Casualties of Highly Competitive, Commoditized Services Marketing: Let’s Start With Sprint’s Framily

5
133 views

Share on LinkedIn

Services marketing, first and foremost, must create perceived – and hopefully ongoing – benefit for prospective and current customers. When that doesn’t happen, there can be serious, long-lasting consequences. Case in point, the Sprint Framily Plan was intended to make this wireless vendor the customer’s best friend and best wireless service option. The program, promoted beginning earlier this year, was available to new and existing customers. The basic premise was that the more people that were added to the group, up to 10 phone lines, the greater would be the savings for everyone on the plan.

Here was the deal represented by Framily. For one line of service, new Sprint customers paid $55 per month per line for unlimited talk, text and 1GB of data. For each additional new Sprint customer that joined the Framily group, the cost per person went down $5 a month up to a maximum monthly discount of $30 per line. By building a group of at least seven people, everyone got unlimited talk, text and 1GB of data for $25 per month per line (pricing which excluded taxes and surcharges).

As a concept, the Framily Plan allowed members to share the savings, without the hassle of sharing a bill. Each account could be billed separately. These were the basic components of the Framily program. The lighthearted TV campaign was intended to generate a lot of new business and stabilize existing Sprint customers. That said, the plan was pretty complex, and raised many questions and required a lot of explanation. Until recently, Sprint was actively in customer FAQ and answer mode.

When compared head-to-head with AT&T, T-Mobile, and Verizon (cost for a four-member family plan with roughly 2.5GB of data per phone), T-Mobile’s ‘Simple Choice’ plan was the least expensive, and it offered a month-to-month agreement (rather than the standard one to two years) and no early termination fees. It also offered free international data, no overage charges, and unlimited music streaming at no added cost. T-Mobile has been actively promoting this plan, forcing other vendors, especially Sprint, to catch up.

Long story short, Framily didn’t achieve its key objectives; and, in fact, it missed on multiple levels. Industry marketing and communications experts weighed in; and they were less than kind. They said it was a) an adolescent commercial campaign, almost to the point of being incoherent, b) perceived to be a financial ripoff, c) a glorified pyramid scheme, and d) risky to users (due to cited loss of customer control). It was a fuzzy value proposition at best. Net: Poor cash flow for Sprint – fewer postpaid customers, and a higher postpaid churn rate (2.1% per month, or 25.2% per month) – all contributing to the departure of CEO Dan Hesse (so much for ‘Simple Everything’).

Now, gone is the voice of Andrew Dice Clay as the Framily hamster/father. Gone is the Goth guy claiming to be a Framily member. Sprint has gotten into a race for the lowest price; and its latest commercials feature a holdover actress from the Framily campaign giggling with her friends over the low prices represented by the replacement plan, Family Share Pack.

According to the American Customer Satisfaction Index, Sprint may have become the most improved U.S. company in customer satisfaction over the past six years, and other accolades (including the the top-rated wireless carrier in the 2013 Temkin Customer Service Ratings), but that apparently hasn’t translated into a straightforward value proposition that drives sales and customer retention. Of the four major mobile carriers in the United States, Sprint was, and is, the only one losing customers. They had to do something. Unfortunately for Sprint, Framily turned out to be the wrong something.

Post-Framily, Sprint has wisely embarked on a more traditional, and broadly appealing, marketing course, with the theme “The Best Value in Wireless”. This new program has unlimited data (at lower prices than T-Mobile, and features the fact that AT&T and Verizon don’t offer unlimited data), and reminds consumers about Sprint’s customer service, Further, it tells consumers that there are no monthly access charges through 2015, the easier ways to get desired new wireless devices, and about their new network (better call quality, faster speeds, fewer dropped calls). These are rational and emotional things that most wireless customers want, and many of the features are key purchase priorities. So, “The Best Value in Wireless” campaign is an important step in the right direction for Sprint.

5 COMMENTS

  1. Framily was a bad idea, but I give Sprint some credit for trying.

    I’m wondering if they did customer research that confirmed people liked the idea, and then in reality what customers did was not what they said they would do. Ah, the perils of research.

    It’s easy to be a “Monday morning quarterback.” Companies that take risks can sometimes make embarrassing mistakes. We’ll see how Sprint bounces back.

    As for Dan Hesse, I’ve read the media reports and haven’t found any suggestion that he as fired or forced out due to this one marketing program. It’s far more complicated than that.

