Course Project Evaluation of Sprint/Nextel, Term Paper Example

Introduction

Sprint/Nextel Communications is the business I have chosen to evaluate for potential lack of leadership/management within the customer service department both online and in store departments. I was hired as an independent consultant by the online sales manager to evaluate and track the current process used to order and track online post paid cellular plans and determine customer satisfaction. Further I was hired to determine if there was a need to implement a solution to any deficiencies found. A three month evaluation was conducted and the results and solutions will be discussed during the course of this research paper.

Problem Statement

Sprint/Nextel merged in 2004 hoping to become one of the largest communications network available to the public with hopes to surpass giant AT&T. Sales rose after the merger because Sprint “was the leader in wireless communications and Nextel was the leader in walkie talkie communications” making them a great fit.” (CNN/Money, 2004). This was a great move for Sprint for their shares were down at the time and the merger made shares rise an enormous amount. As the sales grew the share worth rose. During the last year sales began to drop and upper level sales management began to anticipate the drop might be caused because of ‘online sales with reference to shipping and customer service’.  Further customer service complaints from within the Sprint stores began to surface. I began to look into this situation adamantly screening customer service orders for the past years with regards to customer orders, time shipped, amount of time it took for a customer to receive their product and if there were any complaints file by customers against Sprint/Nextel with relation to their online orders placed and in store purchases.  I will be researching the last year’s online sales roll, tracking the methods of delivery such as Federal Express, United Parcel Service or United States Postal Service and determining how each complaint was addressed. Further I will be contacting the various Sprint Stores and comparing the high sales stores v the lower sales stores to find out what each store is doing differently with relation to customer service. The purpose of this analysis will be to determine if the company is at fault for the decline in sales because of product, shipping or customer service. Once the incident is isolated, I would like to make recommendations to improve the deficit.  Could the online orders with relation to shipping and in store and online customer service have contributed Sprint/Nextel’s sudden drop in sales this past year?

Literature Review

“The top executives at Sprint and Nextel said the two company’s strengths fit very well with one another — Sprint is seen as a leader in wireless data communications and has a stronger presence in the consumer market, while Nextel has been the pioneer in the walkie-talkie service and has its primary customer base among business customers.” (CNN/Money, 2004). The combined value of the companies rose to approximately $70 billion in 2004. Prior to the merger Sprint was third in the states and Nextel was fifth in the states. “Sprint said losses of post-paid subscriber’s customers for 2008 fell 4%. The average revenue per user typically a lone highlight for Sprint is expected to fall sequentially by $2 to $56 in the first quarter of 2010 partly as a result of the continued loss of higher paying Nextel customers.” (“Dow Jones”, 1). Chief Financial Officer William Arendt does not expect a change in the second quarter of 2010 and further states these losses are similar to the losses experienced in 2007.

Sprint is not just lacking in sales, it is their ethical way of handling workers that is suffering also. A business must handle their customers and worker loyally and ethically in order to survive. A sales force is only as good as a motivating manager and motivated representatives. In 2008 over 19,000 Sprint employees “launched a class action legal suit against Sprint for non-payment of work commissions. The average alleged non-paid commission per worker ranged from $100-$500 per Sprint employee.” Sprint alleged as a defence there was an issue with the collaboration of the Sprint and Nextel computers but the judge stated this was not a valid defence, instead made Sprint dig deeper to find out if they ‘indeed owed more’ to these individuals. (Sage, 2008).

Sprint makes money on sales and long-term contracts but sources say that Sprint makes much money on their absorbent activation charges per line ranging at $26 dollars per line and a fee of $225-$250 for early contract cancellation. Much of Sprint’s sales are made from RadioShack carrying the Sprint/Nextel line only in their stores. Radio Shack states Sprint/Nextel sales are actually ruining their store sales. Radio Shack is a Texas based store and actually turned a profit of $1 billion in 2007. They attribute their high sales to video products and “state their sales could have sky rocketed if it were not for Sprint/Nextel products in their stores.” (“Radio Shack Redux: It’s all Sprints’ Fault”, 1). The Radio Shack complaints come in the drop in sales of the Instinct Sprint phone from August, September and October, 2008. Sprint (2008) states that Radio Shack was late launching the phone behind the At& T I-Phone and the Verizon phone and that is why the sales plumaged. There must be some kind of contact that Radio Shack is ‘contracted to sell’ Sprint phones or perhaps Sprint/Nextel owns shares in Radio Shack since they are not forcing Sprint/Nextel out of the store completely. This contract obviously is not an ‘independent contract agreement’ either if it is having ‘direct effect’ on Radio Shack’s annual sales revenue. People are posting blogs that Sprint is one of the most corrupt companies in North America and they will enjoy the day when Sprint creates their own demise. This shows that Sprint has created a very bad reputation for themselves in terms of customer relations and customer service.  Results were astounding in that out of 3,000 people questioned over 40% rated Sprint ‘poor’ for customer service quality. Sprint currently has $53 billion customers under their belt. Ranking below Sprint were Bank of America, Comcast, Time Warner Cable, AT&T, Citibank, Wal-Mart, Verizon, Wells Fargo and Direct TV. Simply because customers receive poor customer service from one provider does not mean they will quit that company. Other factors appear to sway their choices including the fee for early termination, the fact that they are receiving cheap calling to other friends on the same network and the fact that other carriers have poor ratings in the same or other areas. It appears cellular companies are taking customers for granted. Cellular companies are simply concerned about their ‘numbers’ or sales but they do not look to the ‘reasons of how to keep sales up’ until the ‘sales start to drop’. By this time it is too late and it is not fair to the customers. Customer service is the number one aspect aside from providing a good product and service to keeping a loyal customer force.

