Friday, January 25, 2008

Another one bites the dust.


To my knowledge, Tim Kelly's dismissal after eight months as Sprint Nextel's CMO is what will be the first of many 2008 CMO-axings. CMOs are dropping these days like pants on prom night. And no wonder, most CMOs, like Tim Kelly are attempting to solve 2008 Marketing problems with 1985 briefs.

Here's what I mean. Sprint spends $1.2 billion on advertising. Kelly oversaw Sprint's switch from agencies TBWA/Chiat/Day and Publicis & Hal Riney (an alma mater of mine) to Goodby. But Sprint's problems are not problems advertising can solve. In fact, what Chiat and Riney were doing for Sprint was fine. Even if Goodby's work were a thousand times better, Sprint's problems do not stem from advertising, or integrated marketing communications, or their tagline.

This is from Ad Age: "Last week, Sprint reported a fourth-quarter loss of 683,000 postpaid customers, those billed monthly for service and who are considered the industry's most valued." In other words, Sprint lost almost 7,500 customers a day--despite having contracts with their customers that are "Shylock-ian" in their rigidity.

No advertising can fill a "bucket" that leaks that quickly. Mr. Kelly has been canned because he was throwing money at advertising to continue to re-fill Sprint's leaking customer bucket. I've learned over the years that it costs five times as much to acquire a new customer as it does to retain one. Kelly's $1.2 billion of marketing spend should have been focused on treating consumers well.

Then he would still be employed.

1 comment:

T said...

and with mVoIP it's going to be even tougher for the established giants. as mvoip is a way to get their customers. Especially those who must call a lot of long distance which is robbery in daylight as it's charged today. roaming charges is that other pipe of gold dust that will dry up.
i have a feeling thqat sprint, t-mobile, verizon will embrqce mvoip as there's less money in it for them per customer than today. but if they don't, they will lose just about everything.
people are simply getting used to call almost nothing per call.