NET PROMOTER SCORE: WHY INSURANCE AGENCIES NEED IT – EPISODE 084
On this episode of The Digital Broker, Ryan Deeds interviews Matthew Smith of Rocket Referrals, a company that helps insurance agencies discover and get value from their Net Promoter Score. By listening to this episode, you will learn:
- Why a Net Promoter Score is superior to other measurements of customer satisfaction
- How to find your Net Promoter Score and improve it
- How doing so will transform your business for the better
You have probably encountered a question like this before: How likely are you to recommend our service to a friend or colleague? You might have thought this was a vain way to solicit customer feedback, but it’s not. It’s a careful and calculated way of measuring a Net Promoter Score (NPS).
Far more than a traditional customer satisfaction survey, a Net Promoter Score can tell you a great deal about the wellbeing of your organization, because it measures loyalty—from which you can deduce a customer’s likelihood of continuing to do business with you, a customer’s likelihood of recommending you to others, and a customer’s likelihood of disappearing on you entirely.
But to do any of that, you need to send out surveys first, asking customers to rate, on a scale of one to ten, how likely they would be to recommend your service to a friend or colleague. When you gather the responses, you divide them into three categories:
- customers who said 0 to 6 are your Detractors;
- customers who said 7 or 8 are your Passives; and
- customers who said 9 or 10 are your Promoters.
Convert each figure into a percentage of the total respondents, and subtract the percentage of Detractors from the percentage of Promoters. The result is your Net Promoter Score, which can be anything between -100 and +100.
It is always nice to see that you have lots of Promoters, but the hidden value of a Net Promoter Score is in what it tells you about Detractors, how many you have, and what you need to do about them before they dump you. “The percentage of Detractors of most agencies who start with us is about 10% to 15%,” says Matthew Smith of Rocket Referrals, a company that helps insurance agencies figure out their Net Promoter Score and improve it. 10% to 15% doesn’t seem like much, but here’s the bad news: “The likelihood that those customers will stay with the agency by the following year is only 55%.”
This ought to be a wakeup call to any insurance agency, where it is usually more expensive to acquire new business than it is to keep it and the departure of even a few customers can have a serious impact on the bottom line. The good news is that the trend can be reversed—as long as you know what to work on. That is why, along with helping insurance agencies send out surveys and calculate their Net Promoter Score, Rocket Referrals supplies agencies with the means to interpret those scores and improve them. This includes authoring messages they know to resonate with customers; leveraging algorithms to determine when to send out those messages for best response rates; paving the way for the publication of online reviews and customer testimonials, and providing a dashboard to monitor progress in one place.
“When you read the comments, 60% of Detractors cite a breakdown in communication as the number one reason they’re not Promoters. Maybe they’ve lost track of who their agent is, or they were expecting more proactive communication and aren’t getting it. They’ve requested documents weeks earlier and haven’t received them, or nobody’s been returning their emails.” If you see that your Detractors are unhappy with your communication, you should expect to nudge them rightwards on the NPS spectrum by focusing on your communication—which is exactly what happens, with real-world consequences. Do you remember those Detractors who were only about 50% likely to stick around by the following year? That number jumps to almost 90% if the agency does something about it, like surprising the customer with a telephone call.
That’s the whole point of a Net Promoter Score—“to learn from the things that our customers are telling us, to figure out what we’re doing well versus what we’re not, and to set up systems that ensure we do more of the things our customers love and less of the things our customers dislike. When your Net Promoter Score increases, your retention, and referrals rise organically. Many agencies who come to us are simply looking for more referrals and reviews at first. Once they start using Rocket Referrals, the light bulb goes off. They start tracking what their customers think about them. They get feedback that enables them to make changes on an operational level. They get better as a business because of that feedback. If your customers are saying that they’re referring you because of x, y, and z, and not because of a, b, and c, you need to do more of x, y, and z and less of a, b, and c. People are starting to get that.”
So—how likely would you be to recommend The Digital Broker to a friend or colleague? You can always tell us what you think about each episode by joining our Digital Broker LinkedIn group, where you can also chat with our guests, our host Ryan Deeds, and our growing community of insurance agents, brokers, and specialists. Join us and let’s talk.