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How a Small Insurance Company Uses their Service Guarantee to Increase Revenue 7 times


I have worked with Tom Raffio, of Northeast Delta Dental, since April 1990. Back then he and Dr. Bob Hunter implemented a radical Guarantee of Service Excellence at Delta Dental Plan of Massachusetts. In 1995, Raffio took the position of President & CEO of Northeast Delta Dental, which was in financial crisis. He immediately implemented the Guarantee of Service Excellence.

Northeast Delta Dental is the region’s most trusted name in dental insurance for companies of all sizes, individuals, and families in Maine, New Hampshire, and Vermont, administering dental benefits for more than 920,000 people. Delta Dental Plans Association is comprised of 39 independent Delta Dental companies operating in all 50 states, Puerto Rico, and other U.S. territories. These member companies provide coverage to 80 million people. The employees use the dental benefits, and the dentist is a partner in delivering oral health information and dental services.

The Guarantee of Service Excellence is in Chapter 4 of my book, Achieving Excellence Through Customer Service.
Northeast Delta Dental asked for feedback from their customers, who identified 7 areas that were very important to them, then they backed these with… money. Clicking the link above will show the 7 guarantees and the money they pay out each time they fail to deliver on a guarantee. The one I can relate to most is the guarantee of Accurate and Quick Turnaround of Identification Cards within 15 calendar days. They pay the group $25 per pair of identification cards. Let’s say a company signed up for 200 employees, and the cards arrive 16 calendar days later. They would have to pay the group $5,000 for being… one day late. Results are posted annually on our web site

I believe hard numbers are the key to getting top executives to buy into the service strategy. Tom sent me the historical corporate metrics from 1995 to 2019 projections. They went from $57,559,437 in revenue in 1995 when the Guarantee of Service Excellence was implemented to $400,206,985 in 2019. Subscribers increased from 135,929 to 484,306, and Covered Lives increased from 301,491 to 922,454. Surplus or Reserves increased from $8,573.838 to $143,322,169 in 2019. View the actual numbers here:

I spoke in length to Tom Raffio for this newsletter. He stated that, “if you pay attention to service, you will get the results.” A good portion of Northeast Delta Dental’s results is just paying attention to the details and customer service. They are allowed to only cover 3 states, Maine, New Hampshire, and Vermont, with a total population of 3.2 million. They cannot cover half of its population because of government programs or those of businesses like Walmart, the largest private employer in New Hampshire, with headquarters in Arkansas.

One of the reasons why they have a 98-99% customer retention (the Delta Dental industry average is 80%) is the extensive training they provide to employees. It is a lot of work. In Tom’s words, “It’s ‘Common Sense’.” Tom has a passion for the right stuff. He believes it cannot be a flavor of the month. He believes you always have to run scared. And he believes an excellent hiring process is critical to finding people committed to the customer.

Northeast Delta Dental is committed to a total quality system. When they present a check to the customer, they have a customer for life. Tom said, “When in doubt, make the payment.” Some employees have a fear of making these payments. That is why we have to be relentless. They train employees to make payments. Initially they celebrated mistakes and how they recovered from them. Over time, employees see that they are not reprimanded. They track the results each month and usually have the monthly results by the 15th. Customers know each month what the results are. No one wants to collect. It’s creating a trust proposition and giving the customer peace of mind.

Tom’s biggest difficulty since 1995 was how to address the Affordable Care Act. They turned it into an opportunity and used their reserves to fund the transition from only marketing to groups to also marketing directly to consumers. Oral health is their business. They donate about $3 million a year to charity to help those who need dental care, including many Veterans.

I asked why more insurance companies do not copy Northeast Delta Dental?

  • The national average is 80% customer retention, and they are happy with this.
  • Others do not understand the value of retaining 99% of your customers.
  • Competitors are concerned about massive payouts.
  • Most companies want the easy way.
  • Too much work. Not enough people are trained to handle this.

I know of no other firm in the world that has copied Northeast Delta Dental. Insurance is a very competitive industry. Market share has increased from 20% in 1995 to 50% in Maine, 70% in New Hampshire, and 60% in Vermont. Total payouts in 2018 were $14,473.05. All the details are on our web site. They employ 197 people full time.

With their surplus/reserves they have acquired a couple of companies outside of their 3 states. Now that’s using common sense. That’s being relentless in providing Awesome Customer Service!