A loyal customer of Sprint since 2001 decided one day that it was time for a new phone. He went into a Sprint store and discussed his options for a new phone. “The customer had been using his cellular phone for years as a modem with unlimited texting for one price.” (Hardy, 2007).  After speaking with the Sprint representative inside the store Mr. Hardy was told he could be upgraded to a Razor phone with the institution of a new 2-year contract and his unlimited text messaging with modem use would continue. He agreed to the new two year contract and thought how wonderful this new deal was. After receiving his new phone and coming home he tried to place a modem text message and was not able to. He called Sprint Customer Service and they informed him that he did not have the service on the phone. He informed the telephone customer service team that he just went into the Sprint store and they informed him that his ‘same plan would continue at the same price’ with a new two year contract. The customer service attendant looked over the notes and apologized and assured him he ‘would’ receive the same services. He tried to use the ‘modem service’ the next day and again was denied. He called the customer service team back on the telephone and again was told the service ‘is in working condition’. When the customer service looked into the situation further they told Mr. Hardy there was an issue and both of the previous ‘representatives’ were ‘misinformed’ and he would have to pay and additional $39.99 for ‘modem services’ through his cellular phone. Hardy questioned why he would have to pay extra for the same services when he was told by the in-store representative they would continue. After all he was only ‘cashing in on a free upgrade’ that he was entitled to for being a loyal customer for after all those years. Sprint stated that if he was receiving unlimited texting and modem use for one price all those years it was a ‘mistake’ and now he would have to pay and ‘additional $39.99 for it”. They would not back charge him for it. Of course he declined the modem service and kept the texting. The facts are that Sprint was not doing him a favour for not charging him for back use on the modem because the ‘law states’ if service was given in mistake by the company and the customer was under the impression it was free by the negligence of the company, the company has to take the loss. With this situation, the customer was actually charged more, loss service, was put out of his way and loss something he thought he already had. Sprint would have been at an advantage to allow him to keep it for a short time then to disconnect it. They will end up losing a loyal customer. He made reference on the blog he would like a written apology and a $250 grant to a charity of his choice.

Analysis

One application of the problems Sprint/Nextel is facing has already been addressed. They have implemented a $100 dollar a month plan that covers all communications needs which will eventually increase sales for the long term interim but Hesse, sales manager warned this is not a ‘fix all plan’ for Sprint/Nextel customers. This plan may help to keep some Sprint/Nextel customers loyal and keep them from considering other companies that are more competitive with their plans. This will not fix the immediate issues of new customers that are unsatisfied with the level of service that file claims and disengage with new service due to poor customer service or delivery of product as promised by our online guarantee. There are simply some rights that are allowed the customers by guarantee of contract. Excellent customer service has always been a problem for Sprint in the past and must be clearly address if they are to keep their honourable name and keep the sales at an upward trend. These changes will not be seen immediately considering the rate of losses experienced since 2007. It will take at least two years for Sprint to recover if a good plan is put in motion. At present Nextel is carrying Sprint.

The cause of this issue is Nextel is carrying Sprint financially and Sprint is unable to sustain a profitable sales growth to contribute to annual sales. Their newly implanted $100 fits all plan will help to stabilize their sales revenue but they will have to close the gap with the other issues that seem to be hindering their sales. There is much negative criticism about their company in the media about their inability to run a loyal company with respect to paying their workers and taking care of customers need no matter what. This is why customers are pulling out of their contracts. Then when new customers sign up online they are not taking care of the orders in an efficient manner, not tracking orders and when customers call in to complain they are not addressing their orders in a timely manner and with enthusiasm. Customers do not want to hear you will take care of the problem. They want the problem not to occur in the first place. They want you to honour your promise on the internet. They want a reputable company to deal with and I am afraid Sprint is losing their once established reputation and Nextel will lose their good name if they do not force Sprint to tighten up.

