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.

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