Margin-squeezing price wars in the mortgage market price are seeing lenders turn to customer and adviser service as another key battleground, with many viewing their net promoter score as a measure of success.
The score is a management tool used to gauge the loyalty of a firm’s customer relationships. It is calculated based on responses to the question: How likely is it that you would recommend our company/product/service to a friend or colleague?
Based on a zero to 10 scale, those who respond with a score of nine to 10 are called ‘promoters’, respondents with a score of zero to six ‘detractors’ and those in the middle at seven and eight ‘passives’.
The net promoter score is then calculated by subtracting the percentage of customers who are detractors from the percentage of customers who are promoters.
Companies are not obligated to carry out such surveys, but many do, and they do not have to publish the results of such research.
FTAdviser asked all major lenders to reveal their net promoter score and of those that shared their findings Virgin Money neared the top of the pile, with an intermediary NPS that improved from 40 per cent at the end of the fourth quarter last year to 57 per cent in the first quarter this year.
The bank’s overall NPS also increased to 28 from 19 per cent from the second half of 2015 to the first half of 2016, with chief executive Jayne-Anne Gadhia stating she was particularly pleased more customers than ever before would recommend Virgin Money to their friends and family.
Peter Rogerson, mortgages commercial director at Virgin Money, said his team was continuously listening to, and acting upon, feedback from intermediary partners.
“An example of this is our recent investment in a new mortgage retention platform for intermediary partners where we pay a procuration fee for returning an existing mortgage customer to us upon maturity of their existing product.”
The Yorkshire Building Society received its highest ever NPS score of 33 per cent in June, with an average NPS score of 32 per cent for the first six months of 2016, up by 3 percentage points from the previous year.
YBS’ head of distribution Charles Canning said as a mutual, they have heavily invested to achieve this score.
“We have developed a new underwriting approach enabling us to make common-sense lending decisions, which has resulted in speeding up mortgage offer turn-around times,” he added.
Natwest Intermediary Solutions has a broker NPS of 79 per cent.
Branch head Graham Felstead said he uses the data to prioritise changes to improve broker and customer experiences, “by making specific changes to processes and maintaining the high quality of our people”.
A Lloyds Banking Group spokesperson stated customer service progress has been reflected in the group’s NPS, which is now over 50 per cent higher than at the end of 2011.
Other lenders were less forthcoming, but made mentions of their NPS in annual reports.
David Marlow, chief executive of The Nottingham, stated in the building society’s 2015 annual results: “At 74 per cent our net promoter score is among the highest in any sector in the UK, compared to an average for the financial services sector in the UK of 30 per cent in 2015.”
Aldermore chief executive Phillip Monks commented in the bank’s 2015 results he was pleased with a 22 per cent NPS, while Leeds Building Society’s annual report also stated its NPS of 49 per cent “benchmarks very well against the industry”.
The Co-operative Bank stated only that it “regularly features in the top three for financial service NPS scores”, but as it was not a requirement to give the most recent score, declined to be any more specific.
An Iress mortgage market report in April noted “transparency of information is not only central to delivering a quality service, but it can have a significant influence on the net promoter scores given by intermediaries and applicants”.
Henry Woodcock, principal mortgage consultant at Iress, said given the cost of acquiring a mortgage customer, “lenders can see the positive NPS influence on retentions, margins and processing efficiencies.”
It also allows comparison with customer experience best practice, so they can learn from competitors and focus on improvements and areas which will drive performance and increase promotion.”
Later this year, Financial Adviser will reveal which lenders you consider top when it comes to service at the Financial Adviser Service Awards. Visit http://finpub.ft.com/financialadviser/fasa/ for more details.
