In the early part of this decade, the idea of customerrelationship management technology took the insurance industry bystorm, promising to identify a carrier's most profitable customersand help develop products and services aimed directly at them.Seven years later, comparatively little is said or written aboutCRM in the wake of multiple insurance CRM project failures andmillions of dollars invested–all apparently for naught–yet CRMtoday remains an attractive concept to insurers seeking to becomemore competitive and to fatten bottom lines.

The term “CRM” may be sparingly used–or not mentioned at all–butthe benefits are still being offered in different forms, expertssay.

“CRM didn't really go away. We just kind of banned the use ofthat word,” said Kimberly Harris-Ferrante, research vice presidentfor Gartner, based in Stamford, Conn. “The vendors [in the early2000s] over-hyped CRM technology, but it still remains a strategyand methodology designed to change business operations to be morecustomer-centric.”

She explained that “to a certain degree, the technology led thestrategy, which is why we heard so many horror stories,” notingthat the issue emerged when carriers began purchasing CRMtechnology “without knowing what problem they needed to solve.”

The vendors were also complicit, selling large comprehensivesoftware suites that purported to do everything in one package, shesaid, adding that such packages were also not customized for theinsurance vertical.

While that approach didn't work, however, insurers continued touse sales force automation, customer service technologies andcentralized customer information strategies–”all key elements thatthe CRM vendors promised,” said Ms. Harris-Ferrante. “They justdidn't call it CRM, because of the vendor over-hype, confusion,horror stories and failures. It was a stigma to say CRM.”

Today, CRM is more strategy-led, and more aligned withtechnology than it has ever been, she noted.

“When people buy technology to support customers, they know whatthey're buying,” she explained. “It also means they are buyingsmaller pieces of software. It's a completely different buyingpattern.”

According to Ms. Harris-Ferrante, vendors have had to modularizetheir technologies so they could sell smaller pieces. One result isthat products have become more “verticalized” for insurance,addressing key areas such as claims, first notice of loss,distribution systems and commission handling.

“I would hate to be a vendor, because you have to find middleground,” she said, noting that insurers want products that areneither “off the shelf” nor totally built in-house.

The breaking of CRM into discrete functions has spawned avariety of terms for the activities, but Ms. Harris-Ferrantedescribed the concept overall as “customer experiencemanagement.”

Customer experience management, she noted, “is the same as CRM,but one thing CRM missed years ago was that it emphasized salestransactions [as opposed to customer management].” The focus now,she added, is on determining how customers want processes to lookand feel.

“Companies are taking a step back and doing more customerresearch,” she stated. “Instead of inside-out, they're taking anoutside-in approach by trying to improve the experiences theircustomers have with them.”

Ms. Harris-Ferrante predicted that CRM, by whatever name it iscalled, will succeed, but it needs to overcome some challenges.

“The number one barrier is, how do you know your customer?” shenoted. “Accessible and clean customer data is the key. Insurershave a lot of dirty, siloed customer data they have struggled touse. It's not just cleaning up the mess you have but making sureyou have the right data.”

She added that insurers need to change their priorities andprocesses in collecting data to address these challenges.

“Agents know much of this data,” she continued. “A lot ofinformation sits at the point of sale, and insurers need to accessit.” That will mean insurers and agents need to communicate moreeffectively, she said.

“The concept behind CRM has a future, but I don't know that theterm has a future,” she noted. “Whatever we call it, we need tounderstand customers and improve the way we interact with them.This is a core component of how we run our businesses.”

According to Judy Johnson, longtime industry analyst and currentprinciple solutions architect for insurance at Patni Systems inJersey City, N.J., CRM is “more or less the same as it's alwaysbeen–whatever Siebel said it was,” referring to the well-knownmarketer of CRM solutions.

“Since most CRM implementations were failures, CRM was a badword for many years,” she added. “But it's being used again,although not widely.”

CRM now means “a single view of the customer, and to a lesserextent, customer service for claims,” said Ms. Johnson.

While such a view is “a laudable objective, I'm not sure what itmeans or why companies are trying to do it, other than [to improve]data quality,” she said. “Maybe cross-selling opportunities,speed-to-market and getting new products out the door [areinvolved].”

She noted that research on the property-casualty side oncustomer satisfaction with claims has shown that 40 percent are nothappy with the level of claims services received.

