Much like a high draft pick in the NFL, customer relationship management (CRM) solutions seem to have suffered from the burden of high expectations. When CRM emerged in 1990s, it was touted as a cure all, which would bring companies closer to their customers, unify business processes and offer a solid ROI.
However, the reality was often quite different, as stories of tortuous or failed CRM implementations spread, and some began to question whether CRM was worth the investment. What’s more, some of the companies that helped define the CRM space in the 1990s, such as Seibel Systems and PeopleSoft, have been acquired by Redwood Shores, Calif.-based Oracle Corp. in recent years. Indeed, the negative baggage around CRM became so heavy that even CRM solution vendors began to shy away from the term.
“If you ask insurers about their priorities, very few of them will bring up the term CRM,” says Kimberly Harris-Ferrante, Research VP for Stamford, Conn.-based Gartner Group, noting that one is more apt to hear the phrase “customer experience management,” as the focus shifts to the experience customers receive on the Internet and at the call center from the more sales-heavy CRM offerings of the past. “It doesn’t mean they are not using it, they are just calling it something different.
Such is the case in Jacksonville at Blue Cross Blue Shield of Florida, where the term CRM is no longer used, but the technology is. “We use [CRM] to support our sales force, our customers and, to some extent, our providers,” says Barry O’Rilly, VP business solutions group and CTO, noting the company retired the term, along with other old chestnuts like enterprise resource planning and supply chain management, after a restructuring.
O’Rilly says competitive pressure and need to keep agents happy is driving CRM use. The ease of use and quicker compensation engendered by a properly functioning CRM system may well be the differentiator for an agent selling multiple products. “The industry is changing,” he says. “There’s so much competition that frequently we have to consider a new angle on what constitutes competition.”
O’Rilly says that from the perspective of servicing the provider, agent and sales force, CRM products have made significant strides, yet their ultimate promise remains unfulfilled. “The real story is that now we have information at our fingertips in a way we hadn’t before,” he says. “This doesn’t mean that we’re done; we still need a better understanding of who’s buying our product and what’s profitable.”
Currently, the company employs a Seibel-based solution that has been tailored with homegrown applications to assist with things like rating and commissions, O’Rilly says. “It’s not a pure vanilla solution.”
Darren Joslin, VP, IT - customer and distribution solutions for Schaumburg, Ill.-based Zurich North America Commercial says, they too employ a mix of vendor and homegrown systems in the CRM space.
“We are moving from that collection into a more unified approach,” he says, adding that an essential focus of Zurich’s CRM initiative is distributor relationships. “We really look at CRM capability from a relationship management perspective. Collaboration is extremely critical.”
Joslin says that while CRM may not be the panacea that some envisioned a few years ago, there is value to be obtained from a properly implemented CRM solution. “The growth of the global economy has changed how companies view and access information,” he says. “CRM is an opportunity that, if done right, can have big benefits for an organization.”
NO TECHNOLOGY IS AN ISLAND
Some say that for CRM to live up to its potential, it has to be viewed less as a stand-alone technology and more as a business philosophy. Over the years, a majority of the money spent on CRM went to operational or sales-centric CRM systems. While these operational systems have helped net gains in efficiency and consistency, they failed to produce the quantum leap in ROI many envisioned.
“Although the interactions are happening [more efficiently], there’s still no guarantee that they are the right interactions,” says Colin Shearer senior VP of market strategy for Chicago-based SPSS Inc. “You could still be missing a cross-sell opportunity.”
To remedy this and to get more out of their systems, carriers are linking CRM to other systems, such as analytics. The mountains of data collected by CRM systems are the perfect feedstock for predictive analytics and data mining, Shearer notes. While getting a CIO who felt burned by a CRM investment to double down and spend even more money may seem a tough sell, it may be the best chance to realize a ROI on the original system. “There are many organizations of all sizes that have invested in operational CRM that later add the analytical part as an increment,” Shearer says, adding that incorporating analytics capabilities is a relatively small investment compared to the price of the operational CRM system.
THE CALL CENTER
Much like analytics, business process management (BPM) is another beneficial pairing for CRM systems. Gary Kirkham, director insurance industry solutions, for Cambridge, Mass.-based Pegasystems Inc., which sells a suite that blends CRM and BPM functionality, says insurers felt the need to get closer to customers after realizing a gap existed relative to other financial service industries.
“When I think about CRM in insurance, I think about the call center,” Kirkham says, noting that CRM enables a customer service representative to view a caller’s entire history with the company. CRM can help carriers establish a single view of a customer who may have various policies across different lines of business and also assist on cross-sell and up-sell opportunities.
“One thing we’ve seen with BPM is that much of the functionality used in the back office is now performed in the call center,” he says. Thus, insurers that embrace these technologies can automate formerly manual processes, which reduce both average handling time and, because fewer people are involved, cost.
In addition to its obvious roles in customer service and lead management, CRM can also play a role in claims. Kirkham says the need to employ this type of functionality became all the more apparent in the wake of disasters such as Hurricane Katrina, as insurers scrambled to set up call centers and take claims quickly. “As I look at our project pipeline, I see a large number of projects with major carriers increasing their ability to quickly open up claims intake capability,” he says.
Despite the newfound versatility for CRM, an insurer facing the decision whether to upgrade or not will have a difficult a choice on its hands. The legacy CRM system deployed not too long ago may be insufficient for current needs, such as an increasingly complex compliance environment. Additionally, new technologies, most prominently the need to pull, store and analyze data from mobile applications, may also spur upgrades.
Harris-Ferrante says that carriers can learn from past mistakes when implementing new CRM solutions. “The reason why huge CRM projects failed was that they were IT driven,” she says. “Now that business and IT are aligned, the good news is, the possibility of return on investment, the business benefit, is going to be much more dramatic. It’s business driving these decisions now, not technology.”
As companies pump money into long under-funded operations such as call centers, CRM vendors will benefit, Harris-Ferrante says. However, vendors are all too aware that the horizontal, one-solution-fits-all approach of the past will no longer work in today’s marketplace. “The reality is that insurers who buy CRM need something different than a pharmaceutical company or a bank,” she says. “It’s definitely a sign of the maturity of CRM market that vendors made the transition and are now offering more vertical solutions.”
Another sign of the maturing market is the dwindling number of vendors. The marketplace is currently divided between giants such as SAP, Microsoft and Oracle on one extreme, and smaller, specialty vendors on the other. “Right now there are not a lot players in the middle,” Harris-Ferrante says. “If you are a smaller company and want a smaller solution than what you are going to get price-wise or footprint-wise from one of the large vendors, you don’t have many options.”
As a result, a carrier may look to its core policy vendor to provide some CRM capability in its base solution rather than having to buy a separate solution.
“It hasn’t started yet, but I anticipate in the next 12 to 24 months you are going to see more partnerships built between policy vendors and CRM vendors to help with that mid-sized market,” Harris-Ferrante says.
Another option for the small to mid-sized companies to get CRM capability comes from software as a service (SaaS) model, embodied by San Francisco-based Salesforce.com. However, insurance companies have tended to prefer software to the SaaS model, Harris-Ferrante notes. “I think it will take off eventually, but to change the culture of the industry it will take time.”
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