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NPS Does Not Mean National Park Service

When I googled NPS, I got a picture of Smokey the Bear and the following definition, “The National Park Service cares for special places saved by the American people so that all may experience our heritage.”

Hmmm, not quite. 

Anyway, when we say NPS we mean Net Promoter Score. Not quite as beautiful as a national park, but definitely important if you care at all about customer satisfaction and retention.

The Basics

Your Net Promoter Score (NPS) is a tool used to assess and understand the loyalty of a business’s customer relationships. You ask your customers, “How likely is it that you would recommend our company/product/service to a friend or colleague?” And they then respond with a score from 0-10. People who reply with a 9 or 10 are called Promoters, while those with a score of 0-6 are Detractors. Anybody who gives a score of 7-8 are labeled Passives. Your NPS score is then built over time and gives you a gauge of where you stand with your customers. The score can be as low as -100 and as high as +100. Generally speaking, a score above 0 is considered good, a +50 score is excellent and 70+ is exceptional.

NPS Statistics

The Net Promoter Score method is meant to be used as an alternative to traditional customer satisfaction research and provide better results. In fact, studies show that an average NPS increase by 7 points correlates with a 1% growth in revenue. Here are a few other statistics on why it’s important to know and use your NPS:

  • According to research among 100+ customer experience directors, NPS is used in two-thirds of companies. CSAT (another customer satisfaction scoring tool) is used in less than half.
  • Promoters are 4.2 times more likely to buy again, 5.6 times more likely to forgive a company after a mistake and 7.2 times more likely to try a new offering compared with the detractors.
  • Oracle discovered that 89% of consumers began doing business with a competitor following a poor customer experience.

Getting Started

 So like we mentioned, the magic question used to calculate your NPS score with is How likely is it that you would recommend our company/product/service to a friend or colleague?” You can email or text this question out, but in order to have an accurate NPS, it must be this exact question. But feel free to get a little creative when it comes to your follow up query. Companies are encouraged to follow up with an open-ended request for elaboration. This specific feedback then allows you to know what action to take. Some great follow up question examples are simply asking, “Why?,” or “What would it take to raise our score by just one point?” Basically, what would it take for us to go from a 5 to 6, a 7 to 8, etc. 

 Response rates are usually around 15% per survey sent out and you’ll want to send follow-up surveys to stay on top of your customer satisfaction and track any changes. A good method would be to pick 2 dates each year to collect NPS scores and feedback. If you have a large customer base, feel free to collect scores more frequently but make sure to not ask the same customer for a rating more than twice a year. 


How to Calculate Your Score

 The good news is that if you haven’t done math since high school… you still should be able to figure this calculation out. All you do is subtract the percentage of Detractors from the percentage of Promoters. So if 50% of respondents were Promoters and 15% were Detractors, your NPS is 35. Notice though that’s it’s not 35%, it’s simply 35. Keep in mind that an NPS score is a number and not a percentage.


Haters Gonna Hate, Hate, Hate, Hate

 A little side note here and some wisdom from T Swift… it would take too much time and energy to try and change the minds of every Detractor. Use your common sense to separate those stuck in a Detractor mindset from those who maybe just had one bad experience. Those who have only had one poor experience are most likely still on the fence and can be turned back to the light. Focus your energy here. 


Keeping Track of Alllll the Data

 If you’re new to the NPS world, it can be difficult to keep track of and interpret the data. There are quite a few softwares out there that can help you measure your NPS. Or if you’re looking for a more hands-off approach, a service like Lift Local can help you tack and monitor your NPS. We actually will take care of the whole process for you from sending out the requests to reporting on your score each month. Our process also gets you Google reviews at the same time.

 Regardless of the tracking method you choose, the important thing to remember is that your NPS score is basically irrelevant unless you’re using it to take action. 


