Can a Merged XM-Sirius Survive in an iPod World?

It was a big week for news in the wireless world. BusinessWeek’s tech team visits dishes on the XM-Sirius merger, Sprint’s WiMax plans, and the fall of an American icon, Motorola.

Click here to see this Week’s Digital Dish. After changing our set virtually every week, I think have finally found an arrangement that may work. If you have any better ideas, please let us know!

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What I Learned from BusinessWeek’s Sprint Nextel Message Boards

For the last two weeks, I’ve been on the Sprint Nextel beat at BW. And the outpouring of angst, fear and loathing to my two stories has been astounding. To date, readers have posted 265 comments on my investigative feature, “Sprint’s Wake-Up Call”–the most comments I’ve ever received for any story I’ve done in eight years at BW. And in the last 36 hours, another 42 comments have popped up on the boards for “Sprint’s World of Pain,” a simple earnings story I wrote about what is probably the worst quarter in the company’s history. A $29.4 billion loss will do that to your rep.

After reading all of these comments, here’s my takeaway:

1.It will take a near miraculous series of events to turn around the company: The reason is that Sprint has mistreated its customers so badly for so long that its reputation is nearly beyond salvaging. The only reason Sprint hasn’t lost more customers is because people are trapped in these long-term contracts. When they expire, customers are outta there. For this reason, I think it may make more sense in the long run for Sprint to be taken over or broken up.

2. Sprint’s customer service problems are just as bad as I wrote, and in some ways they are even worse than I realized. The message boards are rife with comments from current and former employees corroborating many of the claims I made in “Sprint’s Wake-Up Call,” including the emphasis on sales over service, micro-managing of call center employees, and many many stories about contracts being extended without customers’ consent. Here’s one comment that really scared me because it shows that Sprint’s obsessions with sales growth has led to an ethical breakdown.

Kevin SFeb 28, 2008 6:20 PM GMT I’ve already posted a couple of times here, but I feel compelled to add a couple of things from my time as a former rep. Sprint Supervisors almost ALWAYS go by what’s in your account notes, even if they are nowhere near the truth. As an example, let’s say a rep renews your contract, doesn’t tell you but notes in your account “customer agreed to contract extension for 5% discount.” Later you call to dispute said contract extension. If the note says you agreed to it, then as far as Sprint is concerned, you agreed to it, regardless of what actually happened on the call. Fraudulent sales (reps putting things on your account without telling you) are a problem because ALL our incentives are tied to sales, the more sales we make, the better shot we have at the bonuses they dangle in front of us. There are far fewer incentives for providing good customer service. I was also once told by a supervisor to disconnect a call that was running long even though it was nowhere near done.

3. There are a smattering of current employees who get it. They feel horrible about what’s happened to the company and want to help fix the situation. If Sprint has any chance of survival, those employees must be identified, promoted and supported. And they must perform customer service miracles on a regular basis. That’s how you earn trust back. Step by step by step.

Moreover, new CEO Dan Hesse needs to hire a whole team of new leaders who can help execute his marching orders. The company’s culture is so corrupted that it will take new blood to get Sprint back on the right path. And those leaders must be supported as well. There’s just been too much turnover among Sprint’s leadership the last few years. To have any chance of survival, the company dearly needs management stability.

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Sprint CEO Dan Hesse Speaks About Customer Service

Last week, I had the opportunity to interview Sprint Nextel’s new CEO Dan Hesse for about 20 minutes for my story “Sprint’s Wake-Up Call.” Hesse, an industry veteran who most recently ran the local phone company Embarq, has vowed to make customer service the top priority of the company. That in itself is a huge philosophical shift at Sprint Nextel that should bear fruit. Another major shift: “We are shifting investment from customer acquisition to retention,” says Hesse.

But Hesse must make sure that his message is heard, from the top layers of management all the way down in the call center trenches. Part of the problem of Sprint Nextel is that there’s been a huge disconnect between management and the field over customer service strategy and execution. One result of that dropped call: Even though Sprint Nextel maintained policies barring contract extensions without customer consent, government officials and lawyers have alleged that many Sprint Nextel customers still had their contract extended unknowingly. Here is an edited transcript of the interview in which Hesse speaks in detail about customer service for the first time since taking over the helm at Sprint Nextel last December.

