Sprint Nextel to launch "Come Back" campaign
Last month, Paul Saleh, then acting CEO and CFO of Sprint Nextel, told investors that the company would be focusing its energy on retaining customers and re-invigorating the Nextel Direct Connect brand.
For the last year-and-a-half, we've been asking where have all the iDEN subscribers gone? It was like the entire Nextel iDEN business was swallowed into a black hole once the merger between Sprint and Nextel was completed in 2005. No more clever marketing advertisements and fewer of those annoying Nextel chirps due to an exodus of iDEN customers upset over poor network quality.
The company has admitted that iDEN subscriber trends have been alarming with gross adds down nearly 50 percent. Sprint, with the blessing of new CEO Dan Hesse, now plans to re-invigorate the service by increasing marketing and introducing new devices. iDEN subscribers have historically been the most loyal and highest profit generating users in the wireless industry.
How? I recently had quite a frank conversation with Chris Hackett, vice president of Sprint's public sector sales programs, about how exactly Sprint plans to revitalize the iDEN network. The operator has implemented what it calls its "Get Well Program," which is completely focused on sales, Hackett said. That involves roaming around the country and conducting town-hall style of meetings with employees and key customers to discover how Sprint can win customers back.
Hackett said the iDEN network is now performing better than it ever has after significant investments from Sprint, but the key is wooing back angry customers who were fed up with the poor network quality. The main problem was the operator's use of a 6:1 vocoder that allowed Sprint to pack more users on the network but resulted in extremely poor voice quality that actually made users sound like they were drunk to those on the other end, Hackett said.
"People have a bad experience but they are locked in a contract. They suffer through it. We start to invest and fix the problems but they leave when their contracts are up. Now we are working on getting users to come back to the network," Hackett said.
Look for Sprint to begin implementing "Come Back" campaigns in select markets soon. That will primarily consist of come back advertisements and sleeker and more appealing devices that have been lacking.
It's imperative the operator gains customer trust when it comes to the iDEN network. Otherwise, Sprint is going to have a tough sell when it begins rolling out Qchat over the CDMA EV-DO Rev. A network this year. Sprint hopes to replicate what Nextel was successfully doing early on: selling total solution packages. Qchat will enable Sprint to sell more than just voice PTT services. It will be about one-button data services such as push-to-text or push-to-send pictures such as blueprints.
Qchat is currently slated to roll out in select markets by mid-2008 when the devices are anticipated to be ready. The challenge will be to put together attractive programs and show the benefits to users and help them delineate between the iDEN and Qchat networks.
For now, the question is: How fast can Sprint stem the losses of iDEN customers and convince new ones to come on board? Walt Piecyk at Pali Research says Sprint is losing about 1 million iDEN customers per quarter. When Piecyk looks back at the predictions he made in mid-2005 regarding the company's estimated EBITDA for 2008, he forecasted $17.3 billion. Today, the expectation is less than $10 billion for the year.
Clearly, Hesse has a lot of work cut out for him. -Lynnette