Sprint Dumps Low-Margin Customers

LogoUPDATE: Sprint Issues Official Statement Regarding Military and Roaming
UPDATE: Some Customers Being Reinstated "on a case-by-case basis"

UPDATE: Military customers with problems should call 1-888-788-4727

Sprint, the wireless company that has cemented itself in last place among large corporations in respected customer satisfaction polls may have found yet another way to embarrass itself.

On June 29, Sprint apparently began "firing" low-margin customers who called customer service too much--many, if not most, complaining about Sprint's infamous billing errors.

Maggie Reardon with cNet News.com originally broke the story last Thursday along with a copy of the letter sent by Sprint to it's fired customers.

Rene, a 29-year old professional from Florida, who asked that her last name not be used, received her cancellation letter last week.

Rene has been a Sprint customer for 8 years--and on the same rate plan since 2005.

"After 8 years, this was [still] a great plan," Rene explained, "[then] the plan was changed without my consent."

"Until January, 2007, the plan and billing were perfect." Then, additional charges started showing up on her bill.

"They removed credits and overcharged me," explained Rene. The least costly mistake was $10, and the most was "about $25."

So Rene called to complain. "Between January and June, I would have to call a handful of times each month [about billing issues]."

Rene bought a new Treo 755 in January--a "PDA phone" designed to synchronize and hold calendar, email and other information from a desktop computer. According to Rene, she called technical support "3 or 4 times" with issues.

"At one point, I switched to a flip phone, but ended up [going back to] the Treo."

But calling to complain about the billing errors were the problem. "I would call one time," said Rene, "then be transferred several times--every single time I called since January."

Still, Rene loves her Sprint service, and wishes Sprint would reconsider. And about claim that she was a problem customer? "The problem for me was the bill!"

But Is There More To The Story?

Comments from a senior Sprint employee, who spoke on the condition of anonymity, may indicate that there is more to the "firings" than appears on the surface.

"What's going on here is that Sprint is trying to [get rid of] low-margin subscribers."

Indeed, a review of a wildly popular discussion forum has been unable to locate any customers whose service was terminated, who paid more than $50 a month for their service.

Most, like Rene, paid substantially less for special plans known as "retention plans" and have had them for years.

Retention plans were extremely attractive rate packages designed to lure Sprint customers away from switching to other wireless carriers.

The plans, for the most part, are gone and Sprint may be trying to unload many of these "over-perked" customers.

"These people call in repeatedly wanting free perks," the employee added, "and at some point, you just have to say 'this is enough'."

But this approach may have raised legal eyebrows.

Consumer lawyer Chris Cantrell from the Belt Law Firm indicated that Sprint's actions may violate some state's "duty of good faith and fair dealing" laws which require companies to exercise contractual obligations in good faith.

"Certainly you could make an argument that Sprint has not done that," explained Cantrell.

"It would be a viable claim in some states--especially some of the more consumer-friendly states."

Other Corporate Leaders Concerned

Sprint has led the industry in losing customers. In the first quarter of 2007, lost 220,000 subscribers--or just under 3 percent of it's subscribers.

But could this be the tip of the iceberg?

Sprint, like other wireless carriers, competes for lucrative corporate contracts and offers substantial incentives to get them. But one large customer we talked to expressed concern at this latest development.

"We have over 2,000 lines and our employees have, who knows, how many?"

"If Sprint begins canceling our individual employees [who buy personal phones for family members]," the administrator explained, "it may well impact how we do business."

Sprint, as well as other carriers, allow options for unlimited calling between its own mobile phones. Families, and business associates, are heavy consumers of these free services.

"If families start having to use other services because Sprint cancels their phone service, this could be very bad for us [since it could raise the cost to both employees and the company]."

At least two companies we talked to were planning on discussing the issue internally--one of which indicated they were leaning toward slowly migrating "corporate liable" lines to another wireless provider.

Military Customers Saved

Initially, several members of the U.S. military complained that they were getting the collective boot--but for a completely different reason: roaming.

Many Sprint customers are allowed to use their phones for free where Sprint service is unavailable--but another wireless service is. But the use is limited to a portion of the subscriber's actual bill.

Customers who exceed the limit, as is practice with other wireless carriers, face termination.

We found no evidence to suggest that Sprint actually knew or singled out members of the military for punitive action. Further, there's been nothing to suggest that Sprint treated military members any differently than it has others who have been booted for excessive roaming.

Sprint spokesperson James Fisher indicated that Sprint may have been unaware that it had canceled military accounts--and that it would not cancel accounts held by members of the military. Sprint sent us the following official statement:

Sprint Nextel will not discontinue service for active duty military customers because of excessive roaming. As part of a general enforcement of the roaming policies that all customers agree to under our terms and conditions, we have contacted some customers about violation of those policies, due to excessive roaming. We understand that military customers may have unique circumstances regarding roaming, and we will not discontinue service for those customers. Any military customer contacted by us regarding excessive roaming simply needs to contact us to confirm their military status to have the roaming issue waived and to ensure continued service.

Sprint Nextel is proud to be a strong supporter of our employees and customers who serve in the military and particularly honored to have been named by G I Jobs Magazine for the past five years as one of the “Top 25 Most Military-Friendly Employers.” For our military customers Sprint Nextel provides assistance to military personnel who are sent overseas into active duty. Instead of having to disconnect their wireless service due to deployment, military personnel are able to temporarily suspend their account for 24 months and keep their phone number at no charge.

Still, the timing and the mere fact that military members even "got the boot" in the first place may come back to haunt Sprint in the future.

Poor Customer Service But Excellent BBB Ratings?

