It began as a mail-order business in 1922, providing automobile insurance to U.S. military officers who moved often and could not get coverage from other carriers. Today, United Services Automobile Association, better known as USAA, ranks as one of the best companies in America for providing customer service.With 4.5 million customers and $62.5 billion in assets, USAA placed first as the most reputable financial services company in America in the Financial Services Reputation Quotient study conducted by Harris Interactive, American Banker (a Thomson Financial publication) and the Reputation Institute. USAA also recently received top awards in the life, auto and home insurance categories from readers of Worth magazine.
Interestingly, USAA has developed its stellar reputation through a centralized customer service operation that caters to its mobile policyholders, unlike other large personal-lines carriers that have built customer relationships through neighborhood agents. USAA now employs 16,000 customer service agents in approximately 100 automated call distribution groups-mostly based in the carrier's San Antonio headquarters.
"We've never had salesmen calling on people," says Ken James, business program director for member service operations support at USAA. "As toll-free numbers started to evolve, we were one of the first companies to start employing (them) so members could reach us much more easily and more quickly."
USAA is "one big call center, so to speak," says Tim Brown, executive director of enterprise member service development at USAA. As such, the company handles a high volume of network traffic. The phone system routes 147 million inbound and outbound calls per year (an average of 403,000 per day), and the mainframe processes more than 19.3 million transactions per day.
"The demands of our business stretch (the limits of) a lot of the software we buy or build in house," Brown says.
Buying or developing applications that can meet the new demands of call centers-such as e-mail and Web chat-is a challenge that experts say carriers must address to provide a higher level of service.
Most carriers have call centers that are not prepared to handle nontraditional interactions, such as e-mail, Web chat, co-browsing and voice over IP, says Bill Chambers, principal analyst at Doculabs, a Chicago-based independent technology research firm. Furthermore, he says, companies don't have a platform in place to integrate the different customer service channels into a single customer interaction history.
"It's not only necessary to capture and manage these individual channel interactions," Chambers says, "you also have to be able to blend them together-link them based on the customer-so you can see a 'single conversation' with your customer."
Over the past few years, the insurance industry has been investing in telephony, middleware and customer service applications to build their contact centers. As a result, the call center technology market is maturing, says Brad Adrian, research analyst, Gartner Financial Services, Durham, N.C. The next step is integration, he says.
In fact, Gartner predicts that insurance industry spending on call center technologies will skyrocket, from $394 million this year to $3.27 billion by 2005, when more than half of those dollars will be earmarked for middleware to link applications to each other and to back-end systems (see charts).
Furthermore, as new customer contact methods arise, such as wireless devices, customer support will probably be provided by the traditional contact center, Adrian says. "There will always be new forces impinging on the contact center." A year and a half ago, he notes, no one was even concerned about e-mail handling. "Now that function is being handled by the contact center."
Although wireless and voice over IP technologies are still on the back burner for most carriers, many are implementing Web-based self-service as an alternative channel for customers to obtain information about their policies or accounts and to conduct transactions. And typically, as more services are offered on the Web, e-mail volume increases, industry experts say.
Last year, 85% of customer contact with companies occurred by telephone, 9% by e-mail and 6% by the Internet, according to Dr. Jon Anton, principal researcher at Purdue University's Center for Customer-Driven Quality. By 2005, 45% of customer contact will be initiated by phone, 20% by e-mail, and 35% by Web site, he predicts.
Fireman's Fund Insurance Co. is piloting several Web-based self-service applications-most of which are geared toward agents rather than policyholders. In preparation for the anticipated increase in e-mail, the Novato, Calif.-based carrier installed an e-mail management system at the end of last year from Kana Communications, Redwood City, Calif.
"We were looking at what we needed to do to be ready to handle the large amounts of e-mail we'd receive when we released our Internet applications," says Carl Herrick, senior director, call center strategy, e-business, at Fireman's Fund. "So we're ahead of the curve."
Last year, 21st Century Insurance also began offering customer self-service capabilities on its Web site. Although e-mail traffic has not increased enough yet to justify an e-mail management system, the carrier does offer Web chat.
"We have a group of customer service representatives who can do a blending of calls and chat," says Marina Lubinsky, manager of Internet business development at the Woodland Hills, Calif.-based direct writer. "They can handle four chat sessions at a time. And if the chat becomes slow, they can plug into the system and start taking phone calls."
An expanding role
Indeed, as carriers begin to adopt new customer-service technologies, the activities and duties of call center representatives are changing.
"As our members start doing business with us in different ways, through different channels such as the Internet and e-mail, we're evolving our call center into more of a contact center management operation," USAA's Brown says.
