Excerpt: Why Excellent Customer Service Costs Less

Chris Malone dives into one of Dan’s most firmly held tenets of corporate leadership in this piece published to Fidelum Partners…

How did Dan Hesse engineer such a rapid turnaround of a publicly-traded behemoth with $30 billion in revenue and over 40,000 employees?   I had the opportunity to speak with Dan recently and he shared a number of insights on his experiences at Sprint.

Key Insight from Dan Hesse

“It may seem counter-intuitive, but in my experience, considering all the costs, providing excellent customer service costs less than providing poor service.  When I arrived at Sprint at the end of 2007, we were very cash constrained.  Part of the problem stemmed from reducing customer care resources to the point that customers began to leave.   Improving care and service was one of the few things cash-strapped Sprint could afford to do in 2008.   We focused relentlessly on identifying and eliminating the primary causes of customer frustration and complaints.  As a result, we were then able to eliminate $2 billion per year in customer services expenses, while going from last place to first place in overall customer satisfaction in the U.S. wireless industry.  The issue of customer churn might apply to every industry.  Once you’ve invested in acquiring customers, it’s a lot cheaper to keep them than to go find new ones.”

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Excerpt: Kagan: Bye-bye, Sprint. What T-Mobile US will do next

Jeff Kagan examines Sprint’s merger with T-Mobile and what it means for the joint company moving forward. The article posted to RCRWireless in July 2020 explores Sprint’s history, what they did right and wrong that led us to this moment in wireless history and closes with a look at the next steps for T-Mobile…

Past Sprint CEOs: Bill Esrey, Gary Forsee and Dan Hesse

Bill Esrey was CEO of Sprint when it was in the long distance business and changed over to wireless. The company was popular, but just could not hold a candle to AT&T and Verizon. In fact, that was the cases throughout Sprint’s long history.

When the company needed fresh vision, they hired Gary Forsee as CEO. Forsee came from Bell South, one of the seven Baby Bells. He acquired Nextel just before the entire industry switched from analog to digital.

That move was the death nell for Nextel. And what started out looking like a great move became an albatross around their neck for Sprint Nextel for years to come.

Dan Hesse did a remarkable job saving then growing Sprint

Now, the company was in even deeper trouble. That’s when they hired Dan Hesse as CEO. Hesse came from AT&T. He had been with the company forever. He ran the AT&T wireless business for several years.

When Hesse came to Sprint it was dying on the vine showing huge losses with no light at the end of the tunnel.

What was amazing is Hesse saved Sprint from disaster. He worked hand in hand with the Sprint executives, workers, investors and customers. First, they first stabilized and then grew the business once again.

In fact, Sprint was winning all sorts of quality and reliability awards and it looked like they were finally on a winning path under Hesse.

Click to read the full interview…

Great Customer Service Costs Less

Reposted from Dan Hesse's LinkedIn series on Executive Leadership and Corporate Responsibility. The following was published September 10, 2015. 

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There’s a widely-held belief that it’s expensive to provide customers with superior service. In my experience, the opposite is true. In fact, Sprint spent $2 billion less per year for customer care when it reached the top of its industry’s overall customer satisfaction rankings than it did when it was at the bottom of the rankings.

Companies owe it to their customers and employees to provide great customer service.  A strong service culture can create a virtuous circle between employees and customers, engaging everyone in the firm in customer service improvement, not only the people on the front lines.

In this brief article entitled Great Customer Service Costs Less running in the current CEO Forum magazine, I discuss the six-point plan that took Sprint from “worst-to-first.”  According to the prestigious American Customer Satisfaction Index, when Sprint reached the #1 spot, Sprint was the only company that they had seen go from last place to first place in its industry, and Sprint was the most improved U.S. company in overall customer satisfaction across all 43 industries studied from 2008-2014.

