Incredibly, in this highly informed day and age, it is still news to some that denial is not a river in Egypt.
Customer relationship management–the idea that technology will enable us to determine the wants and needs of our most profitable customers and develop products and services aimed at them–has been a buzzword in our industry for more than two years. Yet experts like Clarence Smith, assistant vice president at Conning & Company, a Hartford, Conn.-based researcher, tell us that CRM programs fail between 55% and 70% of the time. The cost of such failures may range up to $100 million, says Conning.
Why are CRM programs so dysfunctional? According to Smith, the answer lies in the insurers culture and business model. In his study for Conning–”CRM in Personal Lines Insurance”–Smith notes that, “Unfortunately, some P-C insurers view CRM as nothing more than a technology effort, rather than a fundamental strategy that helps establish and build customer relationships.”
Theres a lot of truth there, but Id like to suggest a further, more insidious reason for the failure of this and other technologies to make a difference in insurance. I call it “technological denial.” And while cultural factors certainly play into the equation of failure for CRM in insurance, technological denial (lets call it TD, just to add another acronym to the already overloaded acronym circuitry in our brains) is the x-factor that renders all other factors null.
What is TD? Let me provide an illustration.
Psychologist James Dobson tells the story of a mental health practitioner who had a client who insisted that he, the client, was dead. Lengthy sessions of talk therapy still failed to convince this patient that he was anything other than a walking corpse. At his wits end, the practitioner finally hit on an idea that would demonstrate to the patient conclusively that he was, in fact, alive.
In their next session together, the client again declared he was deceased. At that, the practitioner abruptly grabbed the patients hand and pricked it with a sharp needle. Naturally, a bubble of blood formed on the spot of the wound.
Pointing to the blood, the practitioner triumphantly said to his client, “There, now! What do you say to that?”
“Well, whaddya know?” the patient responded. “Dead people bleed.”
Sadly, this kind of intractable denial is not limited to those in mental health institutions. The Conning study found that “some p-c insurers had invested only in operational CRM and not in analytical CRM, leaving service representatives and field personnel collecting a great deal of data without analyzing the data to identify ways to build stronger customer relationships.”
How is that possible?
According to Smith, “Some insurers have an intention, at a later date, to buy analytical software, but they havent done that. Meanwhile, the data ages.” And as the data gets older, it becomes irrelevant, making its analysis (if that ever happens) an exercise in futility. As a result, the CRM initiative doesnt yield the expected results.