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Cross-Selling: Creating the Right Blend

Insurance companies seeking cross- and up-selling success face "apples-and-oranges" challenges. Focusing on similar products is more likely to bear fruit.

The vision of one-stop financial services shopping hasn't played out the way some commentators on the passing of the Gramm-Leach-Bliley Act predicted in 1998. Certainly, when the walls separating financial services came down, many companies moved to expand their corporate portfolios across the industry verticals-but not necessarily with distribution-related motives foremost. And even with companies' high cross-selling ambitions, the cultural and technological challenges are daunting.

It's one thing for a company to integrate different financial service units in an effort to aggregate disparate companies within a single corporate portfolio; it's another to integrate those units at the consumer level, according to Rick Berry, principal, Tillinghast Towers-Perrin (New York). Radically different products-such as P&C and life insurance-require different kinds of sales and services functions, which is why P&C companies haven't had a great deal of success in their attempts at selling life insurance, Berry speculates. "Companies need to be deliberate in engineering the customer experience, through engineering the role they want various selling resources to play to make it all happen," he asserts.

Convergence or Divergence?

The insurance industry has recently seen a good bit of divergent activity, such as the recent divestiture by Prudential Financial and Mutual of Omaha of their P&C companies, and P&C-focused Zurich's selling off of Zurich Life to Chicago-based Bank One.

Instances of both convergence and divergence are happening, according to Berry, but companies are seeing the value of specialization. "As business gets generally more challenging, companies need to focus on what their central business is going to be, and marshal resources to make that happen," he says. "So I can imagine a predominantly life company saying, 'In the overall scheme of things, maybe we could be successful in P&C, but it's too distracting and we need to concentrate our resources elsewhere.'"

Those distractions can be huge, according to Eric Miller, senior principal, Highpoint Partners (Charlotte, NC). Miller recalls an experience from the trenches where a "big P&C/small life" company tried to get agents to sell life products. The company faced two business problems in that, "first, the P&C agents didn't want to leave their comfort zone, and secondly, they didn't have a competitive life product," Miller says. "The business people's concept was, 'Why do I want to jeopardize my relationship with this very strong client to sell them a life policy that might not be the most competitively priced product in the market?'"

The technology circumstances were little better. "Their desktop systems all keyed to P&C and they didn't have any connectivity to the life side because they had that as a distinct stovepipe," Miller adds. "It was very difficult for them to get a quote on a life product, even if it was regular term."

Integrated Customer Experience

Companies facing such difficulties might need to reconsider whether they're putting their resources into the products and services they can effectively leverage, in the opinion of Paul Donovan, CIO, ING US Financial Services (Atlanta, $150 billion in assets). "The whole integrated financial services concept may sound good, but when you get to the devil in the details, it is extremely difficult to capture, if it's even worth it at all," he says.

Donovan's goal is the integration of ING US's life and wealth management-oriented product lines in order to create "the one ING experience," he says. "Whatever the combination of brand, experience and technology that gets you to that goal, once you're there, customers and prospects start to think about you as an integrated organization with whom it's easy to do business."

Among the channels through which ING US aims to cross- and up-sell products are its ING Direct online banking and financial services channel and the newly formed subsidiary Financial Horizons, a business unit designed to retain or increase wallet share of customers who are moving from the asset accumulation phase to the distribution phase of their life cycle, according to Donovan. To succeed in that task, Financial Horizon's sales force "needs to know an awful lot about our customers," he says. And so that they can, Donovan's IT organization is building what he calls an "information architecture, where we're gathering customer data into one virtual place and creating operational data stores and a data warehouse," using IBM (Armonk, NY) DB2 as the standard database and a BEA Systems (San Jose, CA) suite of products to create the application framework. Scheduled to be rolled out this summer, the information architecture "will give the business a very good picture of who their prospects are, because the data is clean, scrubbed and in one place," Donovan says.

Slicing and Dicing

Mutual of Omaha ($16 billion in assets, Omaha), which now focuses on life, annuities, disability and long-term care products, is trying to get a good picture of who its prospects are by concentrating on what they want, according to John O'Donovan, first vice president, e-business partnership. Pursuing a strategy to be a customer "needs-based" company, Mutual of Omaha is leveraging an E.piphany (San Mateo, CA) CRM implementation to drive cross- and up-selling through its in-bound phone contact with customers. Begun last September and due to be completed in March 2004, the implementation has so far included the solution's marketing and sales automation modules. Within the latter sits E.piphany's RealTime Advisor, which analyzes customer contact information against a body of data on similar customers based on a number of factors, such as age, gender and ZIP code. "You can slice and dice the information any way you like," says O'Donovan. "When a customer calls and says, for example, 'I've got a second child and need to change my beneficiaries,' the minute we enter that information, RealTime Advisor comes back and gives us suggested up-sell and cross-sell products based on the customer's profile against the bigger universe of people that look like that customer."

In the field, Mutual of Omaha is driving cross-selling with a Financial Profiles (Carlsbad, CA) laptop tool. Described by O'Donovan as a "needs establishment tool," the Financial Profiles application develops a picture of customers through a questionnaire about the present state of their finances and financial goals. "The agent gets a picture of where they are in life, and what their assets are and then lets us generically say, 'If you want to do this, then this is the product suite we would recommend.'"

Having just completed a pilot of Financial Profiles with 270 agents, Mutual of Omaha has seen a double-digit increase in sales of core products, including an increase in more-than-single-product sales, according to O'Donovan. "We had people who used to sell primarily one product, and this tool has enabled them to offer and close a broader range of products, based on the customer's needs." Given the results, the tool is being given a full production across Mutual of Omaha's agency force over the summer and into the fall, O'Donovan adds.

