Cover Story : Let Customers Be Your Guide

Voice-of-the-Customer research helps HMS National lift retention and become a thoughtleader in its industry

All marketers think they know what their customers want. How many of them are wrong? How many lose sales because they're not hearing the "voice of the customer"? Can you be sure your customers are satisfied with the experience you think they want?

Tasked with raising renewal rates on home warranties, Doug Stein, president of Sunrise, Fla.-based HMS National, was faced with those questions. He turned to a process of in-depth customer interviews, called "voice-of-the-customer" research, for answers. The strategies and tactics HMS drew from that research measurably increased customer satisfaction, lifted renewal rates 20 percent across the board—75 percent in some segments—and helped the company chart a new course with the customer as its "North Star."

Knowing the Unknowns
"HMS had been around at that point [2008] just about 30 years, and had been very successful," says Stein, "but the principals of the business knew the company could get to the next level."

They were not looking to make small refinements to the business that would yield incremental lift, according to Stein. They wanted big results.

HMS provides home warranties that offer financial coverage for major systems and appliances in a house, which most homeowners' insurance policies do not cover. The warranties are typically annual contracts purchased by the real estate agent or seller when the home is listed, or by the homeowner during settlement.

After the first year, HMS needs homeowners to renew the policy to keep their business. The challenge was getting more of the homeowners to recognize the value of the warranties and a relationship with HMS so they could see the benefit of renewing.

"It was really clear to us that the way to get the big gains was to understand what was on the consumer's mind," says Stein. "Really, it was a makeover for our business. We were now saying, rather than us develop the next new way forward in the boardroom … let's go figure out if we're doing all the right things in the right ways."

The information Stein hoped to collect went beyond simply, "Does the customer want to renew?" HMS sought to learn what its products meant to its customers, how they determined the value of HMS, what the positives and negatives were of their experiences with the company, and how satisfied they were. HMS also wanted to know what homeowners thought about its communications, contact methods and whether they would be open to more engagement.

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