Fresh off its deal to co-brand more than 1,400 stores with RadioShack, Sprint (NYSE: S) is seeking to shake up mobile retailing with a program to travel or customers' homes, offices or other convenient locations to set up their new phones.
The program, called "Direct 2 You," will start in the Kansas City, Mo., metropolitan area today, and on April 20 it will expand to Chicago and Miami. Sprint plans to roll out the program throughout 2015, though it's unclear how many markets it will be in by year-end. The service will involve specially trained Sprint retail employees roving around in cars to meet customers.
"With our new Sprint Direct 2 You fleet of cars, it's as if we are adding 5,000 additional stores," Sprint CEO Marcelo Claure said in a statement. "However, these mobile stores will be continuously on the move based on customer demand."
Sprint said that it will eventually have up 5,000 cars on the road to support the service and may hire up to 5,000 new employees. Sprint will start with a team of around 30, according to Sprint spokeswoman Michelle Leff Mermelstein. She told FierceWireless that number will grow as the program expands across the country. When it is fully rolled out, Sprint expects to have added around 5,000 new jobs, most of them full-time. "This will be a new, separate team of people who are being trained by Sprint and will have the same knowledge of Sprint products as Sprint retail staff," she said.
Under the program, Sprint said that qualified customers who are eligible for phone upgrades will receive an offer via text or email to upgrade their phone. Customers who want to upgrade their phones can then call the Sprint phone number in the text or email to take advantage of the offer and schedule an appointment for the free Direct 2 You service.
Then, a Direct 2 You employee will arrive when and where the customer requests. The Sprint employee will set up and activate the customer's new phone, will transfer all contacts and data from the old phone, and then will personalize the new device to the customer's specifications. Sprint said that Direct 2 You employees will be particularly skilled in helping customers switch smartphone operating systems. Customers can choose to turn in their old phones for recycling or reuse.
Today, Direct 2 You is for upgrade-eligible customers only, but that will change soon. "As Sprint rolls out the service in new markets it will add delivery options," Sprint spokeswoman Michelle Leff Mermelstein told FierceWireless. "Beginning in September, in selected markets, new customers will be able to select this option when buying online or through call centers."
Claure told the Wall Street Journal that the program was an echo of a tactic he used in the late 1990s when he was starting up wireless device distributor Brightstar: delivering devices to customers by hand and then setting up the phones for them. Even though some customers have become more sophisticated in setting up smartphones, Claure said Sprint was still hearing from customers that they were running into difficulties.
"There are so many new features, in many cases customers wouldn't even know where to start to make sure they're taking a full advantage of all the new things the phone has to offer," Claure said.
"It transforms a pain point into a 'wow' moment," Rod Millar, who heads the new delivery program and Sprint's device-leasing effort, told Re/code. Millar said that Claure conceived the idea and it has gone from a concept to reality in just a few months.
Sprint is working with an unnamed partner on the service, but the carrier insists that all of the Direct 2 You employees will be trained by Sprint and will use Sprint-labeled vehicles when visiting customers. "Direct 2 You combines the convenience of an online experience with the personalized in-store experience. Sprint Direct 2 You experts are subject to the same training and responsibilities as our retail associates," Mermelstein added.
Sprint's Direct 2 You program features Sprint-branded cars.
Although it is a labor-intensive process, Sprint clearly thinks Direct 2 You will boost its standing with customers and perhaps help it attract new ones. The carrier has been treading water in terms of subscribers for the past two years amid a massive network overhaul, while rival T-Mobile US (NYSE:TMUS) has been gaining market share, often at Sprint's expense. Many analysts expect T-Mobile to pass Sprint in terms of total subscribers this year, though Claure and other Sprint executives have brushed off that possibility as not important to Sprint's business plans.
The RadioShack deal is also part of an effort to boost Sprint's sales. According to Sprint, all 1,435 Sprint/RadioShack stores opened on Friday and offer devices and services from Sprint and Sprint's Boost Mobile and Virgin Mobile brands. However, it will take some time to rebrand and refurbish the interiors of the Sprint stores, a process Sprint expects to fully complete in the second half of the year.
Macquarie analysts Kevin Smith and Will Clayton wrote in a research note that they think "the new stores will conservatively boost Sprint's postpaid net adds by ~300K per year assuming monthly gross adds at 50% of an avg. current Sprint-owned store."
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