In 2012, the percentage of clients who were classified as “loyal” using Chatham’s proprietary loyalty algorithm increased 6 percentage points, from 52% in 2011 to 58% in 2012, while the proportion of clients classified as “at-risk” declined from 20% to 16%.
A more detailed analysis of attributes that are highly correlated to satisfaction and loyalty suggests that plan sponsor loyalty and Net Promoter Scores (NPS) improved because retirement plan providers are excelling at key aspects of relationship management. Specifically, regression analysis indicates that satisfaction with plan sponsor administrative services and client service personnel have the largest impact on plan sponsors’ overall satisfaction with their retirement plan provider, and scores for attributes associated with these areas improved considerably relative to 2011.
The top two box score for satisfaction with plan sponsor administrative services (the percentage of respondents providing a rating of 7 or 6 on a 7-point scale) increased 7 percentage points relative to 2011 (75% in 2012 vs. 68% in 2011), and significantly more sponsors agreed that their retirement plan provider helps them fulfill their fiduciary responsibilities (79% vs. 66%).
In addition, plan sponsors were much more satisfied with client service delivery in 2012, rating their providers’ client service personnel 11 percentage points higher (78% vs. 67%). Sponsors were also more likely to agree that their provider reduces their administrative burden (74% vs. 65%) and that they are treated as an important client (77% vs. 70%).
These results may suggest that during a period of increased regulatory activity, those providers who pay attention to helping their clients understand and comply with the changing rules will reap the benefit of increased client satisfaction and increased loyalty, Chatham said.
While providers should be pleased with their overall ability to provide service to their clients, their ability to excel in other areas that are emerging as important factors in gauging provider success is still a concern. In particular, only 59% of plan sponsors surveyed agreed that their retirement plan provider offers creative and innovative solutions, a decrease of 22 percentage points from 2011. In addition, although satisfaction with participant services increased by 10 percentage points (from 66% to 76%), only 62% of plan sponsors agreed that their provider helps participants reach their retirement goals.
As providing exceptional client service is becoming the norm rather than a point of differentiation, it is important that retirement plan providers also succeed in providing value added services. Plan sponsors are increasingly measuring provider success through the provider's ability to offer solutions that assist in achieving the outcomes they desire, Chatham noted.
"While the improved satisfaction scores are something about which providers should be pleased, these sub-optimal scores should serve as a strong reminder that there is still work to be done. Providers must remain vigilant in creating differentiation in the crucial areas of efficient partnerships, investment services, and helping participants achieve better outcomes if they are to reap the strategic benefits of a more satisfied and loyal client base," said Chatham CEO Peter Starr.
The Provider Loyalty Index measures loyalty among plan sponsors with decisionmaking authority for their organizations' retirement plans and is calculated based on insights from over 7,000 plan sponsors. Additionally, the data covers clients from 16 of the top 20 retirement plan providers.More research from Chatham Partners is at http://www.chathampartners.com.
« Employers Use Onsite Health Centers to Control Costs