Brisbane consulting firm Engaged Strategy today released findings from their annual Consumer Recommendation and Loyalty Survey announcing the insurance company most likely to impress their customers. Not an easy feat in what’s widely been described as a tough year for insurers. But it’s all smiles for one insurance company as they firmly hold onto the customer crown.
With a Net Promoter Score of 13 per cent, APIA Motor Insurance customers are far more likely to recommend them to friends and colleagues, and significantly outperformed their rivals for a second year running. Their closest competitor, with a score of -3 per cent, was Queensland’s RACQ. But that’s not the only accolade APIA pick up this year.
In a surprising turn of events, and for a second year running, APIA also won in the Property Insurance category with a Net Promoter Score of 11 per cent and again showed their major rivals how to ensure their customers are advocates. Second place was achieved by Suncorp with a score of -1 per cent.
Engaged Strategy CEO Christopher Roberts said Net Promoter Score is widely recognised by the world’s leading organisations because it is one of the most accurate measures of customer advocacy, it’s more robust than mere satisfaction, and importantly is a proven predictor of business growth.
“Our research shows 27 per cent of Home Insurance sales and 25 per cent of motor insurance sales are primarily sourced via recommendations from peers, making word of mouth a critical marketing channel in this category”
“Organisations need to ensure they offer an end-to end positive experience, as every one negative comment made about a motor or property insurance company requires around four other positive comments to negate the damage it causes,” Mr Roberts said.
It seems that Australian property insurers in general may have a lot to learn from their US counterparts in terms of providing great customer experiences. The Australian NPS category average was a disappointing -21 per cent compared to the impressive category average of +27 per cent achieved by the US.
It was the same story for the motor insurance category with the Australian category average only reaching an unfortunate -11 per cent which pales in comparison to the +35 per cent achieved by the US, 6 per cent by France, 2 per cent by Germany and -6 per cent by UK.
A company’s Net Promoter Score or NPS is based on customers’ likelihood to recommend the company’s product or service.
“In these times if you want to drive growth via loyalty and recommendation it is not enough to aim for mere customer satisfaction you need to develop experiences and propositions that are worthy of recommendation,” Mr Roberts said.
And just in case you thought the importance of word of mouth had lost its edge, according to the Engaged Strategy survey, recommendations from friends or family still has the greatest influence on purchase decisions by a mile with a staggering 46% of consumers choosing word of mouth as the greatest influence on their purchase decision in comparison to other marketing mediums.
“There has never been a more critical time to go back to basics and focus on the customer as opposed to the more common and much less effective strategy of cost-cutting. The continued strong utilisation of social media injects an additional element of urgency,” he said.
In the study 2,024 motor insurance and 1,808 property insurance policy owners were invited to rate their experiences. Results identified consumer likelihood to recommend a brand to others. Nine of the biggest motor vehicle and property insurers in Australia were assessed in the innovative survey, including the dual loyalty leader APIA as well as RACV, RACQ, AAMI, Allianz, Suncorp, NRMA, Budget Direct and GIO.
Engaged Strategy is a business consultancy focused on helping businesses grow by developing fresh customer, marketing and organisational strategies. Engaged Strategy is an approved Net Promoter Score® Loyalty Partner. Chris Roberts is an Industry Fellow at the University of Queensland, Australia. The full 2011-2012 Benchmarking Study is available from Engaged Strategy at www.engagedstrategy.com.au
Net Promoter, NPS and Net Promoter Score are registered trademarks of Satmetrix Systems Inc., Bain & Company and Fred Reichheld