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Insurance organizations are undergoing massive reengineering as they face increased competition, outdated technology, and an evolving customer base.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.

Insurance organizations need to take on a holistic view of their CRM technology needs, to ensure that technology investments today will be easily integrated with technology investments of tomorrow. Let’s look at end-to-end CRM for insurance in the framework of Collaborative, Operational, and Analytical CRM.

As insurance sales, marketing and service channels continue to expand, the traditional insurance call center will need to be transformed into a multi-channel customer interaction center. Insurers need to focus on integrating existing channels (i.e., phone, faxes, e-mail) and expand channels with new technologies (i.e., interactive voice response [IVR], speech recognition, Internet call-back functionality, using the Internet for phone calls, live Internet chat) that offer a wide variety of distribution options to match all types of customers.

The power of integrating these channels, in combination with integrating with the back office, is in the ability of the CSR to have a 360 view of the customer at the time of interaction. CSRs are equipped with current information on the customer and can provide better service through personalized scripting and personalized sales flags via service automation tools. When the interaction is taking place over an electronic channel, personalized content can enhance the customer experience based on customer history and preferences.

Insurance organizations must also adopt new technologies to support sales, service and business efficiency. CRM offers insurers these efficiencies through automation of many front-office business processes like sales, marketing, and service.

As the complexities of customer interactions continue to increase, insurance organizations will become more and more dependent upon marketing automation tools to manage the complexities of multi-channel marketing. Marketing automation solutions enable insurance organizations to plan, manage, execute, and evaluate online/offline customer interactions in a synchronized, seamless manner.

Insurance providers need to enhance the sales process by providing agents, brokers, partners and sales representatives with sales automation and workflow management tools. As these channels become more and more service-focused, up-to-the-minute customer information needs to be available on their desktops.

Service automation solutions play a key role in enabling CRM within insurance organizations. These tools help insurers manage and synchronize customer interactions across multiple channels, route interactions to appropriate universal agents, enforce quality assurance, provide workflow management, enhance interaction and enable customer self-help knowledge centers.

Legacy insurance systems are not going away anytime soon. However, insurers must figure out ways to Web-enable these systems to support new e-business initiatives, as well as integrate them into other front office channels.

The move to a customer-centric business model demands that insurance organizations create a single view of their customers across the enterprise and distribution channels. This is only beneficial if actionable intelligence can be gained from having that view. Once intelligence is gained, it is essential that insurers provide the organization a consistent means of acting upon that information by recording appropriate business rules in knowledge management systems.

A customer-centric data warehouse provides a clean, synchronized, atomic-level version of relevant online/offline transactions centered around the customer. This repository is known as the “heart of CRM,” as its content drives processes and decision support throughout end-to-end CRM.

Insurers can use analytics and data mining to conduct customer segmentation and develop models that predict customer behaviorlike the likelihood of customers submitting fraudulent claims or responding to an offer. These techniques can also help insurers understand and measure customer lifetime value or profitability.

End-user query and reporting tools, multi-dimensional analysis tools, and executive information systems (EIS) are a group of information access tools that are designed for business users. These tools allow business analysts within the insurance organization to analyze, report on and distribute information with relative ease.

Knowledge management is a formal process that evaluates a companys people, organizational processes, and technology and develops a solution to get the right information to the right people at the right time to improve productivity. Insurance organizations can use knowledge management to record key business processes and rules in order to retain and maintain corporate knowledge.

Essential #4: Understand the value of partners.

Increased competition in the insurance industry is beginning to eat away at insurer market share. Insurers are seeking out potential alliances and partnerships in the marketplace with leading CRM strategists, CRM technologists, business process outsourcers and channel partners to sustain competitive advantage and spread the risks of participating in the digital economy. Because of the complexities associated with transforming to a customer-centric model, insurance organizations should consider seeking the assistance of consultants who can provide solid plans for developing competitive advantage with CRM.

Essential #5: Understand the true benefits of CRM.

Becoming customer-centric will increase a company’s revenue, profitability and employee productivity, as well as improve overall shareholder value. CRM impacts the top line through direct and indirect revenue generation.

Insurance organizations can grow their customer bases through new channels, cross-selling other services, and increasing paid rates and customer retention. CRM impacts the bottom line through direct and indirect cost reduction. With CRM, insurance organizations are able to improve operational efficiencies, increase speed to market, and increase effectiveness of service and distribution.

is director of customer intelligence for EDS Business Process Management line of business, based in Plano, Texas.


Reproduced from National Underwriter Life & Health/Financial Services Edition, July 13, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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