NPS - why life insurers should care more
What tech companies do well
If you haven’t heard of Net Promoter Score, then you probably don't work for a tech company. In this age of agile digital startups and powerful data giants a few methodologies have emerged as staples. There are some things that any self respecting startup founder goes to bed thinking about, and some of those things should be keeping insurers awake too. Arguably the most important is Net Promoter Score.
Commitment to customer centricity drives the success of the most successful tech companies in Silicon Valley. Google and Apple are renowned for their avid fan bases and the most promising upstarts like Uber and Airbnb focus on customer happiness as a core business strategy. This commitment to customer satisfaction means that brands are creating their own evangelists; customers who are happy to pass on the word of a product that they love.
This should make insurance companies take notice. After all, insurers do not have a perfect record when it comes to customer satisfaction. In an industry where consumers feel distrustful toward companies, they will continue to buy from brands they hate, but begrudgingly and with very little loyalty. Improving this one simple metric could make all the difference for insurers.
So what exactly is NPS and how do you measure it?
Put simply, Net Promoter Score measures customer loyalty. It is based off the question “How likely is it that you would recommend our company/product/service to a friend or colleague?” and usually has customers use a scale from 1 to 10. Those who choose 9 or 10 are “Promoters,” 7s and 8s are “Passives,” and those who respond with a 6 or below are “Detractors.”
The Net Promoter Score is calculated by subtracting the percentage of customers who are Detractors from the percentage of customers who are Promoters. This means an NPS can be anywhere between -100 and 100. Anything above 0 is considered good and a 50 would be fantastic.
According to this study by Customer Experience Matters, NPS scores vary hugely for insurance providers as a whole, ranging from -2 to an excellent 70, with most weighted toward the single digits. It’s clear that some insurers need to rethink how they view customer experience.
How to turn customers into advocates
The key is to figure out what is truly important to customers. Not what you think should matter, not what customers say matters before a purchase, but what actually matters. The way to do this is to start measuring NPS, and then dig down into the results. Any Detractors need to be contacted and asked to elaborate on their score.
In tech, low scores are often due to software being buggy, or untimely and unhelpful support. Likewise in insurance, low scores may come from difficult claims processes or bad customer service, but it’s hard to know exactly where the issues are until you ask.
High NPS in tech is usually a sign that a company truly understands what makes their customers tick, and what problems drove them to use the product in the first place. It can be easy in life insurance, for example, to think that the problem that we solve is simply the financial risk of illness or injury, but that in itself is not what compels someone to purchase insurance. The true need is likely something more personal, like the desire to protect loved ones in the event of a tragedy. Making sure both your application and claims processes treat that responsibility with empathy and understanding is crucial. Again, the only way you can know the real answer, is straight from the mouth of your customer.
If insurers manage to improve their NPS the benefits are obvious; they will gain traction with word of mouth promotion, a sales channel that can be incredibly powerful. The Promoters will also add value in other ways, reducing the likelihood of churn, and being much easier to upsell to. On top of that, customer success stories can provide an endless resource of genuine, compelling content for inbound marketing.