Sprint has had millions of loyal customers for years from what commenced as a very loyal customer service oriented company to what became very corporate focused money making corporate conglomerate. Reports similar to Mr. Hardie’s story are what has made their sales plumage on and off through the years. They have become focused on the ‘numbers game’ rather than focusing on keeping their loyal customers happy and taken care of. According to MSN’s Hall of Shame, (2008) Sprint’s customer service ranks number one for the poorest customer service quality. (Oster, 2008). When Sprint launched the Instinct the phone went to the top of their sales chart. “Instinct has been a great success for us from both a sales and innovation perspective,” said Kevin Packingham, Sprint SVP of Product Development. “We are thrilled with our customer’s response to this dynamic, well-integrated and easy-to-use wireless phone.” (Park, 2009). This phone was especially attractive to the female customers and was priced at $100 dollars after a $100 mail in rebate offered by Sprint. Best Buy stores reported their sales going up dramatically after offering the Sprint Instinct at their retail stores. Sprint still offers their Mobile Broadband card which is very successful for Sprint sales.

“Sprint loss a total of 135, 00 retail subscribers this quarter of 2010.  This was the result despite launching 16 new touch, QWERTY and touch devices. One of their top products 4G has already been deployed in “Austin, TX; Charlotte, NC; Chicago, IL; Dallas/Ft. Worth, TX; Greensboro, NC; Honolulu, HI; Maui, HI; Raleigh, NC; San Antonio, TX; and Seattle, WA.” (Park, 2009, 1). The deployment of the 4G and the Instinct have not driven sales up enough to pull Sprint out of the $478 million net loss they have been accounted for.

Sprint is currently attempting an acquisition of IPCS whose services are currently sold under the Sprint brand. “As a result, Sprint will no longer be required to divest its iDEN network in certain iPCS territories and will terminate its previously announced divestiture process pending closing of the transaction.” (“Sprint Nextel to Acquire Wireless Affiliate iPCS, Inc.”). “Sprint expects to achieve approximately $30 million of synergies annually in the transaction and expects the transaction to be free cash flow accretive to Sprint in 2010.”

Dan Hesse, CEO of Sprint/Nextel says this acquisition will add exhaustingly to the customer base of the company. This acquisition will not affect customer service at all since iPCS service is already being sold under the Sprint name already. Approximately 10% of the iPCS shareholders are in favour of the acquisition.

Sprint allegedly violated Minnesota customer contract rights by extending their contracts without prior authorization. The customers are entitled to full refunds for early termination under litigation settled this week of December 2010. Further Sprint had a clause impended in their contracts every time you made a minor change to your contract the contract had to be extended to ‘the maximum time of the contract’. This allowed Sprint to extend contracts for simple changes to service such as adding voice activation or changing minutes on a plan. This forced many people into termination of services early where they had to on top of it all pay another early termination fee in hundreds of dollars per line on the phone. We should note that even though Sprint and Nextel merged in 2004 most of the ‘negative publicity’ is given in the form under the name ‘Sprint’.

The launching of the new sprint phones have been an innovative way to promote sales this year for Sprint/Nextel. Nextel has remained stable with their long-term contract service to businesses and customers despite the elimination of many of the walkie talkie phones offered before the 2004 merger. This is an optimistic approach to increasing annual net sales. Introduction of new walkie talkie option phones might be a new option for Sprint/Nextel to promote upcoming sales.

The new acquisition of iPCS will most probably be very fruitful for the company because this technology has long been used with the wireless communications industry for Sprint even before the 2004 merger. Sprint/PCS is simply buying the rights to the use of the product which means they will receive the sales proceeds. Currently iPCS in debt approximately $400 billion dollars and Sprint is having to acquire this debt as well but implementations of a better technology will reduce this debt in one or two years as forecasted by Sprint upper management sales executives and Sprint CEO.

Customer Service is still lacking intolerably with Sprint PCS/Nextel in relation to post-paid service plans and online sales and shipping. Sprint needs to address these issues with vehement force and latitude immediately in order to keep the current customers and to acquire new customers. They need to provide loyalty to long term customer and cut out the idiosyncrasies that are present in their contracts such as having to renew a contract to maximum term simply because there is a minor change requested on the account. Customers appreciate being able to make changes to their plans without being punished or forced into a longer contract. The current policies are forcing customers into unwanted contracts in which they would probably stay in without force if customer service was adhered to in a friendly and customer service oriented fashion.

