Open Letter to Sprint Nextel

This is an open letter to Sprint Nextel CEO Gary Forsee and Chief Marketing Officer Timothy Kelly; CFO Paul Saleh and Kurt Fawkes of Investor Relations; SVP of Strategy Jack Dziak and Chris A Hill VP of Corporate Governance and Ethics; and Media contact James Fisher.

Dear Sprint Nextel Top Management

I suggest that you all need to act today to minimise the damage you are collectively doing to your brand and your business. You are probably innocently unaware of the storm that is brewing in the connected world of the blogosphere, as you swing your golf clubs. So let me explain, Sprint Nextel is fast securing the reputation as the worst customer relationship company in the world, by already thousands of people discussing your recent appalling behaviour. So, welcome to the network where customers connect whilst corporations only and sadly, broadcast. If we were in a movie Clint Eastwood would be looking at you guys and he would say:

      "This is going to get real bad, real fast."

Our writing and considerable research, into social networks, informs us that you probably have no idea what is about to happen. We in the blogosphere have a name for the sheep about to be slaughtered like you, its called "Kryptonite". Not as in Superman, but as in the bicycle lock company. What was the gold standard in ultimate trust, reliability and fiercely loyal customers of that once proud bicycle and motorcycle locks maker. The first major branded corporation to fall victim of obsolete PR methods when faced by an angry mob on the web. Kryptonite nearly went bankrupt in its ordeal before they got to their senses and apologized. That was in September 2004. Still today if you google Kryptonite, seven out of the first ten mentions of the company still discuss the marketing disaster in a permanent digital stain on their reputation and brand. A more recent example of similar pigheadedness in attempting to fight web communities was by Dell in July 2005 and the bloodbath the PC maker took in its long term reputation, customer loyalty, and stock price is now known in the blogosphere as "Dell Hell".

You are on the verge of adding Sprint Nextel's name to that shameful list. Yet it does not need to be. For up to now you have only generated a minor PR disaster, embarrassing yes, but nothing more. However the damage is turning catastrophic by the minute and you need to re-evaluate, make the right moves and do it rapidly.

You are terminated!!

So this is about the Sprint Nextel letter to 1,000 customers informing them that because they had called the customer service number too much, their contracts were being terminated.

Crunching the numbers

CFO’s can count right? So lets say you have 54 million customers, the reports say that these on average call a little less than once per month to the call center? So if you get 45 million calls to the call center we are in the ball park? Now, these 1,000 customers you just terminated, they called between 40-50 times per month. Lets make this easy and call it 50 for all. That is 50,000 calls. And lets say as these are obviously troublesome customers, that they hang on the line four times as long as average customers. So in the bigger picture of 45 million calls to the call center we have the equivalent of 200,000 calls that are disproportionate in servicing. How big is that? A quick calculation tells me that is less than one half of one percent of the calling volume. We are looking at very trivial, marginal cost savings to the corporation even if all went perfectly to plan with this termination situation.

Bunny Boilers and Spurned lovers

So it is in fact quite difficult to say goodbye to your 1,000 most unwanted customers, no matter what you had hoped. From a CFO perspective there was only one possible positive outcome under ideal circumstances and its upside benefit was modest net savings. But that was under the assumption that this matter could be resolved rapidly, with a minimum of fuss, and without causing further work overload to manage this new backlash. I suggest, the costs already incurred are well beyond any savings you had hoped to make. A Sprint Nextel spokesperson Roni Singleton in the Boston Globe is already in denial and I assume that took a great deal of management work by the PR department to decide its precise wording. Sprint Nextel has already negated any financial gains out of this entire project. So it’s all downhill from here.

Storming the Bastille

There are online reports of heavy traffic as angry inbound calls are flooding into the call center. The total volume of extra calls is much larger than you might have been able to save getting rid of those "Sprint 1,000". But rather than having the 1,000 who your staff "knew" how to deal with, now your service reps deal with tens of thousands if not hundreds of thousands of suddenly alarmed and angry customers who have to be calmed down and satisfied. Because of the continuing outrage on the web and in the media and by consumer protection groups getting involved, your call center is handling overloads many times the total annual "load" of the "Sprint 1,000". All numerical analysis of this now spells “worst nightmare on Elm Street” and that is before any clever web citizen decides to orchestrate mass protest calls to your calling center - oh yes, those are coming, mark my words. Read Kryptonite. Read Dell Hell. The blogosphere, the network once ignited becomes very powerful. You are nowhere near the peak of the hysteria this is going to generate and the costs on this disaster will climb exponentially.

