Sprint.com Drives Traffic by Emphasizing Value

Over the last few weeks, Sprint (S) announced significant company-wide cost cutting measures and substantial layoffs. The company is faced with making hard, but necessary, business decisions to try to put them back on course. But what else is going on and is there a more positive side to this story?

There is a silver lining for Sprint: the Online Channel. Sprint.com looks like a sure bright spot for Sprint- they have seen improvement over the past year as a result of online acquisition / retention related changes on their site. Let’s dive a bit deeper and see how this impacted their traffic and sales.

Sprint is driving more Wireless Prospects (i.e. potential Sprint customers) to the website, and getting more of them to convert, as shown in the chart below.

In December 2008, Sprint saw 46% more Prospects come to Sprint.com than in December 2007 (blue bars). These consumers, in the market to do some Holiday shopping, appeared to be driven to Sprint.com via online ads – the percentage of Prospects entering the site through ads was up 115%, year over year.

However, Sprint.com’s greatest improvement since December 2007is where it counts the most – online gross adds. December 2008 online gross adds were up 72% from the same time the year before (red line). People are not only going to Sprint.com, but they are buying, driving Sprint’s online conversion rate up 17%, year over year.

One factor that could be contributing to this phenomenal online growth is that the emphasis on value in Sprint’s 2008 messaging resonated with consumers. In December 2007, Sprint focused on the SprintSpeed campaign. While there was one free phone promoted (the M300), the majority of the advertising was done on higher end phones like the BlackBerry Pearl ($199) and the Muziq by LG ($99).

With the 2008 holiday season, Sprint took a much different approach – emphasizing value in tough economic times. They also offered higher end phones– like the Palm Centro and the Rumor by LG - for free.

(Screenshot 1: Sprint holiday ad featuring Free Palm Centro, $149.99 LG Lotus, and Free Rumor by LG)

On plan comparisons – they went head to head with the competition: one holiday ad stated consumers could “save at least $480 annually over comparable AT&T (T) and Verizon (VZ) plans”

(Screenshot 2: Sprint holiday ad featuring a head to head comparison on potential savings over other Carriers)

The takeaway here is that the online channel can be a bright spot in tough economic times and companies, like Sprint, can get a clear sense of their advertising‘s effect. Sprint now sees that results can be achieved by sending a message that encompasses the potential Customer’s needs (i.e. high end phones, “Everything” plans) at a price point that they can handle.

We are all looking for value right now, and the online channel is a great means to find it in 2009.

Comments

[PastTense]

What is this nonsense? Sprint is losing customers while its major competitors are growing. It has lousy customer service. It's losing money.

Who cares about a website?

See articles like this instead:
www.baltimoresun.com/b...

2009 Feb 10 10:51 PM

[NotPastTense]

Hey PastTense,

Maybe if you understood something about investing you might realize the value in learning postive news about struggling companies.

If all you want are obviously negative big headlines, stick to the covers of major newspapers. For people who are looking for investment opportunities in companies that are showing potential for growth and stamina in the tough economy, this is welcome news.

2009 Feb 11 11:53 AM

[User 355717]

While this article proves the online channel did improve year over year from a volume and conversion perspective, you really need to examine the strength of the offer. Two of the handsets were FREE. Maybe this had a bit more of an impact to the site performance than any changes to the online experience.

Its true, wireless companies are most concerned with the re-occuring revenue. This article proves that the online channel was able to bring in more customers. However, Sprint has clearly not solved the churn issue.

In terms of an investment opportunity, I think we'll see next week when earnings are presented. I don't think we'll see any real positive momentum. The company is going through deep cost cutting measures. These are one time gains. How will they be able to improve margins in the quarters to come?

2009 Feb 12 10:18 AM

[Geddy]

I don't know much about investing but I know putting money in a company in a constant losing trend is probably not a smart move.


On Feb 11 11:53 AM NotPastTense wrote:

> Hey PastTense,
>
> Maybe if you understood something about investing you might realize
> the value in learning postive news about struggling companies. <br/>
>
> If all you want are obviously negative big headlines, stick to the
> covers of major newspapers. For people who are looking for investment
> opportunities in companies that are showing potential for growth
> and stamina in the tough economy, this is welcome news.

2009 Feb 12 10:13 PM

[User 356435]

SO refreshing to hear some good news about Sprint! I've been cheering for for them the whole time. Not only am I a 7 year customer, but I'm a stockholder as well. I really want them to succeed and this sheds some greatly needed positive light on Sprint! Dan Hesse's hard work is paying off!

2009 Feb 13 09:35 AM

[Nextel Accessories]

Where did this info come from?

2009 Feb 13 11:28 AM

[Aryana]

The facts are plain and simple. According to JD Powers Sprint has the fastest and most reliable Data networks in the US. Sprint is also the only company, yes the only major carrier offering 4G technology. Last but not least Sprint will be the only carrier to offer the iPhone killer, the Palm Pre. Couple this with Sprint's new management and recent reports from independant research, they have the best customer service in the telecom sector since they got new management. Mark my words, Sprint will be trading north of $5 very soon.

2009 Feb 13 12:05 PM

[Geddy]

I would re-read JD Powers again Aryana. VZW & the other carriers far exceed Sprint in EVERY category (network, coverage, customer service, etc.). Since the "4G" standard has yet to be written they do not have the only "4G" service. AT&T offers HSDPA which is every bit as fast.

I guess I would agree with you that being above $5 would be a major bonus for them though, seeing as they're below $3 now & sinking! :)


On Feb 13 12:05 PM Aryana wrote:

> The facts are plain and simple. According to JD Powers Sprint has
> the fastest and most reliable Data networks in the US. Sprint is
> also the only company, yes the only major carrier offering 4G technology.
> Last but not least Sprint will be the only carrier to offer the iPhone
> killer, the Palm Pre. Couple this with Sprint's new management and
> recent reports from independant research, they have the best customer
> service in the telecom sector since they got new management. Mark
> my words, Sprint will be trading north of $5 very soon.

2009 Feb 14 03:42 PM

[AMan]

Hey Past Tense - your name is accurate.

Keep reading yesterday news and perceptions....a turn around starts with a single step

DIY You know Apple stock was $10 a share in 1995. Don't buy that one either, they are just about to close down due to the white box PC.

Don't buy Sprint stock, you don't deserve it.

2009 Feb 16 08:57 PM