It's not the best of times for Sprint (NYSE:S). The company has the lowest overall network performance; according to RootMetrics, it lost about 500,000 phone subscribers in the most recent quarter, and the company recently announced it's cutting 2,000 jobs.
The company's new CEO, Marcelo Claure, spoke recently about how he plans to bring customers back to Sprint -- and it just might work.
May the best value win
At the Wells Fargo Technology, Media and Telecom Conference, Claure said Sprint customers will "get their money's worth," because the company offers the best value, even if it doesn't have the cheapest wireless plan. Over the next few weeks Sprint will open the market floodgates to try to convince customers that the company's wireless plans are the better deal.
This should be a good strategy for Sprint, considering it's worked well for its competitor T-Mobile (NASDAQ:TMUS). To fight off customers attrition and falling revenue, T-Mobile rebranded itself as the "uncarrier" a couple years ago and marketed the heck out of being the underdog. To prove it's on the customer's side, T-Mobile gives away more freebies than any other carrier, offering up-front pricing, no contracts, and low-cost plans. This strategy's convinced wireless customers that T-Mobile's a good value, and has earned the company 10 million net customers over the past six quarters.
It won't be easy outdoing T-Mobile for the best value proposition, but Sprint's gotten off to a good start with its unlimited iPhone plans, which cost just $50 per month.
Consistency is key
Claure also acknowledged that providing a consistent and reliable network will help keep Sprint customers from leaving. "The rip and replace was a traumatic experience for Sprint and Sprint customers," Claure said, speaking about the company's recent network upgrades.
That transition is what helped push the company's churn rates so high -- up to 2.18% right now -- as customers left the carrier in search for a more reliable network. Claure noted that to keep Sprint customers in place the company needs to meet customers' wireless expectations. "You can affect churn significantly if you are able to meet the basics," he said.
Right now, Sprint is the most likely carrier to get dumped by its customers, but the recent network upgrades -- along with its continuing transition to the faster 2.5 GHz wireless spectrum -- should start changing the tide for Sprint's customers. Claure mentioned the hardest part of the network changes is now finished.
Changes already in motion
While Sprint will start implementing the new strategies soon, the company's already starting to see benefits of some earlier changes. The carrier recently tightened its credit requirements for customers, which has helped lower Sprint's involuntary churn rates (when the company has to drop a customer because they've stopped paying).
In addition to the credit changes -- and despite a poor fiscal second quarter -- Sprint was able to curb the customer exodus in September. During the month, the company became port positive, which means more customers signed up for Sprint service than left the company.
Still, it's going to be some time before Sprint can win back its old customers. As Claure mentioned at the conference, "It's just the beginning of a very long journey."
Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.