A recent survey1 we conducted with Australian financial services, IT and telco customers reveals the secret to why people would recommend these companies and why they've given a high Net Promoter Score.
The research essentially concludes the one thing these companies need to do to increase referrals and customer retention rates. Crucially, if companies focus on this one factor, it will make customers more likely to refer them to someone else, and also to stay with the company for the long term.
Similar trends across industries
Our survey asked different sets of customers of Australian banks, insurance providers, IT and telecommunications companies, why they had scored the way they did in a recent Net Promoter Score survey they have completed. If they have given a high NPS (9-10) we asked them why they scored the way they did and if they had given a low or neutral score (0-8) we asked them what would have made them score higher. Learn about NPS here.
Banks
Of those who gave their bank provider an NPS score of 9 or 10, a majority (36%) of respondents scored that way because they receive good service. The second most common reason (given by 15% of the respondents) was that they have been with them for years and haven't experienced any problems.
Only 7% stated that they would recommend the company to others based on their absence of fees or low fees.
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Insurance providers
For insurance providers it was also good service that was the reason for the majority (40%) to recommend the company, followed by good pricing or premiums. Not so surprising perhaps, however, good products or policies was only mentioned by 7% of respondents.
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IT providers
For IT companies in particular the same pattern was also the case. As many as 44% of respondents would recommend based on good service, and only 14% scored highly based on the fact they'd been with them for years or have had no problems. Good prices or deals came in third with 12% of respondents. Interestingly, only a minority (7%) would recommend based on good coverage or speed.
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Telecommunications providers
For telecommunications companies the case is the same with a majority of 44% wanting good service and only 14% of respondents recommending based on good prices.
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What makes customers unhappy?
Interestingly, for banking customers, the majority (17%) of those who had scored between 0-8, say they would score higher (i.e more likely to recommend) if their banking provider had lower rates or fees. The second most common answer (as stated by 12%) was better customer service, and the third was better interest rates.
In the IT sector, for the people who gave a low or neutral NPS score of 0-8 for their internet provider, lower prices was the main reason (given by 33%) they would score higher followed by 22% saying they want faster connection or better deals. Better customer service came in third with 21% of respondents.
In the telco sector, again, the reason most unhappy customers (34%) would score higher would be lower prices and customer services comes in second place with 21%.
Learn more: Dial up your NPS and your business with our free guide Grow your business with NPS
The main reason people give a high NPS
Interestingly, the pattern is evident across all of the industries we surveyed. The majority of customers don't think they would have scored higher if they had received better customer service, although customer service is THE main reason as to why people did score highly, i.e. why they would recommend a company and are happy being a customer of that company.
Overall, very few people answered value for money or better products as a reason they would have scored higher.
Naturally, as with every survey of this kind, different types of people value different things; some might value customer service whilst others give greater importance to lower prices. However, there is a clear trend amongst those people who have scored highly.
The secret to customer retention for financial services, IT and telcos
The results are clear; better customer service trumps any other reason for recommending a company. Clearly, this is what companies should focus on achieving and where budget should be invested in order to grow the company whilst retaining existing customers.
Given that many companies' business objectives do in fact focus on product development and improvements, competitive pricing - naturally all of which are worthwhile business objectives - there is one thing companies could focus on that would result in more customer referrals. More referrals eventually result in more leads and more sales, therefore a higher rate of customer acquisition and retention.
Understand your customers to know your pain-points
And what better way to be able to provide better customer service than knowing and understanding your customers, by collecting and analysing their feedback. This will enable organisations to understand what their customers are having issues with, any gaps are in their offering and what they need to improve on.
So if you want those referrals, invest in your customer service and to providing your customers a better experience from beginning to end. You'll reap the rewards in no time.
How does your NPS measure up against your industry average? Download our free benchmark reports for New Zealand and Australia to find out!
1. Perceptive Research Omnibus, Australia, March 2016.
