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July 12, 2001 at 08:00 PM
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Insurance organizations are undergoing massive reengineering as they face increased competition, outdated technology, and an evolving customer base.
To help ensure survival, insurance leaders are embracing customer relationship management (CRM) to manage relationships across customer interaction points. They expect CRM to have an impact on their top lines and bottom lines through the ability to improve understanding of their customers, anticipate customer needs, and build customer equity across the enterprise.
However, there is much confusion about what CRM is and what CRM isn’t within the insurance industrywhich can drastically impact your organization’s ability to succeed with CRM.
CRM is a core business strategy for managing and optimizing all customer interactions across the organization. You can’t buy CRM out of a box; its a strategy that is enabled by technology. The goal of CRM is to provide seamless coordination and integration between multiple customer touch points and back-office systems. To successfully plan and execute a CRM strategy, insurance organizations need to understand five CRM essentials.
Essential #1: Understand CRM drivers.
Several drivers make CRM a necessity for insurance organizations to operate in the digital economy. These drivers can be generalized into three main categories.
The empowered consumer. In the digital economy, consumers are being transformed by more available information, the adoption of new technologies, more choice, globalization and deregulation. This transformation is adding complexity to managing customer relationships for insurance organizations.
Increased competition. Globalization, insurance organization consolidation, new entrants, and deregulation in the financial services sector are creating new competitive threats to traditional insurers. On the deregulation front, non-insurance financial services firms can enter the commodity insurance markets through partnerships with relatively low entry barriers. Because financial institutions can offer consumers a broader spectrum of financial services and products, most insurers are looking to adopt new business strategies to compete.
The Internet and e-business. The Internet is changing the insurance industry, as it is many other industries. It has received wide acceptance from consumers due to convenience, control and personalization. This technology enables new distribution channels to emerge and compete with traditional channels and helps organizations be more effective and efficient in their sales, marketing and service efforts.
Essential #2: Understand how to organize for CRM.
Insurance CEOs are looking to CRM to improve operational efficiency and develop competitive advantage. To successfully implement a CRM solution, insurers should focus on becoming customer-centric. They must move from a product mind-set toward a customer-focused mind-set.
Companies must also develop mass customization strategies to replace existing mass-marketing strategies in order to personalize products and services around the specific needs of customers. Technology will enable mass personalization, but strategies must be developed around the technology to exploit marketing efficiencies.
There also needs to be a focus on customer experience across touch points with the life cycle.
Customer experience will be the key differentiator for insurers wanting to retain profitable customers (especially in commodity markets). Insurers need to deliver consistent, personalized products, services and image regardless of the channel. Because many channels are indirect distributors, providers will need to strengthen communications, training, and collaboration with these channelsboth traditional and emerging to emphasize a service focus.
Companies must establish solid communication lines across lines of business and partners. They must ensure that lines of business within an organization consistently and effectively, and frequently communicate and collaborate with each other as well as with supply chain partners.
Its also important to establish customer-centric performance metrics. Develop clear objectives and strategies for using CRM, and then align performance measurement and compensation around achieving service-level objectives.
Its important to formalize the ownership of the customer by establishing a Chief Customer Officer (CCO) position.
In addition, insurers will need to establish key alliances with technology firms that can provide the expertise required to effectively implement CRM, with service providers that will enable insurers to strengthen their value proposition, and with non-financial organizations that will act as distribution channels.
Essential #3: Understand CRM technology needs.
Traditionally, the insurance industry has been slow to adopt new technologies. This puts most insurance organizations in a position where they are not equipped to deal with the demands that are being placed on them by the new consumer. However, insurance organizations are beginning to upgrade their technology infrastructures to bring them toward customer intimacy.