The six steps Sprint relentlessly followed were to:

1. Align Compensation and Rewards: Sprint aligned the compensation of every employee in the company around the same metrics, which included customer turnover (churn) and the number of calls to customer care.  
2. Place the customer experience first on the agenda: The agenda of every Operations Team meeting began with churn and the number of calls to customer care.
3. Perform root cause analysis: Sprint collected and analyzed data from customer calls to identify the root causes of customer dissatisfaction.
4. Hold the right organizations and people accountable: The customer care organization is usually not the cause of customer dissatisfaction, but often, inappropriately, they’re held accountable for customer experiences they don’t control.
5. Assign strong project leaders: If you don’t assign strong people to lead the projects, the organization won’t think customer service is important.
6. Simplify the business: It is not simple to simplify, but customers crave, and they’ll pay a premium, for simplicity.  Complexity creates more reasons for customers to call care, and complexity makes it more difficult for care reps to solve problems.

If you’re so inclined, please clickthrough to read more on these six steps and key factors in providing great customer service. I invite you to share your ideas on this important subject with me.

Great Customer Service Costs Less - CEO Forum, Volume IV, Issue 2, 2015

Best Turnaround CEOs of All Time - Dan Hesse | Fierce Wireless

The following excerpt was included in a review of "turnaround CEOs". Dan Hesse was listed alongside Steve Jobs. Published October 2011. 

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Sprint Nextel (NYSE:S) CEO Dan Hesse arrived at the company in late 2007 as it was in freefall, reeling from the tenure of Gary Forsee. One of the first and most prescient things Hesse did was simplify Sprint's rate plans by offering the company's "Simply Everything" plan in early 2008. Since then, simplicity has become one of the key brand values and identifiers for Sprint, which right now stands alone as the only Tier 1 wireless carrier still offering unlimited smartphone data plans to new customers.

Turning the company around proved extremely difficult, and Sprint lost 5.1 million subscribers in 2008, as wireless revenue fell by $3.1 billion, or 32 percent, as compared to 2007. Still, the company was making improvements, most notably in customer service, which had been one of Sprint's key weak points under Forsee.

In early 2009 Sprint's Boost Mobile brand shook up the industry and sparked a price war with its $50 monthly unlimited plan on Sprint's iDEN network. After acquiring Virgin Mobile USA in late 2009, the company re-tooled its prepaid offerings and launched a multi-brand strategy in May 2010 aimed at segmenting the market. Hesse effectively doubled-down (or quadrupled, if you want to think of it that way) on prepaid with the re-launch of Virgin Mobile as well as the launch of Assurance Wireless for low-income customers and Common Cents Mobile pay-per-minute brands. Prepaid remains one of Sprint's strongest growth engines. Sprint also launched its attractive "Any Mobile, Anytime" service, offering unlimited calling to any mobile number, regardless of carrier.

Slowly but surely, Sprint's subscriber losses began to slow down, starting in the fourth quarter of 2009 and continuing in first quarter of 2010. By the second quarter, Sprint had returned to positive subscriber growth for the first time in three years, largely on the strength of its prepaid offerings, though postpaid subscriber losses were decreasing. Sprint added the most net wireless subscribers in a quarter since 2006 in the third quarter of 2010, but still lost postpaid customers. The turnaround continued in the fourth quarter and Sprint added 1.1 million total net subscribers, including net postpaid additions of 58,000 subscribers--the carrier's first net postpaid additions since the second quarter of 2007. 

Around this time Sprint selected Alcatel-Lucent (NASDAQ:ALU), Ericsson (NASDAQ:ERIC) and Samsung for its network modernization project, called Network Vision, the latest evolution of Sprint's network (the company inked a $5 billion deal with  Ericsson in 2009 to outsource the management of its network). Network Vision is centered around multi-mode base stations that Sprint will use to deploy multiple radio technologies, and the plan will allow Sprint to shut down the iDEN network starting in 2013.

In 2011, continued postpaid subscriber losses have leavened overall subscriber gains, but Hesse's biggest coup was finally getting Apple's (NASDAQ:AAPL) iPhone for the Now Network. The company's Network Vision plans, which will allow Sprint to deploy LTE by mid-2012, and move away from 4G dependence on WiMAX provider Clearwire (NASDAQ:CLWR), still need to be ironed out.

...Click for the full recap.