“For the insurer, good customer service is, 'How fast can I makethe payment?' It's not how much you get, but how fast you get it,”she observed. “So CRM seems to have changed into, 'Let's givebetter claims service.'”

The term CRM today doesn't have the same cache as it once did,according to Ms. Johnson.

“Vendors are scared to death to use the word, because it hassuch a bad reputation,” she said, adding that vendors also have tofit the CRM message in with SOA (service-oriented architecture) andother current technology initiatives.

While she noted that the industry does need to provide customerservice, Ms. Johnson said insurers have found that “throwing moneyat customer service doesn't necessarily get better customerservice.”

She agreed that poor data is also a stumbling block.

“It's difficult to have CRM if you have bad customer data,” shestated. “That's what caused problems in 2003 and previousimplementations. The problem wasn't the technology, but many blamedthe technology.”

Ms. Johnson added that “just as with every major technologyshift, CRM became the silver bullet long before it was the reality.We're not seeing a great resurgence in pure CRM.”

“CRM went through phases,” according to Chuck Johnston, seniordirector of insurance industry strategy for Oracle, based inRedwood Shores, Calif. Oracle owns Siebel.

“You always managed your customer relationships, although maybenot as efficiently as you cold have,” he said. “We got overloadedon the strategic value of CRM, rather than integrating it into theway we do business.”

According to Mr. Johnston, Oracle defines CRM for insurance as“distribution management, customer service via service centers,marketing–and analytics, insight and data management.”

“We tend to operate at the level of talking about thespecifics,” he noted. “Distribution management and customer serviceare the high-level terms. CRM is too high-level, and there is a lotof baggage.”

One reason the term CRM got “bad press,” he said, is that“people tried to do galactic projects. They bought into a vision ofCRM as all things to all people. The reality is that it's a goodpiece of software that did sales force automation, or some otheraspect of CRM.”

He also pointed out that for CRM to be effective, “a lot ofsocial change has to go along with it. You really have todetermine, 'How does it fit my business?'”

Mr. Johnston opined that if CRM buyers in the past had specificbusiness goals going into a purchase, they were usually happy,because the goals were met. Specific improvements or extension ofparticular areas could be measured.

Many purchasers, however, had no such goals for CRM, or thegoals were “fuzzier.” That being the case, “how can you measuresuccess?” he asked.

According to Mr. Johnston, the “hot” area in CRM today is theanalytical tools–dashboards, measurement capability and datahubs.

“Yes, we are selling more pieces around projects, but we arealso seeing interest in single-sourcing,” said Mr. Johnston, inreference to the current trend among buyers to purchase modulesthat address specific needs, rather than a global CRM system.

Buyers “are not doing a galactic project, but the smallerprojects have to fit together into a larger goal,” he said.

“Insurers are always looking for ways to grow the business, andyou can only do so many acquisitions,” he added. “Real competitivegrowth will come through new markets and the ability to get intothe channel faster. Distribution management addresses these painpoints. As an aspect of CRM, it enables you to manage amultichannel environment as a day-to-day operation, as opposed to atraumatic event.”

“I don't think CRM has changed a lot in the last two years,”said Matt Josefowicz, managing director for insurance atBoston-based Celent. “Since the end of the CRM boom, we've seen adisaggregating of the category, which was a vendor-created categorythat took in related things. It was oversold as a transformationalproduct, and that is often problematic.”

According to Mr. Josefowicz, the term now takes in customer dataintegration, data mining, marketing and contact centermanagement–all pieces of what had been touted as CRM.

“Rarely these days do you see these things as part of a grandCRM strategy,” he explained. “People now realize they have to keeptrack of customers–what they said and did and when–manageinteractions, then use the data to make business decisions. Thereare a lot of important tools.”

In particular, he said, “people are spending on customer datamanagement, interaction management and cleansing of customerdata–all of which falls under the CRM umbrella. Approaching this asan overall strategy is biting off more than most companies canchew.”

CRM got such a bad name, he noted, not because the technologyfailed, “but because it was bought in a frenzy of technology-buyingwithout any clear business goal. We thought it would fix everythingand it didn't, so it was a failure. It has to be part of a veryclear business strategy.”

Mr. Josefowicz added that while insurers continue to invest inaspects of CRM, “it's not as high a priority as core systems, datamastery and workflow.”

“We've seen the explosion of the category,” he concluded. “Nowthe solutions under the umbrella are still out there and stilldelivering value.”