Sound Strategy vs. Donald Rumsfeld

This has already been so badly mismanaged that one is drawing parallels with a certain D. Rumsfeld and the folly of an ill-advised war. Chief Marketing Officer Timothy Kelly’s name is already being compared with the worst marketing moves ever - and that means presiding over a disaster to be compared with the launch of New Coke. Its not just bad for us in mobile telecoms - an industry already considered arrogant, nor of the family of American wireless carriers which are a laughing stock to the rest of the industry as the most Neanderthal and knuckle scrapping in their approaches to, what is thought of as “customer service.” Timothy Kelly's name is becoming an insult to professionalism in marketing.

Custer's Last Stand?

You think that ABC News and Wall Street Journal and CNN covering this story now is the worst of it? That a "No Apology" statement by "spokeswoman" Roni Singleton in the Boston Globe would "make it go away"? You are General Custer who successfully shot a handful of indians before heading into Little Big Horn. An undefeatable army is already gathering just behind the nearest hills. Today, 11 July, at one discussion site alone, the Sprint Users Group, there is one posting by a very active premium member called missdiva, from July 5, complaining about the letter.

That single complaint has been viewed already 106,000 times and has generated 2,215 replies with more added all the time. And how pray tell, does that hundred thousand strong army of Sprint loyalists feel about how missdiva has been treated? The rating is a full five stars, almost unheard-of level of maximum support when you have scale of 100,000 views. General Custer, I think there are more indians out there, and they seem to be hostile...

Like I said in the beginning, this is very bad already, and it is going to get very much worse still.

I haven't even mentioned the real brewing storm. The angry bloggers who have only started. Read Kryptonite. Read Dell Hell. Understand. This is only the beginning. The hostile "Sprint 1,000" stories are now multiplying. The anger is spreading across the globe. You haven't even seen the first of the storm you are sailing into.

The only way General Custer could have emerged alive with his troops under those overwhelming odds at Little Big Horn was through smart re-evaluation, and immediate attempts to negotiate a truce. In modern times, the only way a Sprint Nextel will get out of this with its dignity is if a Chief Marketing Officer rushes to his senses and issues a full retraction and apology. Now.

Learn the lesson from Jet Blue
If you don't act now when you still can, it will only get worse and you will end up apologizing in the end no matter what happens. You have made a massive blunder and are already being called on it. This is how bad it got with Jet Blue before they finally caved. Do you want to play brinkmanship with the Sprint Nextel brand under the full glare of the international mass media until it gets this bad:

  Dear JetBlue Customers,

  We are sorry and embarrassed. But most of all, we are deeply sorry.

  Last week was the worst operational week in JetBlue's seven year
  history. Following the severe winter ice storm in the Northeast, we
  subjected our customers to unacceptable delays, flight cancellations,
  lost baggage, and other major inconveniences. The storm disrupted the
  movement of aircraft, and, more importantly, disrupted the movement of
  JetBlue's pilot and inflight crewmembers who were depending on those
  planes to get them to the airports where they were scheduled to serve
  you. With the busy President's Day weekend upon us, rebooking
  opportunities were scarce and hold times at 1-800-JETBLUE were
  unacceptably long or not even available, further hindering our
  recovery efforts.

  Words cannot express how truly sorry we are for the anxiety,
  frustration and inconvenience that we caused. This is especially
  saddening because JetBlue was founded on the promise of bringing
  humanity back to air travel and making the experience of flying
  happier and easier for everyone who chooses to fly with us. We know we
  failed to deliver on this promise last week.

  We are committed to you, our valued customers, and are taking
  immediate corrective steps to regain your confidence in us. We have
  begun putting a comprehensive plan in place to provide better and more
  timely information to you, more tools and resources for our
  crewmembers and improved procedures for handling operational
  difficulties in the future. We are confident, as a result of these
  actions, that JetBlue will emerge as a more reliable and even more
  customer responsive airline than ever before.

  Most importantly, we have published the JetBlue Airways Customer Bill
  of Rights — our official commitment to you of how we will handle
  operational interruptions going forward—including details of
  compensation. I have a video message to share with you about this
  industry leading action.

