Sprint Customers Unhappy

Sprint – Nextel has a problem keeping customers happy, according to the latest
numbers from the American Customer Satisfaction Index. Sprint’s numbers are so
bad, in fact, that the index’s founder wonders how the company can even stay
afloat.

“Business is unsustainable in a competitive marketplace when customer
satisfaction scores are as low as Sprint Nextel’s,” said the
founder, Claes Fornell. Sprint’s satisfaction level dropped 8% from last
year to 56 on the 100-point index. Verizon
scored the best in the industry, at 72. Commenters on this blog regularly slam AT&T
for its service, but the company’s cell phone division gained 4% to score a 71.
You can see the full customer satisfaction index here.
Sprint shares are down 2% today to $9.05 at last check, and telecom stocks in general are heading lower amid broad market concerns. Shareholders have watched Sprint stock plunge 60% since the 2005 purchase of Nextel Communications, and they aren’t at all pleased.

“Verizon and AT&T have been eating our lunch,” said one shareholder to CEO Dan Hesse at the company’s annual shareholder meeting this week. “How did we get into
this situation?”

Hesse gave a rather candid answer, saying that Sprint went to the bottom of the barrel for its customers, getting subscribers with lower credit ratings who have problems paying bills. When the economy heads south, those customers are more likely to cancel service or stop paying. AT&T and other rivals were more selective,
aiming for customers with better credit.

Sprint has also been widely criticized for poor customer service, and its customer satisfaction nosedive reflects that. Its high-end customers have been fleeing for other companies.

Sprint is in the midst of a big turnaround, and investors have shown faith
by sending shares up over the last two months. The company is pinning its future
on a partnership with Clearwire to build out a national WiMax network, one that
has the backing of Google and Intel.

With so much riding on the future, Sprint shares are worth a look. But those big
plans are doomed if the company can’t keep customers happy.

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