Sprint's Better Business Bureau rating, surprisingly, is quite good thanks to an elite team of customer service guru's known as "executive services."

The executive services team aggressively pursues and solves problems brought to its attention by the BBB--resulting in exceptional customer service in some areas.

Competitors like T-Mobile can't make the same claim .

"Sprint has spent an incredible amount of money and time to improve customer service," said Fisher.

Still, everything from phone-based customer service to in-store experiences seem to range from poor to intolerable.

"We've been here for almost 2 hours," exclaimed one customer out loud at a Sprint store last Sunday, "what does it take to get someone to care?"

Employees are equally frustrated. "We're all trying to do the best we can," commented one sales representative.

Ironically, most Sprint employees are fiercely loyal to the company. But what gets to them? "It's the spin, man," commented one referring to what she perceived as senior management's inability to really address core issues.

"It will be interesting to see what spin they put on these cancellation letters," she added.

Today, her curiosity was answered when we received this from Sprint:

"In a recent review of customers’ Sprint accounts, we have determined that over the past year, we have received frequent calls from a small minority of our customers regarding their billing or other general account information which we have been unable to resolve to their satisfaction. These customers are calling to a degree we feel is excessive, in some cases calling Care hundreds of times a month, even after we feel the issues are resolved. While we have worked hard and will always work hard to resolve customer issues and questions to the best of our ability, rather than continue to operate in a situation that was unsatisfactory for Sprint and our subscribers, we chose to terminate our relationship with these particular customers to allow them to pursue other options. This represents a very small minority of our base and we are taking this action to enhance the service of our 53 million customers. This will not be a large-scale cancellation and will have no impact on the overwhelming majority of Sprint Nextel customers.”


After we went to press with this story, we began receiving reports that Sprint has reconsidered dumping some customers who received letters. Rene, the woman quoted earlier in the interview, reported getting her service reinstated.

A Sprint employee told us that approval had been given to reinstate customers "on a case-by-case basis." There was no indication of who authorized the change, nor was a published document available.

"If a customer wants to discuss [his or her] account, they should follow the procedure noted in the letter [he or she] received."


I have been a Sprint wireless customer, myself, for close to 10 years (at least I think I'm still a customer--but I haven't gone to the mailbox yet to see if they've fired me for writing this editorial).


I'll sum up today's reason: Sprint President Gary Forsee is a geek. He's a geek's geek!

He has more stuff hanging off of his belt than I do. Those who know him well tell me he's always playing with some new toy--eagerly awaiting the next one.

Under Forsee's leadership, the company has built arguably the best wireless network in the U.S. today along with a cache of technical expertise is unrivaled in the industry.

When it comes to the network: things just work. And it's because of Forsee.

Forsee has been the driving force behind seamless roaming contracts--and those who enjoy data roaming and simplicity can probably direct their kudos straight at him. Because he did it.

But the one thing that Forsee hasn't done is keep tabs on his pencil-necks.

You know, these are the guys who spend six weeks preparing complicated spreadsheets explaining how the launch of the iPhone has resulted in this "natural," "planned," "expected" (feel free to add to the list) drop in this quarter's sales projections.

They are the spin doctors who, this week, will explain with zeal why it was actually a good thing to fire (thousands of?) customers.

They are the ones who hire, then disarm and dis-empower the fiercely loyal cadre of customer service representatives--those who actually want to help customers and who hang on to the hope that, eventually, someday Sprint will make it possible to do so.

These pencil-necks are the ones who can explain how it's "natural" for Sprint to lose customers, and how a frustrated customer is simply bad for business--and must be dumped if the company is to succeed and make a profit.

After all, they'll explain, "you can't please everyone."

With the help of a 600-slide Powerpoint presentation, Sprint's pencil-necks (over the course of a week or two, of course), will be able to explain why Zogby's customer satisfaction polls are flawed, and customers (in spite of this "flawed" data) really do love Sprint and, given the chance, would trade their children for a month of service (they might be right about that last part)!

They'll show you, with pie charts and graphs, why a 2-hour wait on hold, or in a store, is beneficial to a customer in the long run.

Because, you see: it's their job.

Their job is not to satisfy customers. It is not to fix problems. It is not to make life easier. It is to explain why it isn't.

Until Sprint figures out that "people are people too" a profitable bottom line will elude them.

As a 20+ year I.T. executive (with a geeky systems and network background), the most important thing I've learned about problems is to solve them.

If you tell a customer you are going to charge them $99 to clean the virus off of a computer, a certain number of them won't have $99. But you're still stuck with the virus on your network!

The reason Sprint finds itself having to nickel-and-dime customers for every last cent is because it has to pay for customer service representatives to take 2 hours arguing with customer over why they're being nickel-and-dimed!

Many industries are changing and wireless is no exception. MetroPCS has figured out that the low-cost, flat-rate, no-surprises, "under-promise-and-over-deliver" model actually works--as their bottom line will attest.

What Sprint's pencil-necks need to do is to figure out that simplicity works.

If you don't give customers a reason to call and complain, they won't!

But, perhaps, that's not what this is all about. Because if it weren't for complaining customers, the pencil-necks, their Powerpoint shows and spreadsheets wouldn't be needed to explain why customers were complaining.

If it weren't for customer churn, then the staff of pencil-necked analysts, their laptops, SAS and SPSS models explaining why (why does this remind me of Alice's Restaurant?) the churn is natural and expected, wouldn't be needed.

So, perhaps, the best thing for Forsee and the board to do is to leave things alone. After all, there will always be something to do--and there will always be an excuse and an explanation.

(Somebody on the Board needs to take the lead and fix this)

Allen Gwinn