This is the second time I have heard Dan Hesse, CEO of Sprint, chat about the customer experience transformation journey they have been on. It’s a great case study in leading a customer oriented change.
Dan started off by offering a where we have been view. In 2008, when he took over as CEO, Sprint had created the “perfect storm” of customer dissatisfaction. They had starved customer care, customer complaint calls were 2X the industry average, customer churn was horrendous, development and innovation were starved, and employee morale was “in the dumps”. The core issue, in Dan’s mind, was “we allowed care resources to go”.
He decided the thing to do was drive transformation by really focusing on the customer centered mission of “resolve customer issues the first time every time.” He then backed this up with three strategies: improve customer experience at every touch point, strengthen the brand, and generate cash. Let’s look at each of these.
In order to improve customer experience at every touch point, Dan and the Sprint team focused on “The magnificent 7”:
- Align compensation and rewards – by tying them to “what matters most” metrics such as first contact problem resolution, reduce churn, reduce employee turnover, etc.
- Ensure the change topic is on the agenda and it’s what the boss checks on – make it a cultural totem and a maniacal focus in conversations.
- Be fanatic about “root cause” analysis to get at the pain points – one of his surprises was the lack of middle management understanding of what customers really thought. They tapped into the rich data source of customer care feedback and asked why?
- Ensure “closed-loop” accountability – he tied back the date reach call center feedback to areas of accountability. No function was left untouched: dropped calls to the network team, misalignment of plan sold to the retail team, more than one call to solve a problem to the customer care team.
- Drive the change with project leadership – it takes a disciplined approach the driving the change.
- Simplify – In Sprint’s case the lack of post-merger integration had finally caught up with them and they needed to get rid of the complexity. This included things like rate plans, fewer cell phone sku’s, and IT systems clean-up.
- Make it a brand principle and live the brand. In this case “value and simplicity” became drum beat mantras.
The results were a $1B reduction in customer care costs while getting a 15 point improvement in Forrester survey results. Calls to care were reduced by 39% and customer satisfaction has been improving for 9 quarters. Top 2 box satisfaction is up by 49% in a two year period.
Dan discussed the need to get employees heads in the game. In some cases where they could not do this, they are no longer part of the team. However, to gain support Dan and the team created culture change with great communications and cultural totems – webcasts, elevator speeches, and elevator awards. The also used red-yellow-green scorecards as a learning tool versus punitive tool.
While calls to customer care was mission critical, they also invested in understanding and measuring customer lifetime value (CLV) and churn, “churn is the holy grail”. They use churn to focus on extending time, average revenue per customer to get a sense of deepening and dissatisfaction, cost of service, and an “all in” acquisition metric – cost per gross addition. All these were aimed to better serve customers WHILE shifting the breakeven point of the business.
He commented that as bad as customer care was, the stores were even worse. Factors such as compensation based on widget selling and lack of in store servicing were a few of the issues. The shifted compensation to a blend of year-over-year store sales AND improvement in customer delight.
While he had more comments during Q&A there were two comments he made that really hit home for me.
- The “last thing to do in the silliness of chasing profits in a downturn is to cut costs in care.
- Somehow there has to be art…to ensure customers score high, not just on satisfaction, but on enjoyment.
Cheers!
