Sprint’s Top Marketer on Ad Spending, Subscriber Losses

New ads from Sprint Nextel promise nothing less than a “Wireless Revolution” predicated on the ability to use cell phones for data without racking up extra charges. Whether consumers will join the brand in the revolution remains to be seen. For the past few quarters, the telecom giant has had its hands full just trying to keep its existing subscribers from fleeing. In its most recent quarter, which ended Sept. 30, Sprint lost 1.3 million net subscribers while AT&T added 2 million and Verizon Wireless gained 1.5 million. But analyst Roger Entner, svp, communications sector for Nielsen IAG, says Sprint is making some progress of late on the marketing front, particularly with its new “Wireless Revolution” TV ads, via Goodby Silverstein, featuring CEO Dan Hesse. “The ads with Dan Hesse are more and more striking a chord with people,” said Entner. “Before that, they were all over the place with no consistent look or feel.” If the ads do indeed turn the tide, some credit should be given to Bill Morgan, Sprint’s svp of corporate marketing. Morgan joined Sprint in November 2006 and since then has been focused, among other things, on improving Sprint’s customer service and honing a consistent message. Some excerpts of a recent conversation with Morgan are below:

Brandweek: You rolled out ads featuring CEO Dan Hesse. It’s fairly unusual to have a CEO in a starring role like that. Why did you take this approach?
Bill Morgan:  We really are making some significant changes here and Dan’s kind of the architect of these changes. They are changes that we think are leading the wireless industry and we’re really just trying to communicate clearly that this is a revolution in the industry. Look at what we’ve done on the pricing side with Simply Everything [a $99 all-you-can-talk, text and surf plan Sprint rolled out earlier this year], which is truly an all-you-can-eat flat price which hadn’t really existed in the industry. There were voice plans like that, but nothing that included data and that’s where the industry is going. It’s all headed toward data and we’ve changed the entire dialogue in the industry, so having Dan talk about that as well as our customer service improvements, those are things that are really important and demonstrable.

BW: With regard to Simply Everything, do you think there’s a danger that that will lead to commoditization in the industry?
BM: It’s kind of the old Wayne Gretzky thing, you’re skating to where the puck’s going not to where it’s at. People are totally used to this in voice, but they’re looking for the capability and productivity that comes with other applications. So whether it’s things like texting or e-mailing or surfing the Net as we really get to more sophisticated, using these devices for all things data really opens up the opportunity to have consumers use the full capability of the phone and unleash the whole power of their phone. And we really want people to do that. We know that consumers want simplicity and predictability. They want that in their pricing and in the applications that they have for their phones. We look at that for pricing plans we’re developing and for apps we’re developing. Are they predictable? Are they easy to understand?

BW: Sprint has been losing some subscribers for the last two years or so. Why?
BM: We had, through the merger [with Nextel in 2006] a lot of challenges on the integration side, but the truth is we have stabilized our churn and we are churning significantly less than we had. So we’re tracking well there and are really focused on stabilizing that and making sure that our current base of customers continue to value us and see us as the best choice in the industry.

BW: Analysts we talked to said the Instinct phone was a big hit with Sprint subscribers, but it didn’t necessarily pull in a lot of new subscribers. Is that fair to say?
BM: The Instinct is the No. 2 hottest-selling phone this year [next to Apple’s iPhone]. It clearly won a lot of recognition. It was best-of-show at the CTIA [the wireless industry’s largest trade show, in April] and we certainly had a lot of people in our customer base who were really excited about it. We have a pretty rich customer base that is really data-centric and our whole network is really built to capitalize on data and our basic customers understand that we have the most robust 3G network. The competition has 3G networks, but theirs just don’t stack up to us in terms of performance, so it’s not surprising that our base that already are with us and understand the power of the network, that they would be the ones to most immediately gravitate toward the device. [But] we did sell well with new customers, not just with the Instinct but with other phones introduced this year.

BW: What is the main reason that people switch carriers? 
BM: There’s a myriad of reasons. Network reasons. Customer care reasons. I think value is becoming an increasingly important one. I think the carriers have the same kind of triggers for switchers, but I think value will play a bigger role as the economy continues to really press on folks.

BW: How is the economy affecting your business? Are people dropping their wireless plans to save money or ar they pulling the plug on their landlines?
BM: We have not seen to date any significant change on our end. We do believe and we’ve seen strong evidence that people are cutting the chord. They’re looking at it and saying “Gee, I’ve got a landline and I’ve got a mobile phone. I really don’t need both.” They’re also looking at, “Do I need that DSL line?” So we’ve been seeing some really good movement on chord-cutting. 

BW: Typically wireless brands are among the top advertisers, but now the market is pretty saturated. Do you see this spending war ending any time soon?
BM: I think it’s going to be pretty much the same level of spend you’ve seen. If you look at all the analysis done, by 2011 we’re going to have 90 percent market saturation. So it’s really fighting over switchers and I think you won’t see marketing or advertising budgets reduce, and they will stay the same and could very well increase as the efforts to get switchers becomes more and more important.