A CEO Worth Emulating

This article, reviewing Dan Hesse's corporate leadership, originally appeared on Talent Zoo's Digital Pivot blog. Published January 2013. 

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As someone who grew up watching a parent run a business, I’ve always paid attention to CEOs who rise to the forefront of media attention. Many of them, like the revolving door of those unfortunate souls in charge of RIM, incur nothing but a growing disappointment in heads of major corporations and a concern for the future of our country.

However, Dan Hesse, CEO of Sprint, long ago earned a place in my heart. Although Sprint may not be the chief carrier in the nation, his manner of running a business is an inspiration to any current or aspiring entrepreneurs.

While other major cell-phone carriers remain faceless corporations, whose customers continually have nothing but ill to speak of them, Sprint has featured Dan Hesse in its commercials for years, a move that gives consumers a name and a face to associate with their cellular provider. This decision alone stands head and shoulders above the choices of other major carriers, who hide in the shadow of their brand and never emerge to address or appreciate their customer base.

Hesse has even, at times, invited customers with complaints about their cellular service to email him directly. Prior to that, when it became apparent that Sprint customers were increasingly dissatisfied, Hesse took steps to ensure that Sprint rose from having one of the worst customer service departments in America with whom to deal to having the absolute best.

Coming from a very technology-proficient family, and being a person who can occasionally be hard on mobile devices, I have personally been a thorn in Sprint’s customer service department at times, but have always had my issues resolved quickly and in the best way possible for all parties. If more CEOs truly took the time to listen, sincerely, to customer complaints, it would surely do wonders for the economy.

...Click for full article. 

The Business Impact Of An Outside-In Perspective At Sprint | Forrester

This article, chronicling Dan's customer service efforts at Sprint originally appeared on the blog of Forrester magazine. Published May 2012. 

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Sometimes a CEO takes the reins at a company that’s in such great shape, I can’t help thinking, “Wow, it must be great to be that guy!”

And then there’s Dan Hesse, CEO at Sprint. Given the shape that Sprint was in when he got the top job in 2008, I was thinking more along the lines of, “Wow, he must be working off a karmic burden!” That’s because back then, the company had the lowest customer satisfaction ratings of any of the major wireless carriers. As a result, it was bleeding cash from high customer care costs and lost subscribers.

Faced with this mess, Dan decided to focus on systematically improving the quality of Sprint’s customer experience as a way of improving Sprint’s bottom line. We were so impressed by his efforts that we included a case study about Dan in Chapter 2 of our upcoming book, Outside In: The Power Of Putting Customers At The Center Of Your Business.

The book won’t be out until August 28th, but you don’t have to wait until then to get a sense of how effective Dan’s efforts have been. That’s because on May 15th, Hesse gave an address at Sprint’s shareholder meeting, and he had this news:

• Sprint now has the highest overall customer satisfaction rating among all major US wireless carriers. Yeah, that’s right — it went from distant last to first, according to the American Customer Satisfaction Index.

• As a result of eliminating the customer experience problems that fueled ridiculous amounts of contact center traffic, Sprint took its customer care costs down from $3.7 billion per year in 2008 to $2 billion per year today. That’s a savings of $1.7 billion per year from improving customer experience.

• Improved customer experience paid off in terms of customer acquisition and retention as well as cost savings: Sprint has now had six consecutive quarters of adding 1 million net new subscribers per quarter.

...Click for full article.

IBM, HP, Sprint retain top spots in Newsweek Green Rankings | GreenBiz.com

This article documenting the eco-friendly efforts of Sprint eco-friendly efforts of Sprint under Dan Hesse's leadership originally appeared in GreenBiz.com. Published October 2012.

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In the race to become the world’s greenest company, Team Finance and Team Technology have taken the lead.

So say the results of Newsweek’s fourth-annual Green Rankings released this morning, which ranked IBM as the top environmental performer out of the 500 largest publicly traded U.S. companies for the second year in a row, and fourth-best company globally.

Hewlett-Packard and Sprint Nextel maintained their #2 and #3 rankings, respectively, as compared to the 2011 results.