What went wrong? Why did it get so bad?
I don’t have a history here. I came and took a look at customer satisfaction scores and churn. And I have just focused on improving it.

What did you learn?

The churn numbers were way too high and the customer satisfaction numbers were way too low.

How are you changing the way you run the business to improve customer service?
It is cultural. We have an operations review every week. When I walked into my first meeting customer service was not on the agenda. We weren’t talking about the customer when I first joined. The first team meeting agenda was already set. The second meeting after January 1 was reordered.

It’s also symbolic to the entire senior team. Every meeting starts with that. We started the practice at second ops team meeting. Also, my first visit outside of the headquarters was to a call center in Charlotte. I spent a day jacking in to calls.

How did that go?
It was eye-opening to me. You get to listen to the kinds of issues are reps deal with.

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What else are you doing to turn around the company?
I have to simplify our business. There’s an opportunity to improve our systems, with fewer rate plans and options.

How important is customer service now at Sprint Nextel?
The most important economic driver is churn. Customer service plays such an enormous role in maximizing the customer life. It was very apparent it was the most singular issue. It was very apparent that job one was to improve customer service and reduce churn.

How long will it take to turnaround?
We are beginning to improve customer service already. There’s always a perception lag. We did have problems last summer. There will be a lag when it improves and when the world knows that Sprint’s customer service has improved. First call resolution and average speed of answer are measured. That’s improving right now.

How hard is it going to be?
The customer experience is much more than customer service. It’s retail. Network quality, ease of use of phone. Experience with care reps. There are a lot of things we are focusing on to improve customer service. You will see progress and regular progress. It is very doable. We have the right people in place. We will get it done. I am holding an all-employee Webcast to talk about this tomorrow.

Customer service is job one. This is the number one priority of the company.

What’s working? What’s not working?
We have instituted self-managed teams. We’re focused on customer lifetime value as a company. I am making investments in customer care. We already have increased investment in customer service. Added more seats in call centers. We put service people in our retail stores. It is a significant investment. We are shifting investment from customer acquisition to retention.

Creating a great experience is very positive from a shareholder point of view. That’s how you create a great brand. We don’t look at this as a cost anymore. Great customer service drives profitability.

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Revolving Door: More on Sprint’s Poor Customer Service

So my investigative feature “Sprint’s Wake-up Call” has been burning up the Web. It’s been the most read, emailed and discussed story on BW.com for the last four days, with 96 comments and counting. Many thanks to a bunch of bloggers for linking to the story, including the diva blogger herself Arianna Huffington, super-activist site The Consumerist, and the tech mavens at GigaOm and CrunchGear.

Over the next few days, I hope to share more of my reporting and thoughts with readers on this blog and BusinessWeek.com that explains why Sprint Nextel has consistently delivered the worst customer service of the U.S. wireless industry, which arguably means the worst customer in America given that cell phone providers consistently rank at the bottom of industry customer satisfaction surveys.

One theme that did not make it into the final version of the story is the incredible turnover that Sprint Nextel has seen in its management of customer service. Over the last 17 months, four different people have run customer service: Cindy Rock, Timothy E. Kelly, Steve Nielsen and Bob Johnson. Last October, Johnson took over as Chief Service Officer from Nielsen, whose tenure only lasted six months. Rock left the company in 2007, according to her LinkedIn profile, and Kelly was one of three top execs to be let go on January 24, one month after new CEO Dan Hesse took over.

What’s the impact on operations? Well, as one former senior executive told me: “It puts things on pause for three to four months. You can’t be successful. You need to have more stability in an organization.”

When I ran this point by Johnson, he said, “I am in a role that I hope to be in for a long time.” Sprint’s customers can only hope he is right on that count.

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Why Sprint Nextel’s Customer Service is So Bad

Wanna see the gory insides of America’s worst customer service operation? Then read my new investigative feature “Sprint’s Wake-Up Call,” which takes readers inside the call centers of Sprint Nextel. It’s a whopper based on interviews with 12 current and former employees, U.S. officials, business professors, customers and reviews of court documents.

In the story, new Sprint CEO Dan Hesse also reveals for the first time his plans to turn around the company’s service rep. “We’re beginning to improve customer service already,” Hesse told BusinessWeek. “There will be a lag between when it improves and when the world knows that Sprint’s customer service has improved. There’s always a perception lag.”

Happy reading!