CRM May Soon Deliver On Its Promise

Insurance companies may find the cost of consolidating and integrating an acquired policy management system to be prohibitive. Updating old policyholder information and converting it to a new technology is far more costly than simply keeping the old system running. The information integration problem is compounded because many of these legacy policyholder systems are custom developed, using obsolete proprietary technology and old programming languages like COBOL.

The insurance industrys adoption of CRM reflects its conservative approach to technology adoption and organizational change. Industry data shows modest insurance industry spending on CRM. This conservative approach has had a silver lining, however. It helped the industry to largely avoid the costly failures associated with large-scale CRM deployments during the excesses of the dot.com years. There has been a high failure rate for large-scale CRM deployments over the past three years.

CRM projects taking more than one year to implement fail to reach their objectives fully 70 percent of the time. The primary reason cited for this failure is that the project was improperly defined. CRM projects have suffered from overly ambitious project scopes that span an entire enterprise and last several years. ROI (return on investment) measurements and accountability were buried in the grandiose promises offered by an integrated CRM suite that was to be all things to all people.

Those that fail to learn the lessons of history are bound to repeat its mistakes, and insurance companies have benefited from the well-publicized mistakes made by those companies that were oversold on large CRM implementations. This second, post-dot.com CRM marketplace is not about technology, but rather about business fundamentals. The best CRM installations are those that focus on customers and workflow, and implement CRM incrementally in bite-sized chunks with well-defined project scopes.

The trend in CRM now focuses on accountability in the new and realistic post-bubble CRM marketplace. Increasingly, todays CRM projects are targeted for completion in less than 12 months. Another encouraging sign of the renewed emphasis on managing the risk of CRM projects is the incremental focus of CRM implementations.

This conservative and proven piece-by-piece approach to CRM reduces the risk for insurance companies that must integrate incompatible islands of policy management information with multiple distribution channels. A singular focus to understand and streamline workflow, to focus all sales and service resources on the most profitable customers, vastly increases the probability of success.

Islands of policyholder information present attractive integration opportunities for properly planned and implemented CRM projects. Presenting tailored and unified views of customer information from multiple systems to provide enhanced customer service and sales opportunities are proven ways to increase revenues for measuring a CRM ROI.

The first step in achieving insurance industry ROI objectives for CRM means lowering the cost of customer service and sales, while improving the policyholders perceived experience. This mature CRM project focus, to reduce costs while increasing service quality, is a complex business task when the source policyholder data comes from multiple systems. However, successfully done, it delivers timely and optimized views of sales and service information to each sales channel. Its defined focus lends itself to the reduced risk CRM management approach of bite-sized chunks incrementally implemented.

Reducing the cost of sales and service for insurance companies can be complicated by online distribution. Electronic communications, such as e-mail, Web site application forms and instant messaging, are very cost effective. These electronic channels are best used for providing pre-sale and post-sale customer service information. These channels also aid in reducing the cost to manage the distribution of targeted information.

Insurance policy buyers actually prefer a personal sales experience once theyve arrived at the buying decision. This information presents an obvious "upsell" opportunity, and the most cost-effective way for insurance customers to buy new or additional insurance is via a personal sales call with a telesales rep in a call center. A well-designed and implemented insurance CRM solution will arm the telephone salesperson with relevant policyholder risk and premium information.

This risk and recurring revenue information, fundamental to profitable insurance business, comes into the CRM system from previous contacts with the new prospect via e-mails, instant messaging, Web forms, or phone calls. For existing policyholders, additional information is provided by the legacy centralized policy management system. The information is aggregated, correlated and analyzed to provide optimum value before a call center salesperson presents it to a policyholder or prospect.

Properly planned and implemented insurance CRM projects impact both sides of the business equation. They significantly reduce the cost of delivering enhanced services to policyholders. Well-managed CRM produces measurable gains in top-line revenue by integrating targeted sales information across all distribution channels. Combining sales effectiveness with efficient policyholder service is the best way to manage risk in the insurance business.

Jerry Lumpkin is senior vice president of Worldwide Marketing for FrontRange Solutions, based in Colorado Springs, Colo.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 27, 2003. Copyright 2003 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.