By Poorna Nayak | Apr 19, 2021
Net Promoter Score (NPS®) is the gold standard when it comes to measuring customer satisfaction. It pays for banks and wealth management firms to be customer-obsessed. As we all know, losing even a single HNI client can prove to be costly. NPS measures customer loyalty. It is a score between -100 and 100 and is typically derived by asking a single question to customers.
The simplest way to measure NPS is by asking this question -
On a scale of 1 to 10, how likely is it that you would recommend [Bank XYZ/ Wealth Management Firm ABC] to a friend or a relative or a colleague?
Depending on the response, customers are then classified into 3 categories:
Subtracting the percentage of detractors from the percentage of promoters gives the NPS score. For example, if 50% of your customers are promoters, 40% are passives, and 10% are detractors, the NPS score, in this case, is 40 (50-10).
For most banks, a personal touch is involved when dealing with their valuable clients. That's the nature of their business. Hence, they may wonder if it really needed to bother with NPS. Banks should definitely take NPS seriously. Measuring Net Promoter Score digitally has many advantages:
So, what is common among these companies - Amazon, Apple, or Microsoft? All of them have high NPS scores. The quality of service and satisfaction is what makes Amazon customers happy and gives them a high NPS score of 69.
So, what is common between a bank and say a tech company like Amazon? Both of them have access to a lot of customer data and information. While Amazon uses this data to provide excellent customer service in the form of personalized offerings, banks are only now waking up to the fact that traditional approaches to customer experience won't help anymore.
If there's one reason we have done better than most of our peers in the Internet space over the last six years, it is because we have focused like a laser on customer experience, and that really does matter, I think, in any business. It certainly matters online, where word of mouth is so very, very powerful.Jeff Bezos |
CEO of Amazon
Tech-savvy customers expect more from their banks - better products, better services, better customer experience. The average NPS score for the financial services sector is 34. Happy customers can take it all the way to 60 or even 70. A high score means deep engagement between the bank and its customers. This, in turn, correlates to higher sales and profitability.
Clients change, their needs change over time too. Hence, it is important to measure the pulse of customers regularly, say monthly or quarterly. Measuring NPS is an ongoing process. By doing it regularly, banks can identify areas of improvement. If there is dissatisfaction in any area, they can take corrective measures and do course corrections.
With NPS, banks get to know their promoters, as well as their detractors. By knowing the detractors, banks can take proactive measures to prevent churn. Losing high-value clients is a big loss to banks and directly affects their topline.
By knowing the promoters, banks can increase a key driver to their business, especially in the wealth management segment - word of mouth referrals. As per a Neilson report, people trust family and friends above all forms of advertising. For example, it is more likely that someone will buy a financial product like say insurance when it is recommended by a family member or friend. Word of mouth plays a crucial role in the buyer's journey. As promoters grow, the word of mouth engine grows as well.
NPS score and data can help banks channel their customer service efforts and grow revenue. This can be done through referrals and upsells. Promoters are the driving force of any business. Banks should put continuous efforts into converting detractors and passives into promoters. The top reasons for this are:
Net Promoter Score can help banks gather useful feedback on individual areas as well. For example, if they are planning to roll out a new product, they can gauge client interest. If they are trying to introduce a new feature in their digital suite, they can get feedback as to how many clients would like to use it, etc. Identifying areas of improvement saves time and improves customer satisfaction.
It's important to engage customers before asking for any feedback. Engaged customers are more likely to give feedback. Personalized videos combine data and video to create unique, engaging experiences for each and every client. The best place to measure NPS is when a customer has just finished one of your touchpoints - like receiving a monthly account statement or a policy renewal reminder from you.
It is to be noted that NPS is just an indicator that gives an overall indication of how customers feel. It is important to keep track of the general trends in NPS over time. To get the big picture of what is driving customer experience, banks need to collect more data and analyze it along with NPS.
Segmenting customers and then looking at the scores for a particular segment can be useful in improving the experience for that segments. Segmentation can be done by behavior, demographic, gender, market, etc. For example, there might be a certain touchpoint that needs to be improved for the Millenial segment only and not for others.
Combing customer experience metrics like NPS and CSAT Score (Customer Satisfaction Score) and operation metrics like the number of banking transactions, no. of logins to the mobile app, number of meeting with RMs, etc will give an overall picture and help banks predict if a customer is likely to churn.