In the same way that insurance companies lose customers because of long policy approval cycle times or misplaced paper applications, insurance and financial services organizations lose customers who want to conduct a relatively simple transaction-rollover money from a 401(k) or pension plan into an IRA.
Although The Principal Financial Group ($111.1 billion in assets under management, Des Moines) already had good retention rates through a process that began with call center agents pre-filling in information in rollover forms and then mailing the paper documents to customers, the company wanted to do even better.
"The Principal launched an innovative online process in 2002 to increase rollover IRA close rates," according to Doug Fick, second vice president, eBusiness & CRM, The Principal. "By allowing retirement plan participants the ability to complete a rollover of their Principal Financial Group 401(k) funds to an IRA through an electronic process, The Principal was able to get customers to act at the time of their interest, rather than letting paper applications lie forgotten on customers' desks."
Acknowledging that some customers could be apprehensive about a completely Web-based rollover process, The Principal combined the personal contact of a call center representative with the real-time capability of the Internet to provide customers with an easier way to roll their money from their 401(k) to an IRA. The Principal automatically posts the personalized, pre-filled signature-ready forms on a secured portion of the Principal.com Web site for customer review. "The customers log onto the Web site with their user ID and PIN number. They can approve the forms immediately," says Fick.
Primary technologies used to develop the rollover IRA option included a custom-developed, Java-based CRM application to collect customer information; Java servlets to present the information and handle the submission of the customer's signature after approval; and, a workflow system to process the request once approved by the customer.
The online authentication and e-signature is a secure option for existing plan participants, in part, because The Principal is using this rollover option for existing customers only. It is not available to new customers yet, notes Fick. "The customers who utilize the online rollover process already have a relationship with us and they are simply moving assets to another internal relationship," he says. "The response to the Online Rollover process has been highly successful."
To date, according to Kristen Gibson, director of sales, The Principal, "we've experienced a 29 percent improvement in 'good order' applications and a 16 percent improvement in close ratios. And the average number of days from the time sales counselors post the electronic application to when the customer approves them is 4.6 days, down from 12 to 15 days with the previous 'snail mail' process."
The online process has been so successful, The Principal is now extending the functionality to qualified CDs and annuity products, says Gibson. "The cost-benefit analysis is so good that it is now driving us to look at this for other products," she says.
"Had we known we'd have this much success, we might have considered starting with more products," Fick says. "We decided on an incremental approach to learn from a single product." The technology makes it easy for customers to retain their assets within a Principal IRA, he adds.
Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio