The American Consumer Satisfaction Index out this month shows that Sprint Nextel’s rating jumped 11% from 2009 to 2010. The increase for the telecom industry over the same period was an average of 4.1%. This is wonderful news for Sprint Nextel, but it turns out that it only brings them up to par with their main competitors. Two years ago, they were at the lowest point of customer satisfaction in their history.
That made me wonder: did they do anything special which they can continue to build momentum with, or did they just stop sucking? Birch Studio’s first step into any project is research, so I figured I should research this as well in hopes of learning something. As one might expect, there was a slew of press around this and quite a few differing opinions. The original source of my data, ACSI, is a significant arbiter of information in the US economy so its reports carry quite a bit of weight.
The goal of my research was to find out what they did. I found three theories worthy of exploration.
Theory 1: Structure
“Sprint Nextel had the largest increase, up 11% to an ACSI score of 70, following a year of a similar gain of 13% … Sprint’s 2004 acquisition of Nextel was probably behind much of its past customer problems—mergers of large service companies are often detrimental to customer satisfaction, and the customers acquired from Nextel had even lower satisfaction than the Sprint customers. In order to stem customer defections, Sprint has relied on price promotions and bundled services.”
– Prof. Claes Fornell, for ACSI
The proposition that a merger had something to do with dissatisfaction makes a lot of sense. Think about the last time you were merged. I’ve been fortunate enough to not need a lot of service lately but when my home phone company was purchased by another, I felt like a part of me was sold to the highest bidder. Granted, my account doesn’t represent much of my actual existence on this earth but when I signed up for the original carrier, I chose them. As it stands today, I didn’t choose the company that has my account now – they chose me. I had no choice. That becomes a customer satisfaction issue that is bound to slant opinion against a company well before any actual problem occurs.
Theory 2: Customer Service
“The company has seen subscribers flee for several years, but it has made big efforts to improve customer service. Those efforts appear to be bearing fruit, as its score rose from 63 to 70. It posted another seven-point increase the year before. Sprint’s subscriber losses have slowed in the last six months.”
– Consumers Happier About Their Cell Service By Peter Svensson (AP)
Theory 2 credits the increase in service for the increase in satisfaction – another valid possibility. After all, aside from the actual technology working or not working, the other half of a customer’s interaction with a company is how they treat the customer. There is plenty to go wrong from consistent communications to fair pricing to helpfulness of the customer rep, and more. The facts Svensson offers are scant to make such a connection from ‘Those efforts’ to ‘appear to be bearing fruit’. There may be more information that substantiates this, but at this point, I still haven’t found the truth.
Theory 3: Stability
“… despite their high satisfaction scores, a troubling 22% of Sprint’s large business customers are evaluating switching to a new primary wireless voice provider. This could indicate wariness on the part of enterprise customers about Sprint’s overall corporate health in light of its recent financial troubles.”
– Eugene C. Signorini, VP Enterprise Applications & Mobile Solutions with Yankee Group
Large business customers bring a chunk of subscribers to Sprint all at one time. So when 22% of them are considering moving, that’s considerably more than 22% of Sprint’s customer base. This suggests that people are unhappy with Sprint now because they may be more unhappy with Sprint later when those financial troubles catch up with them. For a company that has a mission-critical relationship with mobile telecom services, this can be a very significant issue. Still, switching core service providers at any time is a monumental chore so it is probable that a big chunk of those 22% won’t do anything until their service really starts to fall apart.
Each of the three sources claim a different cause for Sprint’s track record in customer satisfaction. They all are plausible. But most likely, the resolution is some dissonant mix of all three: some customers were unhappy with the merger, some were unhappy with the customer service and some were doubtful that they’ll see major improvements anytime soon.
One Last Theory
Furthering my research, and hoping for resolution, I sought answers from real clients. Well, maybe. I went to the primary source of the uptick, Sprint Nextel, to see what they had to say about this. Surprisingly, I didn’t find much but a prepackaged podcast series on customer loyalty about telecom marketing in general. The comments on the podcast, however, were priceless. I read through the first-hand comments and none of them mentioned consistency or functionality. Aside from some comments about relentlessly inconsistent data, customer loyalty was defined by their customers as providing something special that made existing customers feel more valued that new customers.
With the VP of Consumer Marketing thinking that loyalty is about consistency and functionality, it seems more likely that ACSI’s supposition is correct – that customers which had gone through the merger from Nextel to Sprint Nextel probably drove the dissatisfaction down well below the industry average, and now that the effects of the merger have worn off, Sprint Nextel is merely on par with its competitors rather than soaring past them. Time will tell whether they actually surpass their rivals as a result of their focus on consistency and functionality.
Summary
So much of how we think about branding has to do with how we think about self-promotion. This data shows that before you embark on an image building campaign, ask questions to make sure that you are not building a happy facade on a crumbling strategy. No amount of brand marketing will help with that.
