As insurance agents, you know that the most productive way to maintain and expand your book of business is to ensure that customers are satisfied with your products and services. And the best way to achieve this is to solicit feedback directly from customers themselves.
But how do you do this in a way that’s effective and efficient?
Enter Net Promoter Score. Net Promoter Score, or NPS, is the gold standard across organizations and industries when it comes to measuring customer satisfaction and loyalty. Not only is NPS used to track brand sentiment and perception, but also plays a vital role in customer retention and acquisition strategies.
In order to utilize NPS to its full potential, it’s important to understand what it is, how it works, and why it can be leveraged to grow your customer base.
Net Promoter Score (NPS) was developed in 2003 by Bain and Company–one of the largest global management consulting firms. It is now utilized as the standard for measuring customer satisfaction and brand loyalty across all industries. Typically distributed as a one question survey, it asks customers: "On a scale from 0-10, how likely are you to recommend <product, service, or brand> to family, friends, or colleagues?"
Based on the customer's numeric response, NPS scores are grouped into the following three categories:
Promoters = a response of 9 or 10. These are people who had a very positive experience and are very likely to recommend the brand to others.
Passives = a response of 7 or 8. These are people who had a neutral experience. They will neither speak negatively or positively about the brand with others. These responses are not included in an overall NPS score since their responses have a net neutral effect.
Detractors = a response of 0 to 6. These people had a negative experience and will not recommend or speak positively about the brand with others.
NPS can be utilized to measure a customer’s satisfaction with the organization overall, or can be used to measure customer satisfaction with a specific product or service.
HOW IS NPS DISTRIBUTED AND COLLECTED?
NPS is presented in a survey format that can be delivered to customers via email, text, directly on an organization’s website, or other various customer communication channels. Responses are collected through the survey platform used to create it.
An example is shown below.
HOW IS AN OVERALL NPS SCORE CALCULATED?
After customer responses are collected, an overall NPS score is assigned. The formula used to calculate NPS is:
% of promoters - % of detractors
For example, if you surveyed 100 customers and 10% of respondents are Detractors, 20% are Passives, and 70% are Promoters, your NPS score would be:
70 - 10 = 60
NPS scores range from -100 to 100. A score below 0 is generally considered as needing improvement; 0-30 is considered good; 30-70 is considered great; and 70+ is considered excellent.
Below is an illustrative breakdown of how respondents are categorized in relation to how NPS is scored.
NPS scores vary widely by industry. Here is a chart that shows the average NPS score for 23 industries so you can get a better idea of how your industry measures up.
Put simply, NPS can help you understand your customers better. NPS gives you a pulse on how likely they are to renew their policy, purchase an additional product, or act as your brand ambassador. This can help you create targeted campaigns to increase brand affinity and improve the bottom line. NPS not only helps you retain your current customers and reduce churn, but also provides a roadmap for acquiring new ones.
USED AS A COMMON LANGUAGE ACROSS BUSINESSES
NPS has given organizations a common denominator for how they reference customers and customer satisfaction. Promoters, neutrals, and detractors are terms used to categorize customers within the loyalty funnel. In addition, scores are universal. A score of 65 at one company does not mean something different at another.
Using NPS as a standard metric means you can also benchmark your brand externally against competitors to see how you’re measuring up. It provides a big-picture view of how customer sentiment about your brand is trending quarterly, bi-annually, or year-over-year.
As such, NPS gives everyone across companies and industries a common set of definitions to work with.
How to Use NPS to Fuel Agency Growth
CREATE TARGETED CAMPAIGNS
Reach out to your promoters, neutrals, and detractors to close the feedback loop and gather more information about why they responded the way they did. You can then use this information to create targeted campaigns for each group.
For example, ask your promoters to share their positive experiences via social media and Google Reviews. Enroll your neutrals into a nurture email series promoting additional resources or support. And lastly, follow up with your detractors to learn more about areas of your products and services that need improvement.
Engaging with all customer groups can help you identify your differentiators as well as tip the scale for neutrals and detractors to become promoters.
UPSELL, CROSS-SELL, AND ASK FOR REFERRALS
Another way to expand your customer base is by riding the wave of your promoters’ momentum. Remember–these are customers who are natural brand ambassadors with high brand loyalty, so they’re naturally willing to engage with you more. Use their positive brand sentiment as an opportunity to upsell and cross-sell different products and services. They will also be more than happy to send referrals your way if you ask for them or enroll them into a referral program.
ESTABLISH A KPI WORTH SHARING
Studies have shown that NPS correlates directly to a business’ overall health. The better the NPS score, the bigger the increase in growth and revenue. Businesses that adopt NPS as a key metric for success build an agency culture of customer satisfaction. When every member of your team is aligned to continuously improve the score, they focus on delivering favorable outcomes that create long-term customer relationships.
The end result of this domino effect is the formation of brand ambassadors and evangelists; customers who remain loyal to your brand and recommend it to others, which is ultimately the best type of marketing most insurance agents strive to achieve.
Christine is a Marketing Communications Specialist for the automotive and insurance line of business. She focuses on developing content that spreads brand awareness to consumers and strengthens client relationships regarding the value of roadside. Christine has a Master’s Degree in English from California State University, Fullerton and has over 10 years’ experience in content marketing. She is based in California and enjoys camping, traveling, and raising two tiny humans with her husband.