Starting Small

The Hartford ($188.7 billion in assets, Hartford) has focused on in-house-built capabilities to drive cross-selling. The carrier has enjoyed encouraging results in small pilot projects to cross-sell asset accumulation products to existing commercial customers, but currently sees the opportunity in cross-selling within small commercial lines, according to Jim Griesing, vice president of sales and market planning.

Over the past year the Hartford has been in pilot with new cross-selling techniques rooted in home-grown technology. "We've invested a lot on our proprietary warehouse and we've purchased quite a bit of third-party data that we marry with existing customer information so that we can get broader views of the customer," Griesing says.

Joe Manny, customer solutions, small commercial operations at The Hartford, explains the approach: "We've done a tremendous amount of work in data modeling of our customers to look for characteristics that demonstrate a propensity to buy or not, as well as the likely returns," he says. "We have further integrated that with our operating systems and are in pilot mode to make it such that our people on the front end receiving in-bound customer calls will see a message on their screen saying, 'This is a targeted customer, and here is the cross-sell opportunity,' along with some scripting."

Keeping the needs of the customer first is key to success, insists Shawn Cunningham, service operations, small commercial. Before attempting to cross-sell to a customer calling in, "we completely finish the service request," he explains. "Only then do we say, 'Oh, by the way, we have something that you might be interested in.'"

The Hartford's customer database is also being put to the task of segmenting customers for a proactive cross-selling approach involving mail, phone and e-mail. Customer propensity and potential return is even more important to the economics in this case, Cunningham says: "Since there is more cost in reaching out to customers, we have to make sure this is something that's going to be a good fit for both parties."

The carrier meets the cultural challenges of cross-selling by getting agents on board up-front. Agents can opt in or out of exposing their customers to a cross-selling pitch by someone other than themselves, and they can be selective about which customers they approach, too. "The fact is that almost all of our agents have trusted us to sell to their customers," Griesing says. "And we regularly give them updates on our successes, which is also manifested in their commission statements."

While Griesing admits that The Hartford hasn't yet figured out how to cross-sell across lines of business, the results within small commercial fuel hopes for much wider possibilities. "We're committing more resources to it because we think it's a very fruitful venue to pursue further," he says. The economic advantages of the e-commerce channel are especially promising, he adds: "I think that channel will open up another exciting round of opportunities."


Success depends more on emphasizing customer relationships.

In the one-stop financial market paradigm, insurance simply becomes another pitch in a bank's sales repertoire. Combine an auto insurance curveball with a savings sinker and brokerage slider and, theoretically, you present a cross-sell of offerings consumers find too enticing to lay off.

Although a fearsome force on paper, it doesn't quite work like that at the bank branch, where a separate pitcher has to take the mound for each type of delivery.

Thanks to wealth planning tools, predictive analytics and other emerging technologies, bank employees often come into contact with likely prospects for insurance products. But although some referrals are made, large-scale success in insurance remains rare, at least compared to non-US bank counterparts. "Banks are now selling insurance products very actively, but it's nothing like the European firms-or even the Asian firms," says Mark Sievewright, president and CEO of TowerGroup (Needham, MA).

Sievewright and other industry analysts report that this lack of cross-sell success stems from a host of factors, such as inadequately trained and motivated sales staffs and ongoing regulatory issues. The core problem, however, may well be banks' perception of insurance as just another product to sell, instead of an opportunity to enhance a relationship.

"The banking industry is coming to understand that there's a real opportunity to cross-sell insurance products, but the primary opportunity is in the relational business as opposed to the transactional business," asserts Jim Campbell, senior vice president at Reagan Consulting, an Atlanta-based firm that advises banks on their insurance strategies.

The Insurance Touch

For the most part, early efforts in bank insurance have been transaction-based, relying on traditional retail banking techniques used to sell checking accounts and loans to the mass-market consumer, according to Campbell.

But statement stuffers are hardly suited for the high-touch world of insurance sales. "What's working is embedding the insurance capability within the overall relationship management and relationship capability of the bank," comments Campbell. "That's happening primarily with the larger small-business to middle-market commercial customers of the bank, as well as the more affluent individual customers."

One way to instill this type of capability into a bank is to integrate insurance agency culture throughout the enterprise. Some banks have accomplished this by acquiring and incorporating local insurance agencies. For example, BB&T, based in Raleigh, NC, has gained a reputation in the industry for its insurance agency acquisitions. "BB&T bought its first insurance agency in 1922," says David Pruett, chief administrative officer at BB&T Insurance. "We've just found quite a bit of symmetry between the insurance distribution business and the bank."

From the bank side, having insurance gives bankers a place to send their prospects without any qualms about the kind of service they might encounter. In turn, acquired insurance agencies receive a steady source of referrals. Plus, BB&T brings them onto its common technology platform, thus providing its agents with a more effective set of tools. "When we acquire an agency, we do an electronic conversion from their system onto ours," says Pruett. "We have a team that does all of the mapping, does all of the conversions, and works with the bank IT people on the technical aspects of things."

Following the conversion, BB&T sends in a dedicated training team that explains the new system and brings the insurance agents up to speed with all of the help-desk and technical support available from the parent corporation. Additionally, the bank provides its agencies with "redundant systems for disaster recovery," remarks Pruett. "So if something happens, our folks can just click on another icon and they're back in business."

With this security blanket accompanying an array of support resources, BB&T's insurance agents can focus on building relationships. "What we try to do for the agencies we acquire is to allow them to get back into the business of selling insurance and taking care of their clients, and we take care of all that other stuff," said Pruett.

Editor's Note: This article originally appeared in Bank Systems & Technology,, a sister publication of Insurance & Technology.

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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