We all remember the horror stories about customer relationship management projects gone awry: XYZ Insurance Co. spent $5 million in 2000 on a CRM engagement, and another $2 million on software, only to find out a year into implementation that the big idea wasn't working. XYZ's call center performance measurements-such as average wait time, average call handling time, and abandon rate-were below industry benchmarking standards-if they were measured adequately at all.Now, five years later, these same insurers have sophisticated performance management systems in place that tell them exactly how long it takes for their service representatives to resolve a customer's problem, how long a caller waits in a queue, and how much money the company can save by improving these key performance indicators.
What's more, many insurers are taking customer service to the next level- beyond productivity improvements-by asking perhaps the most obvious questions: What about the customers? How does their experience factor into our performance measurement equation? How do they feel about the call they just made to our contact center? How do they feel about the way we resolved their problem? Isn't that what CRM is all about? Satisfying customers to keep and grow their relationship with you?
Tom Hammond, vice president of customer experience management for The Hartford's P&C service operations, is asking those questions. "What we're seeing in the industry is the realization that the real competitive advantage is to understand what the customer needs. So [The Hartford] is moving away from the cost-oriented call center to a cost-and-profit center," he says.
In fact, the Hartford, Conn.-based insurance company wants high levels of service to drive revenue and retention out of every contact it has with every customer.
"We want to balance efficiency with effectiveness," says Hammond. "And to do that you need to balance productivity, quality, and customer-oriented metrics. If you focus only on productivity, you get off track."
Knowing what you need
Back in the late 1990s, CRM vendors were simply selling what insurers were buying, says Michael Callaghan, CEO of the Opus Group LLC, a Chicago-based operational performance management firm.
"But carriers became more pragmatic," he says. "They realized they needed to get more realistic about knowing their business and knowing what they need." Once that shift took place, around 2002 to 2003, the performance management market exploded.
In addition, says Callaghan, after the market dropped in 2000, it took the industry about a year or two to realize: "Holy cow. We're in a new world, and we have to get back to basics," he says. "When was the last time somebody went out and put a headset on and listened to a call? Let's stop looking at data. Let's stop looking at reports. Let's start getting out there to figure out what the heck we're doing."
Like many insurers, The Hartford has been measuring the productivity of its eight P&C call centers for several years using telephone-switch data, performance monitoring, and other call center technologies. The P&C service centers also have been using Six Sigma quality techniques for three years to develop consistent work processes.
More recently, the carrier moved beyond measuring efficiency to devising ways to listen to the voice of the customer. For instance, it captures voice and screens from all customer transactions in an operational database. Then it analyzes this vast collection of data to understand how customer interactions progress and to develop customer-focused indicators, such as first-call resolution.
Another effective tool is the after-call survey, which is becoming ubiquitous in the industry, according to sources. The Hartford, for instance, offers callers the option to participate in a short survey about the level of service they receive. These surveys, along with traditional performance metrics, help the company provide data-driven high performance coaching to call center reps.
After-call surveys are a big trend in the industry right now, says Hammond. "They work better than traditional third-party quality reviews, because third-party reviewers are interpreting what happened between a customer and a call center rep," he says.
"But when the CSR gets direct feedback from the customer-when they hear the customer's recorded comments about their level of service-it provides pure self-discovery," he says. "And when you have pure self-discovery, coaching is easier, because people believe what they hear from the customer."
Similar to The Hartford, the Farmers Insurance Group records every phone call and uses those recordings for coaching its helpdesk analysts who provide IT support to 10,000 internal employees in company's claims organization.
Farmers also requires the IT helpdesk analysts to make three outbound calls per month to conduct a customer satisfaction survey. During those calls, the analyst asks about the customer's experience: Was the helpdesk agent courteous? Did he understand your problem? Did she have a sense of urgency? Did he solve your problem?
"Those survey results are tied directly to the analysts' performance," says Paul Phillips, director of desktop client services for the Novato, Calif.-based Farmers. "In fact, customer satisfaction is the most heavily weighted category we have."
Like The Hartford's P&C call centers. Farmers' helpdesk aims to balance efficiency and effectiveness, says Phillips. "We live by the metrics. We measure everything we do," he says.