Using Your NPS Score

Once you have gathered data and know who your Promoters, Detractors and Passives are, you can set up customized campaigns to engage with each group. For example, at Charles Schwab, they have a team entirely dedicated to reaching out to Detractors. Their sole purpose is to engage with customers, listen and learn about their problems to work towards a solution. Now if you’re an owner of a small agency, this probably isn’t a practical tactic. But even if you don’t have a whole team devoted to Detractors, you still should schedule time throughout your week to engage with those who have given scores of 0-6. A similar methodology should be used for Passives as well. Consider upping your communication game with those who have given you an average score. Keep close tabs on them with the hopes of bringing them to a Promoter status rather than a Detractor. Offer perks, giveaways and discounts to this group in order to bump up their scores. 

 The whole goal of the Net Promoter approach is to motivate an organization to become more focused on improving the customer experience and their service offerings. Since it measures customer loyalty, it will allow you to significantly improve churn rates and lengthen the lifecycle of your customer. At Lift Local, we even use the NPS method to gauge the loyalty and satisfaction of our employees. Collecting feedback from employees in this manner allows us to focus and improve overall culture and organization. It’s a simple way for both your customers and employees to express feelings and concerns. And the best thing about the NPS system is that it’s trackable and consistent.  


NPS and the Insurance World 

 The average NPS for the auto insurance industry is 44 while the average for the homeowners insurance industry is 42, according to NICE Satmetrix. Life insurance is at 31 and health insurance is at 18. These good scores are due to the fact that insurance agents have more personal contact with customers than other industries might. This also means there’s more competition when it comes to NPS scores. 

 So with the insurance industry NPS average at about 34, we are proud to announce that customers of Lift Local have an average NPS score of 66. That’s a big difference and can really make the difference when it comes to handling the competition.

Improving Customer Communication

Data shows that 65% of responders promote an agency due to the quality of communication. If an agent is reaching out consistently and sincerely, customers are more likely to recommend and stay with your agency. If your NPS isn’t quite where you’d like it, improving your communication is the best place to start! Now we aren’t suggesting that you send out an automated, generic email blast. Instead, we recommend changing overall practices of your agency and implementing a culture of personal communication. It seems obvious to increase communication with your Detractors, but it’s important to have consistent communication with your Promoters as well. Remember that personalized communication is key here so make sure that Promoters are receiving different outreach than Detractors. Adding additional communication touch points has been shown to increase retention by 20-30%. Here are some great tips and methods you can use to get started: 


Tips and Tricks

Answer the phone – This may seem like a no brainer, but there’s nothing more frustrating than getting sent to voicemail. Make it a priority to drop whatever you’re doing and pick up the phone. If you miss a call, try to call back as soon as you can. 

Send handwritten notes – Whether you’re welcoming a new client or wishing a customer Merry Christmas, there’s something special about receiving a letter in the mail. Definitely a great way to make someone feel that you care.

Say thank you – When one of your customers becomes a Promoter, tell them thank you! Send them a handwritten note, email or text. Don’t take your Promoters for granted and make sure they feel appreciated. 

Happy birthday wishes – Who doesn’t love to be wished happy birthday? I can safely say I’ve never been annoyed by a business or service who sends me a birthday email or postcard.

People love free stuff – Start a giveaway campaign where people can enter via email. Or have a monthly drawing for anyone in your newsletter. Or have the best candy supply ever at your office for when people come in. 

Monthly newsletter – Send out a newsletter with tips and tricks on all things insurance. Give an employee highlight so that your customers can get to know the faces behind your agency. Make it personal! 

Policy reviews – Now this one may take some more work, but make the effort to schedule a policy review a month or so before renewal. Use this time to address any concerns and encourage transparency. 

You are Not Alone

If I lost you at Smokey the Bear and you’re thinking you’re way too busy for this… we understand. In fact, many agency owners are in your same boat.

We’d love to help you out and take the stress of generating and tracking your NPS score off your hands. Fill out this form to get started.