  You deserved better — a lot better — from us last week. Nothing is more
  important than regaining your trust and all of us here hope you will
  give us the opportunity to welcome you onboard again soon and provide
  you the positive JetBlue Experience you have come to expect from us.

  Sincerely,

  David Neeleman
  Founder and CEO
  JetBlue Airways

You cannot stop a web community

Take the words from Perry de Havilland, one of the founders of UK's Big Blog Company, who says, "People will talk about you whether you like it or not the good, the bad and the ugly." You cannot control this story anymore. Dozens of new voices are adding to the story now. Top rated bloggers now point out to ethical concerns - perhaps some of the Sprint 1,000 are of low intellectual ability, simply having trouble understanding a far-away strange accented service rep in your new calling center in India? How about the soldier doing his duty and tossed off the network for being stationed in a different state for two months and you terminated him. The story is gathering steam. You have no grasp of the heat you will be taking a week from now. And worst of all - read Kryptonite - if you let it go that far, the Sprint Nextel brand will be permanently damaged. Read Kryptonite. The genie has escaped from the lamp. You are skating on ice which is perilously thin and already cracking. If you stubbornly continue on the current path, the Sprint 1000 will be added to that blogroll of disgrace with Kryptonite and Dell.

Ethical Smethical… Dear Sandra

My co-author Alan Moore and I have been having some conversations about ethics in business recently. So, in principal we of course agree there is nothing wrong with a company deciding to “terminate” customers who are unprofitable or unwanted in some way. But the manner in which you dealt with these people is not ethical. Do you fire people within Sprint Nextel in the same way?

            Dear Sandra,

            Thanks for 15 years of service. You’re fired

            Lots of love

            Sprint Nextel xxx

Saying goodbye. It’s the hardest thing to do

If Sprint Nextel felt, that these 1,000 customers really should be let go - it could have been done elegantly and politely, with no fuss, over time. By simply denying them new benefits such as the annual discounts in pricing and subsidies for new handsets. Timothy Kelly as Chief Marketing Officer you could have assigned a “preferred customer” status to the 53 million 999 thousand other customers, and not given the preferred customer status to these 1,000. Then at the next time Sprint Nextel had any benefits, such as annual or contract renewal anniversary price drops, or larger voice minute buckets or SMS text messaging packages - those would have been given to preferred customers but not these 1,000. Many would get the message and start to seek new carriers. The gentle non-hostile way of dealing with this issue would only have taken 10 minutes of time by anyone competent in the fundamentals of Marketing

The Power of Group Forming Networks

If for any reason Sprint Nextel wanted to take the gamble with such a hostile and aggressive - and unprecedented move in mobile telecoms at least - to send such a rude letter to so many customers to actively get rid of them - then it should not have been an edict by Sprint Nextel, but rather an offer. You should have given your customers the CHANCE to leave. But allowing the customer to stay if they wanted again, this was totally fore-seeable (no pun intended with CEO Forsee). Anyone in the telecoms industry must understand at least the rudimentary basics of social networks and thus the power of digital communities. And, anyone in Marketing must by now know that you cannot operate marketing without considering the impact social networks. America's most visible personal brand to fall fall victim of the networked blogosphere was of course famed CBS news anchorman Dan Rather. You are now repeating that mistake. Every day you delay, you push yourself further off the ledge until you fall off, like Dan Rather's illustrious reputation.

Ahem… Investor relations L

Sprint Nextel investors are currently lured by gossip of a foreign take-over. What happens when the scene returns to normal and analysts start to report on all the negative publicity that is snowballing on Sprint Nextel's customer satisfaction. All these complaints. All these hostile stories. They will soon find out it was a PR nightmare, totally predictable and 100% avoidable, but mis-managed from the start. Many will conclude that there has been a significant error in judgement by management, in launching this fiasco of a campaign. How will they then evaluate the management team? Will that help or hurt the long-term viability of the Sprint Nextel stock price? Or the long term job approval of the top management while we're at it. And the angry customers, how many will call up your customer center now that this story is broken by CNN where marketing gurus consider this an all-time low in treating customers?

