- published on 20/05/2013
HESTA was the top-scoring fund in a survey of member-satisfaction levels carried out by CoreData Consulting, which has highlighted the need for more tailored ... [more]
What would make you recommend your superannuation fund to colleagues, friends or family? This is the simple but powerful question at the heart of the idea of the net promoter score, which has been introduced as a new source of information and comparison for super funds over the past three years, writes MICHAEL BALDWIN, CEO of FEAL*.
AUSCOAL Super is one of a number of members of the Fund Executives Association Ltd (FEAL) that have participated in net promoter score (NPS) research since 2009. Bruce Watson, CEO of AUSCOAL, says the fund uses the results in its customer engagement metrics and shares them – including verbatim comments from members – with its entire customer-facing team. “NPS is a key metric in our business,” Watson says. “We are absolutely focused on customer intimacy and this is a very strong way for us to gain feedback over and above the thousands of phone calls and one-on-ones that we do each year. “It’s one thing to have a customer satisfaction score or a belief. But it’s an entirely different question when you ask people if they would recommend you to one of their friends,” Watson says. “That’s the power of this – it’s really understanding how satisfied people are.”
The net promoter score The NPS was developed by Fred Reichheld, an American management consultant, in 2003 and has since been taken up by many organisations, including large companies such as American Express, GE and Microsoft. It is taught by Associate Professor Mark Ritson at the Melbourne Business School, who teaches the branding module in the FEAL masters program. It was this connection that led to discussions about whether NPS could give super funds a way to measure member satisfaction and share insights about their performance. “At the time, many funds still seemed unsure of whether they were offering a competitive service or had truly satisfied members,” says Professor Ritson. “With the market for superannuation likely to open up over the next decade, it was a precarious position for funds to find themselves in.” FEAL invited members to participate in the initial NPS survey in 2009. The study was run by Customer Service Benchmarking Australia and has been repeated in 2010 and 2011. The crucial question asked in the survey is how likely members would be to recommend their fund to others.
Their answers are rated on a scale from 0 to 10 to generate the NPS, which is created by calculating what percentage of a fund’s members are “promoters” then subtracting the percentage that are “detractors”. Promoters give a score of 9 or 10 for their likelihood to recommend and are seen as loyal enthusiasts. Detractors score their likelihood of recommending their fund from 0 to 6. They are unhappy customers or people who would not recommend a fund on principle or because they have a limited relationship with it. In between are “passives” who provide scores of 7 or 8, showing they are satisfied but unenthusiastic (see Box). In 2011 the overall NPS across the 2952 members from 27 funds who participated in the survey was +17. This was an increase on +10 in the 2010 survey and +13 in 2009. The highest score in 2011 was +48 and the lowest was -45. Twenty-one of the 27 funds surveyed had positive scores. To put these results in perspective, a score of +50 is considered to be excellent in NPS surveys. The extremes are +100, where every customer is a promoter and -100, where every customer is a detractor. The results can also be compared to other sectors, such as banking. The major Australian banks have received scores of around -20 and a runaway success like the Apple iPhone has recorded an NPS as high as +73.