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We the Sheeple? February 26, 2010

Posted by bernardrosauer in Customer, Human Capital, Process.


This is the time of year when we see droves of lists showing who is better at what in the insurance industry.  Whether its customer satisfaction, innovation, tech savvy, best place to work, etc… it’s all made available for industry professionals to peruse.  And if you want more detail… it’ll cost you.  Fair enough.

The people responsible for presenting the data must be up against a wall in terms of coming up with meaningful headlines (and data?).  Headlines such as:  “Speed and Efficiency Impact Customer Satisfaction”,  “Agents Value Ease of Doing Business”, or  my personal favorite: “Customers Demand Great Service”.  Go figure!

Maybe we’re all stuck in the mud, waiting for headlines that will lead to answers.  There’s a word for those of us who are caught in that rut.  We’re called‘sheeple’.  If we’re honest, all of us fall into ‘sheeple’ ruts at least in some aspects of our lives sometimes.  We all want answers and aren’t always sure about where to get them, so we follow.

Speaking of wanting answers, step back and take a look at all the predictive modeling that’s going on.  Now, only a fool would say to say that modeling hasn’t been used to make good business decisions in our industry as well as in many others.   I wonder though, how much our preoccupation with finding ‘the answers’ in the numbers is actually getting in the way of thinking and arriving at decisions about ways to deepen relationships with customers and gain market share.   Might key answers, at times, be right before our eyes?  Might we be missing something obvious for all that number crunching we’re busying ourselves with?   I’m going to argue that in many cases the answer is ‘yes’.  If fact, I am going to argue that the answers before us are of better quality and will last longer than any that might be arrived at using a complex algorithm.  Algorithms can be perfectly replicated.  Our own customer’s insight, which, if we listen carefully enough, can guide us through both the best and worst of economic times, can never be replicated.  Maybe the closest thing to having the perfect answer is to ask our customers what they think. 

Gaining customer insight in an actionable format, amazingly, has eluded most of us for most of our careers.  With this in mind, the following quote, which I found at OgilvyOne’s website (OgilvyOne is a major, global advertizing agency) will resonate with most of you as it did with me:

“It is apparent that, no matter what company you are from or what sector you are in, your Customer  Management (growth) project is more likely to fail than succeed.  A stunning 60-92% of Customer Management projects are seen to fail by the sponsor.  As stunning as the failure statistics are, the damage they do to senior management and employee confidence in Customer Management is even more serious.  It leads to thinking such as “We’ve tried it – it doesn’t work”.   This in turn leads to tactical spending on Customer Management projects, rather than the full strategic review and careful implementation which is what is required.”        OgilvyOne

As company efforts continued to fail, someone decided to look somewhere else for answers.  In doing so, they discovered that up to 80% of customers who defect do so even though they were satisfied with a product or service provider.   They also discovered a way to look at customer feedback in a way that makes it possible for all stakeholders, from CEO’s to bayonet level employees to vendors, to understand, with clarity, the goals of the organization.  Customers have the answers, they found.  We just need to be sure we’re asking the right questions.  The answers make the challenge easier to see and for anyone to understand.

Asking the “Will you to recommend us?” question.

The ‘someone(s)’ I’m referring to above is Fred Reichheld, Dr. Laura Brooks (VP at Satmetrix, LLC) and Bain & Company.  The research and thinking they did resulted in something called the Net Promoter® Score, or NPS, an against the grain yet completely logical concept – almost too good to be true.  I was so impressed by their work that I decided to leave the insurance industry after 20+ years and test ‘The Score’ on my own as an insurance strategy consultant.   In short, it worked.   Now I work with Satmetrix and try to spread the word (The Score) to insurers smart enough to at least listen and consider… 

Among other things, when executed properly, NPS can help companies:

  • Improve customer retention.
  • Increase organic growth
  • Identify waste (as customers would define it) and unnecessary spending.
  • Become viewed as a growth mechanism by their independent agents (for companies that utilize them).
  • Prevent unnecessary leakage during M&A activities.

The real beauty of NPS is that its simple to calculate and understand.  As any executive knows, simplicity is really important when it comes to communicating clarity of purpose throughout larger organizations.

The Net Promoter Score is calculated by asking customers one simple questions: “On a scale of 0-10, how likely are you to recommend company XYZ to people you care about?”   Customers who score 0-6 are considered ‘detractors’, 7-8 are ‘passives’ and 9-10 ‘promoters’.   % promoters (minus) % detractors = Your Net Promoter Score.  

The goal of the organization should be to increase your NPS by working to increase ‘promoters’ and decrease ‘detractors’.   What most carriers will find is that there’s are a big group of  ‘passive’ customers who are indifferent about being their (your) customers.  They’ll also find that in many cases they are expending resources in areas that do not impact customer retention or advocacy and perhaps not enough in areas that do.

I spent all of last year helping one company implement NPS and execute improvement efforts against it.  Given this, I can speak to the difference working to increase NPS makes in an organization.  The short-term benefits (which all fuel long-term results) we saw were:

1.   Front line became engaged in solving customer problems permanently.

2.  Supervisors and managers focused on process and ‘the system’ that was preventing customer experience success.

3.   Cycle times decreased.

4.   Employee touches decreased.

5.  Improved first time quality.  

6.   Independent agents became engaged and wanted to know more about alignment issues.

7.  It became possible to allocate resources in alignment with what customers felt was important.

8.  Employees began to understand they report to customers, not bosses.

9.  Connected personal wellness with customer loyalty. (Really powerful stuff).

In all, what I saw NPS trigger was what we (the company’s executive sponsor/CEO and I) were hoping for.   It helped lay a solid platform for the company to focus and grow on into the future.  More and more companies (Virgin, Schwab, Wells Fargo, Progressive, GE, Allianz, to name just a few) are deciding to ask their customers the ‘ultimate’ question in order to direct their operational work at the right place, for the right reasons, at the right time.

Give it a look:  www.netpromoter.comwww.theultimatequestion.com, www.satmetrix.com

Bernard Rosauer   646.675.7000



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