Doing the right thing

CEO Gary Forsee you are the CEO of a company that already has a very bad reputation for its customer service. You know this. You also know the mobile telecoms industry is moving to an ever more competitive, ever more global, and ever more marketing - and thus customer - oriented world. Churn and loyalty are ever more important but your latest results give your company ever worse loyalty, increasing churn, and ever higher new customer acquisition costs. Your success in your term, as CEO, is not going to be achieved with successful roll-outs of “sexy new wireless technologies” like your faster wireless connections. Your legacy will be won or lost in the trenches of marketing and customer satisfaction. You are badly hit by the iPhone already. You are now taking a serious hit beneath the waterline with this comic-tragedy already labeled in the blogosphere as the "Sprint 1,000". Do I feel a play coming on?

And we know that negative advocacy for a brand results in significant lost revenues and profits, whereas, positive advocacy increases revenues. And if those rumors about a Korean take-over are true - they must be laughing right now - all South Korean management read blogs, most of their senior management have personal blogs and avatars. Every day you extend this disaster lowers the value of the company to the Korean buyers. You are trading away a good poker hand for a worse one, every day, for an even worse hand, and worse still.

And the reaction, from media, investors, analysts, and various friends and consultants is alarming. So, go google Kryptonite now. Skip the Superman stories, and count how many of the top Google entries today discuss the lost credibility due to the Kryptonite PR disaster. Then remember that was in 2004 and these are still the top pages today in July 2007. Perhaps talk to someone in your PR team who understands social networking? Anyone under 25, and then ask, might Kryptonite happen to Sprint Nextel?

You know what you need to do now, Gary Forsee. Do the right thing.

Sincerely,

Tomi T Ahonen

www.tomiahonen.com

This Open Letter has been sent to Sprint Nextel corporate HQ to [email protected], [email protected] and [email protected]

RELATED - The story is even worse by many degrees of problems. I have blogged about it in a Follow Up piece. You may want to read that too.

Comments

[Henri Weijo]

http://consumerist.com/consumer/exclusives/sprint-customers-terminated-for-complaining-too-much-were-scamming-sprint-for-free-service-277026.php

I was pretty happy when I read that, it seems authentic and earnest. Don't know how upper management feels about it, though.

It's a bad spin job on their part, but I don't think it's "kryptonite-esque" in its devastation. I think the ruckus will die down eventually.

[Alan moore]

Tomi Smart mobs have already commented on your post

http://www.smartmobs.com/archive/2007/07/11/1000_sprintnext....html

Alan :-)

[Tomi T Ahonen]

Hi Henri and Alan

Henri - thanks for the link to the "insider" story. It does smack a bit suspicious to me, especially as nobody speaks out under their own name. But since that, there is the official position by Sprint Nextel reported in Boston Globe, which actually gives very different facts. If your story was true, it would be totally in Sprint Nextel's interest to mention that in their "we won't apologize" statement in the Boston Globe. I have doubts about the story. But lets see if it gets any verification anywhere.

Of course, notice, Henri, if Sprint Nextel had a fault in its billing or pricing system, that allowed customers to benefit - completely honestly and openly and within the system - and then Sprint Nextel found that loophole, then the ethical way to deal with it would have been to fix the billing and pricing problem, not fire the customers who found it.

Alan - cool, thanks. I noticed yes.

Tomi :-)

[David]

Brilliant Tomi,

Your letter got me thinking and other than making an outright apology right now the devils advocate in me can see only one other way for Sprint to stem the losses and even potentially resurrect their image.

Provide the community with a MP3 recording (with personal details omitted) of the rudest call they've received from one of the "Sprint 1000".

Try and imagine the most abusive insults you've ever heard. Now imagine that Sprint are trying to protect the right for their customer service agents to work in a capacity where their values and rights are respected.

Now i'm not saying that this will happen (because i am 99.9% certain that is letter is based on the ridiculous financial assumption that it will save them money) but i'm an eternal optimist. Other than the release of such a violent and aggressive recording i can see no other option than the very quick apology you're recommending.

Henri - One thing that i'm absolutely certain about is that this ruckus won't die down if Sprint stay out and leave this to the community.

[David]

I'd like to add that if Sprint do release the "Sprint1000_rudest_customer_ service_call.MP3" i will be the first to use it as my ringtone!

[Kalie]

I'm getting so tired of seeing the letters from CEOs trying to smooth over their crappy business ethics... grr... What's so hard about giving the customer what they pay for or putting someone's bags on their flight? I can definitely see why more and more people are using specialized tags like Global Bag Tags www.globalbagtag.com (my favorite btw).

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