing. Could they have handled it a little better? I would think so, but the bigger challenge will be how they communicate to their existing “good customers” why they are and how they will continue to be a preferred supplier.

Connie Kski
Guest
Connie Kski
10 years 1 month ago

I’ve often wanted to send our famous “return queen” to the shop up the street. Every time she shopped with us, she’d return at least half of it–sometimes used and unsaleable. The last time we told her that the “defective” item was damaged by a month’s normal wear and tear and we weren’t taking it back. She stormed out threatening to never return–and we are quite certain she will be much happier up the street.

She was sapping too much energy from us–not to mention taking advantage of a fairly liberal return policy. I have other correspondents (can’t call them customers) who call constantly for free advice but never buy anything. I’ve tried to jettison some of them too.

I think Sprint made a good call.

Warren Thayer
BrainTrust

Let’s see… Sprint has 54 million customers according to the the complete stories I read, and they’ve cut off 1,000 troublesome customers. Good move. I, too, am surprised that the number is so low. The one mistake they made, and it’s a bad one, was talking to the media. I’d have insisted on “no comment” to all the calls, because this is just the sort of colorful tidbit that can produce shock value in a one-sentence, and unfairly incomplete story that so many of the shallow media bubbleheads love to jump on. And, there are a lot of shallow bubbleheads out there who will love to read this sort of thing and spread the incomplete story to all their friends, like a one-liner joke. There are times to talk to the press, and there are darn well times to shut up. Full disclosure: I am a member, um, of the media.

Ed Dennis
Guest
Ed Dennis
10 years 1 month ago

OK, let’s compete for new customers–Verizon, AT&T, etc. now have a major selling point against Sprint. Does Sprint advertise more than it can deliver? This would certainly lead someone to think maybe they do.

Does Sprint provide good customer service? This would lead some to question Sprint’s dedication to their customers. As a customer, how many times can I call before I become a bother? Who makes that decision? What are the rules going in? THIS IS A MAJOR ERROR AND WILL BE COMPOUNDED TO THE EXTENT THAT COMPETITION TAKES ADVANTAGE OF THE SITUATION!

Scott Turley
Guest
Scott Turley
10 years 1 month ago
Hooray Sprint! Consumers clogging up the service lines with daily calls should not be tolerated by any company. If any consumer has that much dissatisfaction with a product that they are paying for, true customer service would dictate that Sprint suggest another service provider. With these 1,000 consumers, it only seems proper for Sprint to waive the early termination fee and show them the door. This should be presented as a positive note to other Sprint customers who have spent hours on hold waiting for the customer service agent to finish with a chronic complainer–those people will no longer be in front of you in the service line. There should be no reason for a consumer to call 40 times per month to complain about service. Most of these people fall into two categories: 1) The “I’m Lonely and Need to Talk” group and 2) “I want something for FREE” group. The first of these groups clog physician offices and any other service where the personnel are paid to talk with consumers. They see their actions as solving a personal need for social communication while “giving the nice service person something to do.” The second group, unfortunately, is growing. They… Read more »
Art Williams
Guest
Art Williams
10 years 1 month ago

Wow! This is something that all of in business have wanted to do at times but kept reminding ourselves “that the customer is always right.” And at times it was complicated by the fact that the most annoying customer was also one of the largest, but still this is refreshing. I agree that the PR could have been handled better but it looks like Sprint is using their data to make some good business decisions. We can hope that they did investigate to see if some of these repeat calls were caused by problems that they should be correcting and not just unreasonable or inept customers.

Gene Hoffman
Guest
Gene Hoffman
10 years 1 month ago

Sprint has apparently found a penalty for profitless pests.

Will Sprint’s action cause other companies to devise schemes to get rid of their worst customers? We shall see.

Robert Immel
Guest
Robert Immel
10 years 1 month ago

Shame on Sprint! If the customers in question were abusive towards the Sprint representatives, then I could see the point. However, these customers were not violating the terms of the contract, or breaking any printed rules. I consider having to take calls from customers a cost of doing business. The customers should have at least received a written notice.

If Sprint wants to keep its focus on its more profitable customers, do what the airlines have done–divide the customers into levels (Silver, Gold, Platinum) and give each level a dedicated phone number to call.

I have Sprint, and I hate it, but I have to keep it, since it’s a company issued cell phone.

Dave Lueken
Guest
Dave Lueken
10 years 1 month ago

It’s just such a tough decision. I would certainly like to fire some customers of my own–reminds me of the Seinfeld episode where Kramer is banned from the produce market because he complained too much. Kramer missed his produce so much he sent his friends in to buy for him. Is my business that important? As I said–tough decision….

Ken Yee
Guest
Ken Yee
10 years 1 month ago

It may backfire on Sprint down the line. I’m sure there’s going to be waves of articles, blogs or interviews by some of these people, and of course 100% of them will say it’s not their fault.

It’ll be a battle words. Sprint says they’re problematic by clogging phone lines with redundant calls, while the cut off customers will say either the Sprint reps didn’t help them or that the company is overly exaggerating the calls.

Personally, I think Sprint will lose out, but in my heart I’m sure they are correct. I’ve worked along side CSRs in the past and every one of them knows callers who call every week, mostly for repetitive info or they just seem to have nothing better to do but vent anger or threaten with BBB action. Even when offered free goods or full refunds, the problems and calls keep on returning some reason. It’s like these people have no jobs and just sit by the phone calling company hotlines all day…sometimes numerous times during the day!

I always had a soft spot for CSRs facing the onslaughts of calls.

Bernie Slome
Guest
Bernie Slome
10 years 1 month ago

A courageous decision with bad publicity. When a customer is a drain on profit and resources, they must be “fired.” All businesses must decide what they can and cannot provide in terms of an offering and service. They need to communicate this to their customers. This might sting, from a PR standpoint, for a short time, but in the long run everyone; customer, company and investors will benefit.

Christopher P. Ramey
BrainTrust

I’m disappointed in Sprint and I’m disappointed in all the writers ganging up on their customers. The customer is the reason we exist.

Mass retail is about serving the masses. Should consumers be afraid to ask questions? Should we fear losing our insurance because we live in Florida? Should we fear that our gift cards are worthless? How can we expect our customers to trust us (and all business) if we gang-up on the few that have problems?

1000 confused customers can’t clog the service lines servicing 54 million unless those lines are woefully inadequate.

Mark Zobrosky
Guest
Mark Zobrosky
9 years 1 month ago

I am a Sprint wireless customer. Their call drop rate is low and so I value the service. BUT, I am one of their customers who calls in between 1-3 times per month. WHY? Their billing is always wrong! They always try to bill me for services that I have had turned off at their facilities…yet those charges and new ones appear and re-appear monthly. I understand that a company that is getting 30-50 calls per month on the same issues needs to do something about the issue so they can take care of customers with legitimate needs. However, knowing Sprints track record with me, I am not sure how truthful their PR info truly is!

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