The father of the Net Promoter System thanked the insurance industry for giving him his start today. “I started 37 years ago in the insurance industry long before the NPS was developed,” said Fred Reichheld at the HSG Innovation Summit that is being held in Tampa today and tomorrow. “So thank you to the insurance industry for helping me get my start.”
Approximately 50 participants came together for a variety of presentations revolving around glass-insurance issues. HSG is a third party administration company that provides services mainly to the automotive glass and restoration industries. Today’s program was centered around automotive glass.
“The Net Promoter Score (NPS) is an open architecture system,” said Reichheld. “It revolves around two questions and designed to measure and increase customer loyalty.”
And customer loyalty, according to Reichheld, is the holy grail of keeping and growing customers.
“What do loyal customers do?” Reichheld asked. “They repurchase from you. They buy additional items. Perhaps most importantly, they send referrals, which is among the least expensive way to gain new customers. And they provide you with candid feedback which you definitely need.”
The former Bain Company executive says that companies that use NPS generally see loyalty levels grow at 2.6 times their industry averages. “Loyalty transforms economics,” he said.
He also had some cautionary advice for the insurers in attendance. “Your industry traditionally has among the worst net promoters scores of any industry. You have a ways to go. Some of you have negative net promoter scores even though you don’t think you do.”
Reichheld says its impossible to attract good customers if you advertise or attract them based on price. “What type of customer will you get?” he asked the group. “You are self-selecting a customer who values price above all and you have self-selected customers who will leave you as soon as a lower price comes along.”
“If you are going to focus on growing customer loyalty, you must grow employee loyalty … and that’s tougher.” He discussed an application he developed himself called “Huddle Up” that he has started and allows candid anonymous employee feedback and recognize employee excellence.
“Almost everyone thinks they are providing great customer service,” said Reichheld. “And almost everyone is wrong.”