The Elusive Prize: Effective Cross-Selling
'Relationship Broadening'
Rather than discuss cross-selling, Scholten says, Principal's goal is what the company calls "relationship broadening" - a term that encompasses the expansion of relationships not only with the end-customer narrowly defined as the member, but also those relationships the carrier has with the members' employers and Principal's distributors. "Our technology solutions help create a value proposition for why any of those constituents would want to have multiple relationships with us," Scholten says.
"Those solutions help enable a common customer experience across channels, across product areas and in the ways they want to interact with us," Scholten continues. They also enable Principal to identify marketing opportunities triggered by life events, such as job changes, and present such offerings in targeted banner presentations on the Web or via contact center representatives who are notified directly through systems tied to their front-end interfaces.
At Principal, the customer experience is supported by three major technology components: a customer database, a contact center application and an enterprise data warehouse.
The first of these components was built in 1998 as a foundation for an integrated experience among Internet, voice response and contact center channels. Its reinvention as what Principal calls an affiliate database - which included customers, prospects and marketers - in 2002 marked "a major leap forward," Scholten recalls. "The affiliate file facilitates integration between channels and across multiple relationships, but it's also the key for integration among employers, their employees - the individual customers - and the marketers," he explains. "It's purpose is to drive transactions." Principal currently has about 30 million affiliates in the database, which supports roughly 15 million transactions per month.
Also in 1998, Principal built a Java- and component-based contact center system in-house. "To get the kind of integration we anticipated needing, we felt it was something we had to have control over," Scholten explains. He describes as pivotal a point in early 2001 when the business units agreed to consolidate on the system as the common contact center for the entire company. "That required some concessions because some business units had contact centers with value-added features very specific to their businesses," he recalls.
Since the 1998 implementation, a Web-based "lite" version has been added for uses such as worksite interaction. Another feature, called Extreme Input, leverages NaviSys' (Edison, N.J.) Front Office capabilities for producing forms. "It allows for easy creation of forms and applications for either contact center or Web applications without the need for IT resources," Scholten says. "Sales counselors love it because it provides support specifically for their relationship-broadening efforts."
The carrier's enterprise data warehouse is the result of a 2004 upgrade to a customer and marketer warehouse installed in 2001. "We call it our enterprise data warehouse because it connected more closely with our marketers as a part of enterprise data strategy," Scholten relates. Extensive marts attached to the data warehouse are used to perform segmentation, campaign management and other analytics-related tasks.
Principal also uses a sales automation tool from Pivotal (Vancouver) to manage and track sales activities. Scholten reports that "We have now integrated the data between that and our marketer contact center database so that we have a full view of dealings with the marketers."
'Total' Solution
The integration of these components has enabled Principal to offer what it calls Total Retirement Solution, a product and services suite that provides a combination of 401(k), variations on nonqualified plans and employee stock ownership plans. "For the members, the common customer experience is a key part of the total value that they get from it," Scholten says.
As an example of how that experience is delivered, Principal has developed what it calls Total Retirement View, which displays via paper statements or the Internet the current or projected benefits for all members for all Principal plans in which they participate, including their Social Security protection.
Principal also offers health savings accounts (HSAs). "We're in a fairly unique position because Principal can offer a high-deductible health plan, plus the record-keeping for the HSA, and then the underlying bank account and mutual fund capabilities beneath that," Scholten comments. "Obviously, it requires a lot of integration between those areas to get the common customer experience and the total value."
Finally, the carrier markets worksite offerings, such as Retire Secure, which includes counseling at the worksite to maximize retirement options. "This specifically leverages our contact center, which is fully integrated with our back-end systems," employing the lite version of the contact center application, Scholten says. "As our counselors are working with people, they are able to pull information out of the application that feeds back into our contact centers and our representatives. Whatever area is going to follow up with that individual has the contact history established at that point."
The results of Principal's relationship-broadening objective would seem to support the notion that cross-selling is a natural activity for an insurer, as well as the argument that it can provide a keen competitive advantage. Principal's customer-retention rates have risen from roughly 35 percent to 54 percent, according to Scholten, who claims that this year almost half of the carrier's total sales to individuals were a result of its relationship-broadening capabilities. "Total Retirement Solution is a great example of that - sales more than doubled in 2005," he says. "That wouldn't happen if we didn't have the ability to integrate our capabilities."
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio
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