...Click for full article. 

Sprint CEO Dan Hesse's plan to fight AT&T and Verizon: 'doing the right thing' | The Verge

This article detailing Dan Hesse's corporate strategy originally appeared in The Verge. Published August 2012. 

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"At Sprint, we describe it internally as being the good guys, of doing the right thing," he said today. That moral component pervades many of the PR-friendly activities Sprint engages in, from eco-friendly recycling programs to distracted driving prevention, but it also, Hesse says, informs what would otherwise seem like calculated business decisions like continuing to offer unlimited data.

The topline example is Sprint's place in the American Customer Satisfaction Index, which since Hesse's four-and-a-half-year tenure as CEO have gone from worst to first amongst carriers. Hesse says that "doing the right thing" when it comes to better customer service not only makes customers happier, but saves the company money: "Customer care costs are roughly half of what they were four and a half years ago."

While Sprint is making some headway in customer service and its cash position, that's not to say the company or its CEO has illusions that everything is great, "What you’re not going to see around here are any mission accomplished signs," Hesse says. Amongst the reasons Sprint is struggling is the vastly more powerful and entrenched competition it's up against: AT&T and Verizon.

...Click for full article. 

Steering Sprint's Turnaround | Wireless Week

Dan Hesse's leadership was recognized at the Wireless Week 2012 Leadership Awards. Details of the recognition follow. Published May 2012.

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Four years and several ups and downs later, Hesse's efforts to revive Sprint are starting to bear fruit.  

"I told you on my first call that our turnaround would be difficult and not quick," Hesse said during the company's fourth-quarter earnings call in February. "Although we're far from finished, our progress, nevertheless, has been very significant."  

Under Hesse's leadership, the company launched unlimited data plans, forged a WiMAX alliance with Clearwire, bought Virgin Mobile USA, got the all-important iPhone and began the laborious process of phasing out its iDEN network and moving toward LTE. 

Hesse’s reign also has been characterized by a number of out-of-the-box initiatives, such as signing up to be the launch partner for Google Wallet, outsourcing management of its network to Ericsson and embarking on a company-wide environmental push ranging from energy-efficient facilities to handset recycling.

Along with those initiatives came much-needed improvements in customer growth, sales and consumer perception of the Sprint brand. 

Sprint's net adds during the last three months of 2011 were its best in six years, its customer base reached an all-time high of 55 million and its postpaid net adds marked a 10th consecutive quarter of year-over-year improvement.  

"Our top line is growing again," Hesse said. "Our customer experience has gone from the worst to arguably the best in the industry, and our once battered brand is strengthening and gaining momentum." 

...Click for full coverage.

Inaugural L. Joseph Thomas Leadership Award | Johnson School of Management

Dan Hesse received the inaugural L. Joseph Thomas Leadership Award in January 2012 and spoke on the subject of Evolving Role of America’s Business Leaders at the ceremony. 

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In recent years, wireless technology has become the most rapidly adopted technology in history. “It has been growing faster than TVs, PCs, and automobiles combined,” Hess said. A recent survey suggests that four out of 10 students on college campuses cannot go more than 10 minutes without checking one of their wireless devices. “In my day, we couldn’t go more than 10 minutes without checking out a member of the opposite sex,” Hesse joked.

Despite the rapid growth of the industry, Hesse explained that American business in general has been in trouble over the past few years. “In my view, principal business leaders will need to build our nation's leadership back up from the mess left by the lack of political leadership from our increasingly ineffective two-party political system,” Hesse said. “The imperative for corporate social responsibility by America’s business leaders to build our country’s leadership back up has never been greater.”

According to Hesse, one of the main problems with the American economy is the changing attitude towards capitalism. “Mitt Romney’s business background should be an asset, but instead, it’s a political liability,” he said.

Another issue, he believes, is that the nation is losing interest in the future. “I was talking to the CEO of a major corporation just last week, and he said that investors would prefer a higher profit next quarter even if it meant killing his business over the long term,” Hesse said. What’s even worse, he said, is that this is a widely held sentiment.

...Click for full coverage.