Some proposed changes to the customer service industry might include having a new policy and procedure manual revamped in order to address some issues that are decreasing sales. Another avenue is to gear the policy directly with the customer’s best interests in mind. Customers renewal of contracts should be ‘by discretion’ rather than mandatory with ‘hidden contract clauses’ forced onto them.

There should be a full scale investigation conducted with relation to online sales and delivery schemes in order to determine if online customers are receiving products in a timely fashion. It appears they are not and some orders are being lost. Sprint feels once they ship the product their liability has been addressed. That is not the situation. They have a duty to the customer to ensure their shipping services are adequately providing the product as well as they are providing the service and service needs to the customers fairly under Consumer Law Acts.

Since a good customer service plan is the root of all businesses Sprint needs to address the issues that they have had in the past with regards to blogs, litigation and dropping sales. My research has uncovered that Sprint’s decline in annual net sales since 2007 has been largely due to poor customer service in store and online sales. “Good customer service is about bringing customers in, sending them away happy and making them want to return.” (Ward, 2009). In essence a good salesperson will be able to sell a product once but a great salesperson will be able to sell additional products. A customer service team should be able to address a person’s need through establishing a bond or a relationship with a person or customer relative to their needs by listening to their needs and addressing them. Sprint customer service agents have been accused of taking a monotone voice with them and simply addressing issue in a robotic tone of voice and treating them as a number after they receive their business. One step to ensure repeat customers is to make sure you either answer your phone or have someone available to service the customers. A second step to promote good sales is to make only promises you intend to keep. There is nothing more annoying to a customer to be told something and a company not to adhere to their promises. Often in person customer service agents of Sprint have told customers one thing about their account and online telephone representatives have said another thing. Customers have been left in the dark and without recourse because they simply have had no other argument to pursue. The third action is to attentively listen to the customer and not to babble a sales line simply to shut the customer up. A fourth point of view is to actually deal with the customer complaints in a way that will attract the customer to stay. Remember the customer is the one that brings the business and most companies lose sight of this issue and get caught up with the inflow of the money. A fifth note to consider is to be helpful at all costs. There may not seem to be an immediate profit in the helpfulness for the company but this effort will go a long way. This will ensure the customer is helpful and maintain business integrity and customer relations. Of very important nature is number six which is to have all staff trained in sales and customer service. Dale Carnegie offers an excellent training program of how to motivate your sales force and How to Win Friends and Influence People. Your sales force and customer service team are essential to your business prospering. Step seven and eight go hand in hand. They encumber taking the extra step and throwing something extra in for the customer. The customer has a choice of which company they want to service their cellular and data service. They are locked into contract but do not have to stay in contract or can choose another carrier at will. Some are not in contract or simply will pay the early termination fees because they are sick and tired of the poor service. Customers want to feel appreciated for their loyalty and payments. Going the extra mile for a customer will make them feel appreciated. Sprint thinks they have a monopoly over the cellular industry simply because the merger made them the largest cellular provider. Well the glory is not bringing in the annual sales any longer. The sales are dropping and they are not acquiring the new customers because of their ill fated reputation with past and present customers. They are producing poor in the shipping departments for online orders and this is adding to their demise. They have created their own monster. Adding new products is only putting a band aid on the cut. Fixing the customer service errors is the key to fixing their long term success.

Documented failures have been seen with litigation cases of Sprint not even paying their own employees commission. The class action case was even won in court awarding the litigants all the money afforded to them plus a more in-depth investigation to the possibility of other monies owed. Sprint has been sued for extending customer contracts without their consent. This was seen when customers request an addition to their plan or a simple change in service and Sprint adds to their contract for the maximum time. An example is a customer calling to change their minutes from 400 a month to 700 a month or adding call forwarding to their plan. Sprint was automatically renewing the already existent contract to the maximum term of either one year or two years without customer approval or consent. When customers tried to initiate a stop on this practise they were told they had to pay a $225 early termination fee. Customers were awarded this early termination fee in the class action suit. They were forced to pay the fee or their public consumer credit report would be severely tarnished. I know of this practise to be true because I was a Sprint customer prior to the merger with Nextel. I was a customer for three years and I was forced into a contract extension on three occasions for a minor change in my plan. The other option was to pay an early termination fee of the contract. This option was not discussed with me upon signing the initial contract. I was not told my original contract would have to be renewed every time I made a change to my plan. Sprint was using discretionary powers in which they had no legal right to do.

