May 29, 2012
Sometimes a CEO takes the reins at a company that’s in such great shape, I can’t help thinking, “Wow, it must be great to be that guy!”
And then there’s Dan Hesse, CEO at Sprint. Given the shape that Sprint was in when he got the top job in 2008, I was thinking more along the lines of, “Wow, he must be working off a karmic burden!” That’s because back then, the company had the lowest customer satisfaction ratings of any of the major wireless carriers. As a result, it was bleeding cash from high customer care costs and lost subscribers.
Faced with this mess, Dan decided to focus on systematically improving the quality of Sprint’s customer experience as a way of improving Sprint’s bottom line. We were so impressed by his efforts that we included a case study about Dan in Chapter 2 of our upcoming book, Outside In: The Power Of Putting Customers At The Center Of Your Business.
The book won’t be out until August 28th, but you don’t have to wait until then to get a sense of how effective Dan’s efforts have been. That’s because on May 15th, Hesse gave an address at Sprint’s shareholder meeting, and he had this news:
- Sprint now has the highest overall customer satisfaction rating among all major US wireless carriers. Yeah, that’s right — it went from distant last to first, according to the American Customer Satisfaction Index.
- As a result of eliminating the customer experience problems that fueled ridiculous amounts of contact center traffic, Sprint took its customer care costs down from $3.7 billion per year in 2008 to $2 billion per year today. That’s a savings of $1.7 billion per year from improving customer experience.
- Improved customer experience paid off in terms of customer acquisition and retention as well as cost savings: Sprint has now had six consecutive quarters of adding 1 million net new subscribers per quarter.
So is Hesse a hero? Yes and no. What he’s done so far makes sense, and he has the numbers to prove it. You’d think that would get him support for his next generation of customer experience improvements, which involve upgrading Sprint’s network and offering the iPhone. But networks are expensive, as is licensing the iPhone from Apple, and not all shareholders see the wisdom in spending the money needed to make these moves.
Looking at this situation from the outside-in perspective of a wireless customer, that lack of shareholder support seems strange to me. A network that doesn’t meet subscriber needs for reliability and speed fails right at the fundamental base of the customer experience pyramid. And it’s hard to underestimate the importance of offering the iPhone: I’m one of many people who switched from Verizon to AT&T back when AT&T was the only option for an iPhone — even though Verizon’s network seemed a lot better here in the Boston area. So why isn't it critical to offer customers a fast, reliable network and the phone they want — especially in a world where they have so many choices?
But it seems that even saving $1.7 billion per year and adding 1 million net new subscribers per quarter just can’t buy you the benefit of the doubt these days — at least not when the people who would give you the benefit of the doubt don't have an outside-in perspective.