Center of excellence
The center, which is located in Oklahoma City, has achieved efficiency levels in the top 10% of its kind, which recently earned a Center of Excellence certification by BenchmarkPortal and the Center for Customer-Driven Quality at Purdue University.
Still, as important as those metrics are at the OKC helpdesk, when Farmers assesses the helpdesk analysts for rewards and recognition, it combines efficiency indicators-such as average handling time and adherence to schedule-with customer satisfaction. "We weigh customer satisfaction heavily into almost everything we do," says Phillips. All the numbers are about the customer.
A key component of using productivity and customer satisfaction measurements successfully is educating call center employees about why these processes are in place, Phillips adds.
"If employees think you just want to micromanage them and don't want them go to the bathroom, that's going to lead to dissatisfaction. But if they understand that gathering all these metrics is not about a need to control their lives-it's about making sure we're available for the customer and we have the skills to support the customer-they'll buy into a culture of customer satisfaction."
Simple, focused execution is ultimately what CSAA members want, according to Brian Jones, vice president of contact and centers and the Internet for California State Automobile Association (CSAA). The San Francisco-based AAA federation is implementing a customer relationship management system in the third quarter of this year.
"Our vision is to leverage CRM technology to create an environment for our front-line employees' to see all the products and services a customer has with us and what their interactions have been with us, whether that's in the call center, on the Internet or in a branch office," says Cyndie Beckwith, vice president of customer experience at CSAA.
Empowering agents
Beyond that, CSAA also plans to leverage the knowledge it gathers to offer more products and services to its members and to predict why they're calling and what they need. If the customer's premium is due, for example, the customer service rep can ask, "Are you calling about your premium notice?," says CSAA's Jones.
"We want to take the information we know about the customer and make that information actionable," says Beckwith. To that end, CSAA will provide employees with dialogs and scripts containing product or servicing messages personalized to each member.
What's more, CSAA intends to get to the point where it not only monitors the typical call center performance measurements and improve first-contact resolution, but to identify the opportunities for cross-selling and up-selling, says Jones.
Indeed, information about the customer and agent performance data only create value if they're used to retain good customers and grow the business, according to sources.
"The real big piece of [CRM] for us is not only capturing and analyzing the data in the back room. It's about making the data visible to the front line so they can help us drive results," says The Hartford's Hammond.
If it's broke, fix it
Insurance executives don't like to talk publicly about their technology failures, but the people they rely on to bail them out will.
Michael Callaghan is one of those people. The CEO of Opus Group LLC, a Chicago-based operational performance management firm, says his firm has worked with two large carriers over the past couple years to help them recover from failed customer relationship management (CRM) projects that cost millions of dollars. Both companies prefer to remain anonymous.
"It's a pretty classic story," says Callaghan. "There was a clear recognition when these companies invested in CRM that it's a great concept, but now they realize the concept doesn't work until the fundamentals are in place."
Similar to the lesson the manufacturing industry learned about automation in the 1980s, insurers who implemented CRM without optimizing their processes first, ended up making bad processes go faster.
One insurer called Opus Group after spending approximately $7 million on a CRM program, says Callaghan. A year or so into the implementation, the carrier went through external benchmarking and realized its service and performance were way off base. "The president stepped in and said, 'We're not spending another dime until we understand what we're doing internally,'" he says.
Beginning with claims and customer service, Opus Group measured and optimized all the work processes and built an operational performance management engine for the carrier.
That exercise resulted in an $8 million savings to the bottom line, according to Callaghan. And, after tackling underwriting, claims, enrollment, billing, indexing and scanning for the same client, the total savings amounted to $40 million. In the end, the company went through the CRM implementation and spent only about $3 million, he says.
What kind of process changes does a carrier have to make to save that kind of money? Callaghan offers an example: A customer service agent in claims is responsible for servicing the customer transaction-but only has authorization to manage 30% of what's required to do that.
For instance, a customer calls about an unpaid claim. The agent looks up the claim and finds the bill went to the wrong address. But the agent doesn't have the authorization to make an address change. An address change is handled by another department. After a five-day turnaround, the customer then has to resubmit the claim.
"Multiply that by 100," says Callaghan, "because that kind of thing happens 100 times a day to every rep in that group. Unless you look at the entire process all the way through the organization-unless you know all the touchpoints of that process-you're only taking a cursory view of what will really bring value to that service agent and to the customer."
