You have probably heard the recent story about Sprint Nextel firing 1,000 of their highest maintenance customers. CNET’s News.com covers the story, and the reader discussion is very active with 125 comments so far. You can also easily find this article by searching for “Sprint customer service” on Google, where it is currently the sixth match on the first page of Google’s search results. Actually, two of the top ten matches are this story, and three of the ten (two individual blogs and one article at MSN Money) are very negative commentary about Sprint customer service.
Now, I have nothing against Sprint. But I find it fascinating that in this day and age the way we consume information is so dependent upon Web search results. We spend more time consuming media online than in any other medium. If you are considering Sprint as a customer and searching for “Sprint customer service” on Google to learn about the experience you may have with them, 30% of the first ten matches are negative and 20% are about them firing high maintenance customers.
This highlights a modern day challenge. Firing bad customers deserves more consideration in today’s “global village”. I’m guessing that Sprint made this decision on an almost purely financial basis. Some of these customers were calling them 24 times per month. Perhaps these are just high maintenance individuals. We all know them – no matter what you do, they are never happy. If I called my mobile provider’s customer service department every time I had a dropped call, I would be calling them often – maybe even 30 times per month. And some customers probably do call every time there is a dropped call. I don’t know if these 1,000 customers fall into that category or not. That is why I put “bad” in quotes for the title of this post. Only Sprint knows how bad these customers truly are.
But did anyone at Sprint consider the reputation impact of this cost-cutting action in today’s networked world? If not, I’m sure they will next time. This story has been everywhere. First, I heard it on the radio. Then I saw it on CNN at the gym. And now it is literally all over the Web!
One of my most memorable classes at Wharton’s MBA program was Dr. Eric Clemons’ class on using information as a competitive weapon. He taught us about how credit card companies had used their superior customer database systems to identify and fire their worst customers (e.g., those that would have the highest debt write-off) by enticing them to transfer their balances to competitors. As bad customers transferred in droves, it almost put their competitors out of business as they didn’t have the same type of customer forecasting capabilities and therefore couldn’t proactively address the issue until it was too late.
So, I think back to what I learned in Dr. Clemons’ class and Sprint’s recent action. Perhaps Sprint knew that high maintenance customers would tell other high maintenance customers thus sending these bad customers to other mobile providers. Perhaps they calculated the word of mouth cost of this action before taking it. Perhaps they thought that this story would actually educate high maintenance customers not to come to Sprint in the first place. But given the way Sprint seems to be playing defense with the press instead of offense, my guess is that they didn’t – it was probably a purely financial decision, a cost-cutting move.
In any case, I’m sure Sprint and other companies are now thinking about how networked the customer has truly become so that future cost-cutting actions take this issues into consideration. However, you can’t satisfy everyone. This logic may seem outdated – it may run counter to some of the recent word of mouth practices. But it’s true. Businesses are still in business to make a profit, and not all customers are a good fit.
At Bazaarvoice, I have learned that knowing who is writing a review is sometimes as important as the actual content. Is the review written by your best customer? Your worst? This puts into context the information. Not all word of mouth will be positive. That’s a given. But when you are a merchant deciding on the actions to take from either highly positive or highly negative reviews, it is important to know who those customers are. One of our clients, PETCO, proactively contacts high-value customers when they write a negative review. The bottom line: digitally-archived word of mouth will be married with the time-tested methods of information strategy taught by Dr. Clemons.
Update 7/12: One of our Community Managers sent me this story at The Consumerist. There may be more to this than Sprint’s PR people were willing to speak about publicly.