Outsprinted

Telecommunications vendor Sprint Nextel recently noted a drop in calls to its customer service lines, and that, in response, it will close some of its contact center locations. As first reported by TradeTheNews.com, Chief Service Officer Bob Johnson predicted that service-call volume might shrink by as much as 20 percent in 2009, leading to the closure of up to 20 contact centers, or half the number Sprint operated in 2008.

Tough economic times sometimes call for tough measures, but any closure of a contact center by Sprint Nextel carries a strong dose of the ironic. Like SAP slashing its IT budget or American Express cutting back on travel and entertainment (see "Express Service"), this reduction goes to the heart of Sprint's business. The news led some to suggest that the closings would compound the company's recent problems with customer service. One analyst, quoted by Forbes.com, said poor network quality and bad handsets have plagued Sprint since mid-2007 and have led to market-share problems, with customers switching to AT&T or Verizon Wireless.

"In this environment, many companies like Sprint are looking to cut costs; unfortunately, customer-care organizations and contact centers are often viewed as cost centers, making them sitting ducks for slashing," says Bruce Temkin, vice president and principal analyst for customer experience at Forrester Research. "It's unclear how these contact closings will impact Sprint's customer relationships, but the wireless carrier just came out 107th out of 114 U.S. firms in [our] customer experience rankings. So Sprint will likely lose more customers even if it maintains the status quo."

These challenges may lead Sprint to increase marketing spend in early 2009, but that approach carries risks as well. "If Sprint decides to heavily invest in customer acquisition, customers might be in for a rough time as a growing number of new customers vie for a smaller number of call center reps," Temkin says. There's already evidence of marketing motion, with new wireless routers, BlackBerry phones, and other products intended to reduce customer erosion.

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