Reflective Statement

I have learned that a successful business cannot operate without a successful customer service department. Sales can be severely affected without a sound customer service team. There are innovative ways to increase sales by introducing new products but the best ways to continuously keep a business profitable is to maintain a great customer service oriented team. Keep it simple and tend to the customer’s needs by focusing on what they are telling you. After accessing Sprint’s program I have learned that their deficit started long before their profits began to decrease. Their profits began to drop as a result of poor communication with the customers and a very poor tracking system for their online orders. They were rarely concerned about the products once they were shipped and focused on volume rather than quality. They need to change their mentality and instead of thinking corporate America and dollar signs they should think back to the simplistic way that customers are the ones that make sales high because they are the ones that make the purchases. The focus should be on keeping the customer happy then the profits will rise.

Solutions

Immediate solutions to the declination in sales is to keep promoting the new products that have been introduced to the market. These products are doing well and will help to alleviate some of the deficit. Another solution is to ensure the acquisition is successful. The third and most important solution is to implement a new customer service plan for in store and online sales and support and retrain all customer services personnel with a program such as Dale Carnegie.

Hire people that are intelligent yet empathetic to customer needs. Send them to training or bring in a consultant to train in the stores. “Give your customer service agents the power to make decisions without authority.” (“How to Improve Customer Service”).  Teach them to make decisions that are customer oriented. Ensure that you read all customer feedback and reward customers. Make sure customers are given ‘exceptional customer services’ because they will return.

Dale Carnegie (1936) stated there are three essential keys to influencing people and making your business profitable: “don’t give criticism, complain or condemn-give honest and sincere appreciation-arouse in the other person an eager want.” (Carnegie, 1936). Sprint was inadvertently with implication complaining and criticizing customers by not assisting them with their needs. They are failing to give their loyal customers’ honest and sincere appreciation thus customers are not loyal to them anymore. Why should they be? Why is sprint so surprised? Did they think the merger with Nextel would bail them out forever? I think Nextel did not do their homework well enough and investigate Sprint well enough before the merger. Nextel was a low key company but they are very professional and had excellent customer service skills. It appears Sprint kept their employees for the most part especially in the customer service department and is dominating the company. Nextel might want to reconsider its backyard appearance with the company and revamp the customer service department to reflect their plan prior to their merger with Sprint in 2004 or they will sink with Sprint.

If Sprint takes one larger class action litigation suit they may just take that fall. Many people in America as much as 40% of polled unhappy customers might be more than happy for this company to create their own demise. Unfortunately Nextel will have to go down with them.  All is not lost for Sprint though if they would simply wake up and smell the roses, perhaps make a public apology to the public for a lack of consideration for their feelings and inform the public that they are attempting to change their perspective on customer service-and do it!

References

CNN/Money (2004) Sprint, Nextel in $36B Merger Retrieved December 12, 2009 from, http://money.cnn.com/2004/12/15/news/fortune500/sprint_nextel/

Dow Jones (2008) Sprint Nextel Loses Nearly $30 Billion in Q4 Retrieved December 12, 2009 from, http://www.cellular-news.com/story/29616.php

Sage, S. (2008) Sprint Sales Reps Suing over Unpaid Commissions Retrieved December 11, 2009 from, http://www.intomobile.com/2008/11/26/sprint-sales-reps-suing-over-unpaid-commissions.html

Radio Shack Redux: It’s all Sprint’s Fault (2008) Retrieved December 11, 2009 from, http://sprintconnection.kansascity.com/?q=node/838

Oster, C. (2008) The Customer Service Hall of Shame Retrieved December 12, 2008 from, http://articles.moneycentral.msn.com/SavingandDebt/Advice/TheCustomerServiceHallOfShame.aspx

Hardie, C. (2007) Is it Possible for Sprint Customer Service to be This Bad? Retrieved December 12, 2009 http://www.chrishardie.com/blog/2007/03/is-it-possible-for-sprint-customer-service-to-be-this-bad.html

Sprint Nextel to Acquire Wireless Affiliate iPCS, Inc. (2009) Retrieved December 12, 2009 from, http://www.smartbrief.com/news/ctia/industryBW-detail.jsp?id=54E164E3-EFE8-4ED0-9A8D-D82937948BA4

Ward, S. (2009) 8 Rules for Good Customer Service Retrieved December 10, 2009 from, http://sbinfocanada.about.com/od/customerservice/a/custservrules.htm

How to Improve Customer Service (2009) Retrieved December 12, 2009 from, http://www.gaebler.com/How-to-Improve-Customer-Service.htm

Carnegie, D. (1936) How to Win Friends and Influence People Retrieved December 12, 2009 from, http://www.westegg.com/unmaintained/carnegie/win-friends.html