On Fri, 6 Jul 2007, Craig Froehle wrote:
> What I'm about to say here will probably be met with indignant gasps and
> muttered profanities, but what Sprint's doing is *exactly* what I teach my
> students they should consider doing.
>
> As a business school professor, one of the courses I teach is Service
> Operations Management. In that course, I show a graph that looks like a J
> that has been rotated 200 degrees clockwise. The x-axis is "customer
> retention rate" and the y-axis is profits. As you start retaining more and
> more of your customers, your profitability increases...to a point. At some
> point, you're retaining customers you really shouldn't, as they cost you
> more to service them than they generate in revenue for you.
>
> Say you ran a restaurant. Would you be happy to serve a customer who comes
> in and takes up a booth for hours, uses napkins and silverware, sugar, milk,
> stirrers, uses up your wait staff's time, but only orders a 29-cent cup of
> coffee? No...you can't run a business with customers like that.
>
> I fully understand that Sprint is partly to blame -- Sprint's customer
> service is lousy, which may be causing some of the repeat calling. But,
> there are always going to be customers who simply cannot be satisfied and
> will continue to leech away your resources unless they are cut free. If
> Sprint is finally doing that, more power to them. I just hope they do what
> I teach my students, which is to be really smart in selecting which
> customers get pared.
With all due respect I think you missed a bit with the analogy. If the
customer came in every morning, noon and night and ordered a full meal and
always paid in full you'd be unwise to run him out the door, especially if
your restaurant were losing money and had a reputation for lousy food and
poor service. Even if the customer is very demanding of the staff. The
restaurants next door, VerPieZone and AT&Tacos, have better food and
friendlier waitstaffs - can you afford to send a profitable customer over
there?
Sprint isn't terminating these customers for not paying their bills but
for using up more resources than they would like. Should my ISP cancel my
contract with them just because I'm using the full 20mbit they allow me,
even though they oversubscribe the network and don't expect anyone to use
that much for more than a few minutes at a time? If I were violating
their terms of service (spamming, distributing viruses, etc) that's one
thing, but the Sprint contract doesn't give any warning about calling
support too much. And that's the worst part: this was done without
warning. Back to the restaurant, would you ask the customer to be a bit
easier on the staff and not take all of the napkins or would you just turn
him away at the door without warning? You can bet he's going to tell his
friends if you do the latter and they'll avoid your place too, deceasing
business that much further.
-Jason
-----
--- There are no absolute statements. I'm very probably wrong. ---
"The difference between genius and stupidity is that genius has its limits."
- Albert Einstein