    My take is that Hesse rescued Sprint from almost certain demise, fixed customer service and stopped the bleeding, but made his own share of mistakes. Here’s one take on his departure:
    https://gigaom.com/2014/08/06/the-hesse-era-at-sprint-was-a-7-year-struggle-with-nextel-and-bad-network-decisions/

  2. Did Sprint conduct viability and customer favorability research for Framily? Maybe some qualitative or basic confirmatory studies (multivariate quant research would have identified the weaknesses of the program), but, as importantly, I’d wonder if they piloted the offer plan concept before rolling it out.

    Re. Nextel, this business-focused service clearly was a major challenge for Sprint to integrate right from the beginning; but, from all the flogging of Wiimax, the company ‘bet the farm’ on this technology, and then ceded a lot of control to Clearwire for developing and completing it. Having been tangentially involved in all three of these situations (developed multiple research and consulting proposals for Sprint, Nextel and Clearwire at the time), the seriousness and level of concern were quite evident.

    Framily was the proverbial last straw for Hesse at Sprint. While he should be credited with leading the rebuild of the company’s service capabilities, service wasn’t sufficient – as it usually isn’t – to prop up the overall customer experience and perceived value proposition relative to competitors. As noted in my blog, during Hesse’s tenure, the number and percentage of valuable postpaid customers significantly declined. Framily was unable to plug the leak in that bucket, and may have contributed to making the bucket leak faster..

  3. Agree that improving customer service wasn’t sufficient at Sprint, and indeed that’s probably the case at most every company.

    Unfortunately, customer service is too often equated with customer experience (CX). And CX advocates point to the correlation between CX leadership and business results as “proof” that investing in CX is the key to success.

    Sprint’s story shows that the “product” is still a key part of the puzzle, too. Verizon and AT&T have stronger offerings, while Sprint has had to compete on more “value” such as all-you-can-eat pricing plans.

    Let’s face it — with mobile devices people don’t want to call customer service. It means something broke or they couldn’t understand their bill. Either way, it’s not a good thing.

    There’s a great lesson here for the CX industry. Don’t overlook the product!

  4. Many companies delude themselves that improvements in customer service performance and functionality equate to overall experience, which, in turn, tacitly drives future customer behavior. We can both easily agree that it’s perceived value in the functional and emotional connection, and trust in the product and brand, that create or erode loyalty. Product can often get lost in the ‘red herring’ of service emphasis.

    In your 2010 interview with Sprint’s exec in charge of what they define as customer experience (who has moved on to become EVP at SATMAP), his responses to your questions were almost entirely service process-based. Here were my comments about his answers: “Generally informative re. transactions and service, but didn’t provide much targeted, prioritized detail (apart from first call resolution) on what Sprint is doing/has done to drive more positive, and profitable, customer behavior, even when asked. Customer perception was introduced, but not amplified. Rational and relationship customer experience, and especially branded customer experience, is critical to strategic differentiation in most markets; and this interview focused on the operational ‘table stakes’ of customer satisfaction and dissatisfaction, and churn reduction. Didn’t get that Sprint is endeavoring to be world-class in customer experience…..” And, there apparently wasn’t much targeted, or segmented, experience improvement for postpaid customers, because Sprint has continued its high churn rate for this key, and financially contributory, customer group.

    Product is an absolutely essential contributor to perceived value. So, as frequently discussed, is brand image and reputation as a major foundation of trust. The fact that Framily, Sprint’s backbone program at the time, was seen as both more complex and more expensive relative to competitors served to help undermine the carrier’s still delicate and recovering brand perception.

  5. The Sprint turnaround has generally been cast as a CX success story, by me and others.

    However, in my 2010 interview with Sprint exec Jerry Adriano, I asked what they found to be the drivers of customer loyalty. His answer: product, price and service.
    http://customerthink.com/jerry_adriano_sprint_customer_experience/

    * On service, the story is clear — Sprint made major strides.

    * On price, Sprint is known for aggressive pricing and usage plans, compared to its chief rivals.

    * On product — Sprint is still lagging if not falling farther behind.

    Without customer service improvements, Sprint would likely be out of business. But it still needs to solve its product problem.

    The Sprint story shows clearly that CX improvements alone are not enough.

LEAVE A REPLY

Please enter your comment!
Please enter your name here