Once A Silver Bullet,
CRM Is Now A Dirty Word

At the turn of this century, customer relationship managementthe idea that technology will enable us to determine the wants and needs of our most profitable customers and develop products and services aimed at themwas hailed as the paradigm that would give new life to the insurance industry.

Today, following highly publicized CRM project failures in the industry, experts say the technology endures, but the term inspires fear and loathing among customers and potential customers.

“CRM is a dirty word,” declared Kimberly Harris, research director for the financial services industry at Raleigh, N.C.-based researcher Gartner. While CRM was once seen as a “silver bullet that would save the industry,” the results have been disappointing, she said.

“A lot of companies are struggling [with CRM systems],” she continued, noting several key issues:

Insurance companies still dont agree on who the “customer” isthe insured or the agent?

CRM is often seen as an information technology purchase, rather than as a solution that involves the entire company.

In some cases where they have been implemented, CRM systems were unable to support a carriers business requirements.

On the other hand, companies still want the benefits CRM technology has promised, Ms. Harris noted. She said Gartner is seeing a “renovation” among buyers who “want to meet the CRM utopia but dont want to call it CRM.”

While CRM applications were initially sold as “horizontal” solutions that werent specifically designed for the insurance industry, that trend has changed in recent years, said Ms. Harris. “Today, [CRM buyers] want to build loyalty among their agents, or enhance their claims management functions, or make their customer information files available to the whole company,” she explained.

CRM vendors today are either “horizontal, vertical or in the middle,” Ms. Harris observed. Those in the middle “are trying to walk the insurance talk” by placing insurance terms in a horizontal product demo, she noted.

Todays vertical CRM products, she said, are able to recreate “typical” insurance processes based on best practices.

In terms of spending, Ms. Harris said the spending on “ongoing” CRM implementations has declined, while there has not yet been an “uptake” in spending on new CRM deals. While such deals are still being discussed, wary buyers have lengthened the purchase process and have place more stringent requirements on the sellers.

“The main problem with CRM is that the category is way too broad; it encompasses many things,” said Matthew Josefowicz, an analyst with New York-based Celent Communications. The three main areas of focus for CRM are contact center management, data mastery or business intelligence, and managing marketing programs, he explained.

“What we see these days in insurance is less of an interest in the broad category and more in solving specific problems,” he continued. “If the contact center system is inhibiting performance, a company will focus on that. The customer data issue has now been put in the business intelligence/data mastery box, as it should be. Customer data is no different than any other enterprise data.”

CRM is such a “dirty word” because of large-scale projects that were poorly planned and executed, he noted. “People are happy to have something else to call it.”

When CRM was first in vogue, customer behavior data didnt necessarily include other data in the company that may be linked to it, Mr. Josefowicz said. Buyers thought they merely had to implement the technology, then business will be betterwithout actually knowing how that would happen or why, he explained. No thought was given to cross-selling or to linking with other data to maximize its value.

“The category of CRM is less important [today],” Mr. Josefowicz declared. “People are pulling out the elements of what used to be called CRM and addressing them to support their business strategies.”

He added that traditional CRM vendors are bifurcating into either contact center management specialists or data specialists. The latter are pulling away from contact management and focusing more on managing and extracting information from customer data and unifying it with other customer data.

Will the term CRM cease to be used? “Its such an established term, and companies have dedicated CRM practices, [so] the term will limp along,” said Mr. Josefowicz. “Companies have more of an interest in solving business problems, whether its called CRM or not.”

“CIOs and CEOs are getting more sophisticated about buying CRM products,” he added. “Some tech vendors will bemoan the loss of easy money, but now all sides are focused on sustaining value.”

“Basically, CRM has never been a bad idea,” according to James Bisker, senior analyst, insurance, for the Needham, Mass.-based TowerGroup. “Insurance has wanted to do these things for many yearsrecognizing who their customers are and whether or not you have the same customer on two different lines.”

“CRM is a labeling and marketing pitch, but the complexity of what it needed to do got in the way,” he continued. He asserted that “more successful” CRM programs introduce the concept and provide users with tool kits, instead of providing the whole solution in one fell swoop.

Mr. Bisker said CRM has been a success for several vendors, but they have “approached it as an additional product, assuming that you are already consolidating your data. If you werent prepared from a business or systems standpoint, it was always a problem. You have to have all your ducks in a row to make this work. CRM is a great idea, but the implementation is much harder than they thought it would be. The basic concept is to know as much as you can about your customer.”

According to Mr. Bisker, carriers are telling CRM vendors, “We believe you, but we want it in smaller chunks now.” Today, “potential buyers are very suspect of large-scale projects,” he noted. “They need concise deliverables and realistic ROI targets. Youve got to show ROI for segments of the overall CRM program.

“We have to be careful of point solutionsthat put one thing on while another breaks,” he continued. “The reality is that these systems must produce every day; you cant do open heart surgery while the patient is running down the road. You have to have a strategy for serving customers better that will have stages.”

Mr. Bisker said there is “a renaissance” in recognizing the value of CRM to a customer-centric strategy. “Carriers are wise to continue to invest in the solutions and infrastructure changes necessary to achieve that strategy,” he stated. “That, ironically, is classically what an agent does.”

Mr. Bisker said the “bell curve” is racing toward putting customer centricity first and recognizing its value. Impediments to this have been the silo nature of data sorting as well as the multitude of data channels and the need to synchronize them. CRM can provide such functions, bringing together data from all the channels, he asserted.

“CRM has a place to go,” he concluded. “Companies shouldnt ignore it.”

Where budgets are limited, CRM doesnt have to be “a huge project,” he explained. Companies may only start with part of a CRM project as a strategy for the present”a solution that grows with them.”

Reproduced from National Underwriter Edition, January 16, 2004. Copyright 2004 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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Once A Silver Bullet, CRM Is Now A Dirty Word

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