Average NPS for insurance agencies and how to improve it

Average NPS for insurance agencies and how to improve it

In the last several years the Net Promoter Score (NPS) has been swelling in popularity among service-based companies across the globe. Essentially, the NPS is a business’s overall client loyalty score. And, the great thing about client loyalty (in contrast to client satisfaction), is that it’s a direct indicator of actual client behavior; namely referrals, retention, and repeat business. That being the case, it comes to no surprise that research has proven a direct correlation between a high NPS and the overall profitability of a company.

An example of an NPS survey

The NPS is obtained by measuring client responses to the following question: How likely are you to recommend [x business] to a friend or colleague? With choices being on a zero-to-ten scale. Respondents are classified as promoters (9–10), passives (7–8) or detractors (0–6).

One great thing about the NPS is its versatility. In regard to client loyalty, the NPS can be used to gather feedback from an individual client, to gauge the performance of an individual employee, or to measure the aggregate of an entire business.

At Rocket Referrals, we use the NPS to determine the appropriate communication to send to our users’ clients. For example, the majority of an insurance agency’s book of business may be promoters. But they could also have a handful of passives or detractors. In this case, you’d want to send the promoters communication thanking them for their loyalty and encouraging referrals and reviews. Detractors, on the other hand, should be asked ways the agency can improve, and followed up accordingly.

Individual NPS responses are also combined to provide an overall score for a business. This is the NPS that Rocket Referrals displays on the dashboard. Put simply, the NPS is the percentage of promoters minus the percentage of detractors. Businesses often use this score to set company-wide client loyalty goals and to compare themselves with industry benchmarks.

What are the benchmarks?

We are frequently asked by our clients how their aggregate NPS ranks against others. It turns out that insurance agents are quite competitive! In response, we decided to collect some data for your viewing pleasure.

The only widespread data on NPS’s within the insurance industry correlates to P&C direct writers. And, interestingly—yet not surprisingly—as a whole, they scored significantly lower than users of Rocket Referrals which are composed chiefly of independent agencies. According to data collected in 2014 from Bain & Company, the aggregate score for direct P&C writers was 30. Now, this number may seem low, but keep in mind that direct writers are generally competing on price. To keep rates low they usually skimp on the customer experience. Additionally, the type of clients they attract are by and large “shoppers” that flee at the slightest rate increase.

Although the aggregate NPS among direct writers sits at 30 its important to note that it’s increased by 50% since 2012. This recent NPS boost is a result of more carriers realizing the value in client loyalty and taking active steps to increase it. Therefore, as an independent or captive agent, it’s perhaps more important now than ever before to differentiate yourself by improving the customer experience.

As an insurance agency, you could be satisfied with an NPS over 30 – or you could remove the training-wheels and suit up for the major leagues by comparing your agency against other captives and independents.

At Rocket Referrals, we’ve averaged the NPS of all the insurance agents using our software.

The average NPS of an insurance agency is 74

Wow! Seventy-four is much higher than the paltry 30 the direct writers could muster. This is to be expected for several reasons. The first—and most obvious—is that insurance agents have more personal contact with clients, closer relationships, and provide better service. Theoretically, at least. The second reason being that agencies using Rocket Referrals have, as a whole, placed more of an emphasis on customer loyalty and taken a proactive approach of both improving and leveraging it.

So there you have it. If your agency is sitting above the average, then good for you! If it’s lower, then you have something to strive for. And if you have no idea what your NPS is, well, you should get on that.

Even more benchmarksComparing an agents NPS to the agency's NPS

Comparing your NPS against other insurance agencies can be an effective motivator for improving client loyalty. We recommend also using the NPS internally to gauge the success of a specific agent. For example, Rocket Referrals averages the NPS for the entire agency and places this score next to the NPS for all clients associated with a specific agent. This data has been useful to discover the agents that are fostering a client base that has a higher overall customer lifetime value (CLV) aggregate than their peers.

Improving client loyalty

We’ve established that client loyalty correlates to profitability. But if your NPS is a little on the slender side there are some foolproof ways of putting some meat on the bones (increasing your score).

We do a lot of in-house research at Rocket Referrals leveraging data we’ve collected from tens of thousands of insurance consumers. We were able to pinpoint the influencers of client retention by studying the behavior, attributes, and features of agencies that resonated with clients. This feedback was broken down into keywords and is represented visually in this word cloud.

Wordcloud of promoter responses

Our data shows that clients reference regular, meaningful, and timely communication as the number one reason they are likely to recommend and remain with their current insurance provider with 65% of responses falling into this category.

The most effective way to raise client loyalty is to improve communication with your clients.

Obviously, this doesn’t mean to start automating pointless emails to your entire book of business. Rather, it’s about implementing a proactive campaign—agency-wide—of reaching out to clients more regularly and in a personal and meaningful way. This alone will make a tremendous impact on client loyalty. But it’s important to make sure the communication you send matches the current feelings a client has toward your agency. In other words, promoters should be getting different communication than detractors!

Several recommended touchpoints include:

  • Handwritten welcome cards to new clients
  • Handwritten loyalty cards to promoters
  • Policy review a couple of months before renewal
  • Returning phone calls
  • Handwritten birthday cards
  • Handwritten holiday cards
  • Periodic meaningful newsletters
  • Handwritten thank you cards for referrals
  • Encourage promoters to leave testimonials and reviews

This additional communication alone has been shown to increase retention by 20-30% and referrals by about the same. Improving client loyalty can be pretty lucrative, after all! By the way, I would be remiss not to mention that Rocket Referrals was specifically designed to automate much of the communication I outlined above.

Closing the loop

The NPS is effective at measuring client loyalty and improving the needed insight to tailor communication to promoters. But what about detractors? We cannot forget about them.

If done correctly, the NPS survey will ask respondents to follow up on their scores with some explanatory feedback. Promoters are asked what agents did right – and detractors are asked how they can improve.

When evaluating detractors, it often occurs that clients give a specific reason why they are teed off. In these cases, you should follow up immediately with an appropriate response. Call the client and ask how you can right the wrong. We recommend calling every detractor soon after they respond to the NPS survey – even those that don’t provide additional feedback. In NPS jargon this is called closing the loop with the detractor and will go a long way to turning that frown around.

Example of NPS responses

Ready to cut to the chase and start benefiting from the NPS? Schedule a one-on-one demo, or visit My Agency Rank to see how your current NPS stacks up.

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