In addition to expanding the call center representative's role, USAA-which comprises insurance, banking, investment management and other businesses-aims to present one corporate brand to its members.
"We want our members to look at USAA as one company, as opposed to a bank, or an insurance company or a financial services company," Brown says. "And vice versa, we want our operations to look at each member as a USAA customer, not just a property/casualty customer or a bank customer."
Customer service is embedded deeply into USAA's culture, says Bill Bradway, president of Meridian Research Inc., a technology research and advisory firm in Newton, Mass. Furthermore, USAA embraces technologies that support that service culture, he says.
For example, he says, in the mid-1980s, USAA invested in a "universal" customer information system, which enables any of the business units to understand the breadth of the relationship the customer has with USAA.
A USAA property/casualty representative is able to access detailed information about a customer's auto policy, as well as general information about that customer's credit card, checking account, life insurance policy, mutual funds or brokerage account. "It's an acknowledgement that this person has a relationship with more than one business unit within the USAA family," Bradway says.
Furthermore, if that customer wants to make an adjustment to another policy or account, the property/casualty representative transfers the call to that business unit and a customer service representative picks it up there. "And USAA makes the customer feel like it's a seamless transfer," he adds.
Computer-telephony integration, which USAA has been using for three years, is a key to that seamless transfer, USAA's Brown says. "We transfer the screen information along with the call."
USAA also employs an interactive voice response system (IVR), browser-enabled customer-service workstations, sophisticated imaging capabilities, and customer self-service via the Web site.
Now, USAA is planning to implement co-browsing and customer relationship management (CRM) technologies. "Just like every other company, we're heading down the road to become more of a contact center," Brown says.
With the addition of CRM, call center agents will have a greater level of detail about a customer's accounts, Brown explains. For example, he says, call center reps will be able to see if a customer has an outstanding transaction with the bank and ask if the customer would you like to speak with a bank representative to close that transaction.
They also will be able to suggest other USAA products and services triggered by life events-insurance or a loan when a member buys a car, for instance.
The integration challenge
"There's a lot of interest in having customer service centers promote and sell new products to customers," says Doculabs' Chambers. As this happens, "more marketing automation solutions-which analyze customer data and make recommendations in terms of products-will be linked closely to customer-service solutions," he adds.
The road to full-scale CRM, however, is obstructed by the integration obstacle. Insurance companies basically have two choices, Gartner's Adrian says: select a turnkey approach with one vendor, or select "best-of-breed" vendor applications and integrate them.
The turnkey approach has been offered by vendors only within the past year, and the solutions are not yet fully functional, analysts say.
CRM vendors are beginning to add components to their systems, which support nontraditional channel interaction, such as e-mail, Doculab's Chambers says. "But the level of sophistication of those components varies widely. Also, most CRM software was designed to run as if it were in a standalone environment, with minimal integration to back-office systems, he adds.
Vendors usually offer customized integration approaches using application programming interfaces (APIs), Chambers says. "They may have an adapter for an (off-the-shelf) enterprise resource planning system," he says. "But if you're an insurance company, that doesn't do you a lot of good-because most insurance systems are not off-the-shelf. They're usually very large, custom mainframe systems." Therefore, almost all integration to a back-office system is customized, expensive and time-consuming.
Doculabs supports the use of enterprise application integration (EAI) as a solution. "A lot of companies are looking to implement EAI as a way of avoiding these one-off custom integrations between systems," Chambers says. "It's much more economical." However, most CRM vendors are only beginning to consider integrating with the EAI vendors.
Despite the challenges, full-scale CRM holds the promise for carriers to provide better customer service and a broader range of financial products and services.
"Customer relationship management is more than customer service-it's more than answering the phone and answering questions," Adrian says. CRM requires companies to analyze, segment and present information in a way that is directly meaningful to their customers.
At The Leading Edge
More companies at the leading edge are beginning to envision the customer service center as yet another marketing campaign, Doculab's Chambers says. And CRM vendors are adding marketing components to their product suites.
A customer service center marketing campaign is more effective than telemarketing, Chambers says, because CSRs are communicating with existing customers. This strategy leverages the knowledge a carrier has about its customer base to provide information to the customer service agent who-while interacting with the customer-is in an ideal position to recommend other products and services, he says.
This marketing push also extends to the Internet. "If I'm on the Web searching your knowledge base or I'm submitting a claim online, that's another opportunity for the carrier to suggest other services I might be interested in," Chambers adds.
Ideally, carriers will be able to use customer information to provide some financial planning advice, Gartner's Adrian says. "Here's what your portfolio looks like. Here's what your risks are. Here are your opportunities for improvement. The objective ultimately is to retain that relationship and to sell more, or at least to make sure there's loyalty there."
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