Alistair Davidson is a strategic consultant who helps organizations improve their performance. He has consulted to the telecom industry, trained its managers on strategic planning, consulted to firms providing customer relationship management software and user interaction design services, and helped vendors with sales strategies. He has an MBA from Harvard, is the author of several books on strategy, a contributing Editor at Strategy and Leadership magazine and has headed up several entrepreneurial ventures. This article highlights a personal experience with Sprint. He generalizes from the experience how one company appears not to be managing customer satisfaction sufficiently.

After this article was copied to Sprint and a slightly modified version published in Strategy and Leadership magazine, Sprint introduced a new program that maps very closely to the recommendations made at this end of this article. Whether this was the result of the pressures identified in this article, the recommendations in the article or great minds thinking alike, it is hard to tell. Sprint is still trying collect charges that are the result of the inadequacy of their ecommerce capabilities.

The highly competitive cellular phone market seems to be a market dominated by three factors: competitor consolidation, competition for network coverage and rapid introduction of features that are quickly imitated by competitors. But the ideas of creating value in cooperation with the customer offers an alternative way of developing loyal customers and building profitability. Failure to create loyal relationships with customers is extremely expensive. And if you are smaller player in the market innovation is needed to compete and increase profits..

In today's competitive environment, a company that fails to act on behalf of customers and does not seek to cooperate with its customers will experience high rates of churn and lower profitability. It's not just competition that the problem. It's that it's harder to hide your errors. We are now in a world of transparent business performance. We all know that Verizon gets higher rankings on its network coverage. If Sprint competes only on network coverage, Verizon is likely to continue to increase its market share faster than Sprint. Sprint needs to work more cleverly.

I recently moved. Knowing that my DSL connection would take two weeks to get installed, I logged onto my cell phone company, Sprint's web site and upped my minutes from 300 to 700 minutes. I figured I would use my regular phone for an Internet connection and my cell phone as my voice line.

My Sprint phone service was being managed by me in cooperation with Sprint. I was varying my purchases, doing all the work on-line. They had essentially forced me to transact on line because their phone queue had such long wait times. The value proposition kept me reasonably loyal in spite of the attraction of moving to Verizon with its better coverage, made even easier by number portability.

Imagine my delight when I discovered that in my new home, my Sprint cell phone actually worked reliably for the first time at home. The last five places in which I have lived had been “dead zones” for Sprint. For the first time in my life, my cell phone actually worked reliably.

Except for this rather major problem, their inability to deliver on the major reason I stuck with Sprint since 1999, their month to month option. Sprint charges me ten dollars a month extra or $120 a year extra for being able to change my minutes from month to month. I should point out that the month to month option was the primary reason I chose Sprint in 1999, and over the years they have gradually made it harder and harder to use as a service - perhaps a bad move in engendering loyalty.

But Sprint sent a bill for roughly $250 more than I was expecting. My month to month change had not gone through. A software problem I thought. But after seven phone calls and one email, the customer service reps none of whom were empowered to give me satisfaction or return phone calls finally passed me on to an unreceptive supervisor.

I figure over the past four years or so, I have been worth approximately $3000 to Sprint. So Sprint is losing a customer that over the next two years might well have been worth another $1200-$2500. And I was looking at going to Sprint for their $15 a month unlimited long distance product, worth perhaps another $360 over two years.

If I were the CEO of Sprint, at this point in the story, I might get down and cry. I would be thinking: “The client put up with us when Sprint did not deliver a particularly satisfactory service. And the moment that the client got excellent cellular service, when we had the customer in a solid value relationship, when the customer was using the preferred low cost CRM channel, when we had a program that seemed uniquely suited to his needs, we (Sprint) forced him to leave.”

Clearly, Sprint's first problem is systemic. Its customer service is costing it too much (it just outsourced its CRM to IBM). Its wait times are too long. Its software at its web site has historically been poor and unreliable. Changing programs has been difficult. Obtaining confirmation that transactions or program changes have occurred has been unreliable.

But you need to have a culture that deals with problems and focuses upon customer experiences rather than policies. It's a little like the server in the restaurant who has been trained to ask: “Was the meal good?” Often, if you have had a bad experience and you tell the server such, there is a look of confusion on his or her face. There has been no training on what to do if bad service exists. And I would suspect that Sprint does not measure the quality of service it provides to customers in terms of quality of service at home or dropped calls. And if it does, it does not use such information about the value experience created with its customers to propose or listen to suggestions on different programs.

Bad word of mouth tends to spread faster than good word of mouth. So, if my experience is typical, I don't represent a loss of $2,000 over the next two years, I might well represent (if I were typical of customers who badmouth) a group of ten or so influenced customers - perhaps a loss of an additional $10-20,000, assuming a gradual erosion over the average two year contract. Additionally, Sprint lost me as cellular customer or in the future a broadband mobile wireless customers.

Fix your web site. Make it easier to know what cellular program you are using. In a service business, you should guarantee no surprises. Charging customers for something they don't know they are going to be charged for cannot possibly lead to high customer satisfaction. Fairness is a key pricing virtue.

Provide confirmation of changes to programs and payments more reliably. My experience suggests that direct debits to banks accounts and program changes are unreliable.

Fix the bug that does not allow measurement of minutes if you change your program and the one that seems to get confused if you make two changes to you number of minutes.

Restore the flexibility of changing your minutes. Surely, you are in the business of selling minutes at a reasonable rate, not trying to create complexity so that you will make money in ways that upset customers.

Measure customer satisfaction with your web site and service and use this information to change service levels, change pricing models or manage the relationship between your pricing and your service levels.

Stop trying to manage your business to optimize profits in the short term. This is a relationship business. If you think it is a price-based business, then you have no future.

Make sure that your CRM outsourcing with IBM is about more than cost savings. Your customer relationship management activities should be viewed as ways of selling new services not driving down costs and making it inconvenient for the customer.

If you own the relationship with the customer, you will be able to create or resell new services. As with banking, having multiple relationships with the customer will lead to higher profitability. But you have to start thinking more imaginatively about value added services and resale of third party services.