In recent years, a combination of poor planning, bad execution and an inability to properly measure results have conspired to undermined customer relationship management (CRM) initiatives, casting doubt on future insurer investments in this space.Despite these missteps, a growing number of insurance companies have realized that best-practices CRM can become a reality if insurers can somehow summon up the ability to re-engineer their CRM strategies and alter their corporate focus.

For starters, implementations of large-scale CRM projects appear to be a thing of the past, industry experts concur. Rather, insurers are pinning their hopes on smaller-scale, selective and departmental projects-ones that can stimulate top-line revenue growth and bottom-line savings (see "The Best Laid Plans For CRM," November 2003, page 17).

But the secret to best-practices CRM involves a great deal more than a project's scope or scale-it involves infusion of support from senior-level management combined with the recognition of a concept known as change management, which to this point has been an elusive piece to the CRM puzzle.

"Often, change management is not part of the equation with a CRM initiative," notes Kimberly Harris, senior analyst for Stamford, Conn.-based global IT research and consulting firm Gartner Inc. "Fi-nancial services will acquire the technology, believing that the technology will solve the problem. But it takes change management in combination with the technology to achieve results."

Enterprise view elusive

Implementing change management, though, can be a difficult undertaking for insurerance companies that either aren't inclined to embrace change-or can't easily embrace it due to corporatewide barriers.

But best-practices CRM absolutely demands a shift to accept some degree of change management, industry experts agree. Without it, insurance companies can't reap a return on investment from CRM projects, which are touted for delivering a single, enterprisewide view of customers, all occurring through the integration sales, service and marketing.

Provided a single view, carriers can foster more effective cross-selling strategies, as well as become more proficient at measuring customer profitability, generating leads for agents, optimizing call center and agent workflow and stimulating new-product development.

Large insurers that operate with disparate business units-and independent processes and systems-have had difficulty embracing change management ideals that can ultimately drive the CRM effort.

"Large insurers with a large mix of distribution channels as well as a large variety of products across life and property/casualty often have trouble finding an operating consistency-the way they should act as a company," explains Gartner's Harris. "It's hard to be consistent with so many silos. This creates difficulty enhancing the customer experience with cross-selling."

These barriers have led to modest CRM adoption rates. In a survey released last fall, "CRM and the Insurance Industry-Room for Growth," Boston-based The Aberdeen Group generated responses from 146 insurers.

Of this group, only 43.4% indicate they currently use CRM solutions in their businesses. But of the insurers that have engaged in CRM, 60% indicate they have derived results from projects.

Indeed, a select number of large-size insurers have made efforts to leverage their internal competencies to establish a best-practices CRM "blueprint."

Enterprise CRM

With CRM roots tracing back to early 2000, Northbrook, Ill.-based Allstate Insurance Co. developed a plan to maximize customer profitability across marketing, sales and service. Referring to the initiative as "enterprise CRM," Allstate's objective was to "generate quick, measurable wins and to continue to evolve and strengthen the business case for continuing investments in CRM," Gartner's Harris explains.

"Insurers such as Allstate that have a handle on CRM understand that timely, relevant, proactive contact, including service and marketing contacts, can inevitably improve the customer experience and can inevitably drive incremental revenue growth."

Allstate created an eCRM testing center that it referred to as the "war room," which is a communication platform for change management, explains Harris.

The carrier established cross-functional units to determine how eCRM could help solve business problems by leveraging customer information, analytics and technology, states Harris, who tracked the initiative.

Allstate declined to discuss specific details of the project.

As it assessed the third-party support it would need to drive the project, Allstate concluded that the selection of best-of-breed solutions-rather than a single packaged solution-was the route to go. "With CRM, you're talking about a complicated mix of requirements, which makes it extremely hard for one vendor to satisfy all the components that comprise a CRM investment," declares Harris.

All lines of Allstate's business were set up to use identical data logic to ensure better targeted cross-selling opportunities for inbound and outbound customer contact, says Harris.

Within its best-of-breed game plan, the carrier selected a solution developed by Lexington, Mass.-based MarketSoft Corp. to identify, classify, route and track sales opportunities for agents and call center personnel. At the call center level, it selected multiple sales force automation technologies, including a highly customized solution for distributors, developed by San Mateo, Calif.-based Siebel Systems Inc.

Allstate went with Cary, N.C.-based SAS' Enterprise Miner for data extraction, while a solution developed by Cambridge, Mass.-based Pegasystems Inc. was installed for establishing business rules. To facilitate integration, Allstate requires all its vendors to support ACORD's XML open standards, according to Harris.

Channel conflict

As it embarked upon eCRM, Allstate had to deal with widespread distribution networks, including proprietary and independent channels, which spawned problems such as channel conflict and vertical sales business unit silos. "This inhibited the carrier's ability to cross-sell and grow product penetration within households," she adds.

However, the recognition of change management applied to the integration of sales, service and marketing-all within a strategy to derive quick and measurable wins-enabled Allstate to parlay corporate fragmentation into a positive result, Harris says.

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