Strategies for Putting the Customer First

Developing a strong business case that demonstrates results—including clear return on technology investment—is an often underestimated, but critical, element in a successful customer service strategy. That was the resounding message heard throughout Insurance & Technology's Customer Service Leadership Forum, which took place in New York City in April.

More than 150 attendees, including insurance executives, consultants and technology solutions providers, participated in the one-day event, the first conference in Insurance & Technology's new Leadership Forum series. Sponsors included IBM, InStranet, PeopleSoft, SAP, SAS, SeeBeyond, Sherwood International, SpeechWorks, and Sun Microsystems.

"Achieving the goal" of an integrated customer view "is a multi-year journey," pointed out Stephen E. Yates, president, USAA Information Technology Co. (San Antonio). Yates served as discussion leader for the Leadership Forum's workshop program, where attendees tackled several customer support challenges, including creating an infrastructure for cross-selling, ach-ieving ROI from CRM investments, realizing the benefits of self-service, and building a unified contact center.

Pay Now or Later

The difficulty of quantifying long-term ROI can make it challenging for an IT organization to deploy enabling technologies. "It's hard to get budgeting for things such as improved service that operating management can't see," Yates said. "World-class CIOs have to both understand the business, and avoid unnecessary business costs."

For example, despite the much-touted economic benefits of online self-service, the jury is out as to whether this offering really will help insurers build customer loyalty-and market share, Yates noted. "Do people really want self-service?" he asked the Leadership Forum audience. "The economics say self-service looks wonderful, but the service side of the business says, "We don't want to lose touch with our customers.'"

That's why at USAA, Yates acknowledged, "we are still in dual mode" on the self-service issue.

In general, both IT and business management do need to bite the proverbial bullet when it comes to infrastructure and legacy systems, Yates stressed. While end-users may resist replacing familiar tools with new systems, IT must avoid creating "another layer of systems and software," he said. If companies don't take these steps—and spend the money—now, they're just going to have to deal with it at a later date. "You're going to pay now or later," Yates said.

Negotiating the problems of implementing cost-effective customer service technology solutions was also addressed by keynote speaker Jamie Bisker, director of research for the TowerGroup's (Needham, MA) insurance practice. He focused on the checkered history of customer relationship management technology, which has been characterized by well-publicized failures and "stealth successes." Of the qualified successes, he related a CIO commenting that "CRM is good; it's just not $10 million good."

Go Small Scale

For those looking for a more profitable implementation of CRM technology, Bisker counseled shorter-term results from smaller-scale projects. He added that CIOs "want to see ROI metrics that meet their needs so that they can quickly deliver information not only to their boardrooms, but to their customers."

As low-transaction businesses, compared to their financial services peers in banking and securities, insurance companies need to leverage all opportunities to collect, organize and analyze information for customer service and cross-selling potential, according to Bisker. "Leveraging CRM technology at the time of a claim is a significant concept that should be expanded at insurance companies," he asserted. "It's an opportunity to leverage the information you only collect at infrequent intervals, so you should make use of it to best advantage."

And, in a theme that was sounded throughout the conference, Bisker stressed that as insurance companies prepare to take advantage of next-generation customer service applications, one of the most important tasks they face is getting their infrastructures in order, enabling communication among core systems. Touting the advantages of component-based architecture, he said "unless you have a flexible back-end that you can change quickly, that works for you, not against you, you will always be behind other companies in financial services."

Make the Business Case

The importance of having a business case in place before implementing a CRM system cannot be stressed enough, according to Richard Cunningham, vice president, information services, Prudential Financial (Newark, NJ). Cunningham was part of a panel that addressed the challenges of "Achieving Next Generation Customer Service. He related the initial steps involved in building Prudential's CRM system (the business case for which was established four years ago), which he described as one of the largest CRM practices on the East Coast.

Cunningham also warned against management setting up unrealistic expectations of ROIs within eight to 12 months. He estimated Prudential's investment in its CRM system, which was between $6 million and $10 million, will see returns in two or three years.

Mervyn E. Wallis, senior vice president and CIO, New York Life International (New York), emphasized the importance of having an organization management structure in place in order to provide customers with consistent information across all touch points. "If you don't have the proper management structure it's harder to achieve CRM," he said.

Matthew Josefowicz, analyst, Celent Communications (New York), concurred with Wallis' view that a company must be organizationally aligned in order to succeed with CRM. "CRM is not a technology problem," says Josefowicz. "It is an organizational challenge that requires technology to address it." Consistency also is critical, Josefowicz stressed. "There is no such thing as a single-channel customer," he told the Leadership Forum audience. "All of the information presented to the customer must be consistent and in real-time across all channels."

Making a solid business case is also key to the successful and profitable performance of customer contact centers, according to the executives who analyzed "How To Get ROI from Your Contact Center." The Hartford's Susan Hess, vice president plan services and technology, expressed the importance of knowing the customer, which in The Hartford's case includes consumers, sponsors, brokers, TPAs and employees. Also central to Hess' message was the need to develop a careful balance between "high-tech and high-touch." She warned against getting "so enamored with the technology that you forget how to do business."

Business strategies such as maintaining customers from age 16 until they are in their 80s are the foundation supporting Nationwide's CRM technology strategy, according to George McKinnon, vice president and CIO, Nationwide Insurance (Columbus, OH). "We want to be able to take customers through to their full life expectancy," he said. "As we look to implement technologies, we are focusing on the customer retention side."

New York-based AXA Financial's Karen Pineda, director of CRM, service coordinator, noted it's important to focus on what functionalities the customer wants. For example, AXA Financial videotaped the usability testing of its IVR (interactive voice response) system, which people from "all walks of life" participated in. "It was an eye-opening experience," reported Pineda. "As a developer, you think some things are so obvious." As a result of the testing AXA made a number of changes in the system. "It had a dramatic impact on the number of calls that were completed," Pineda said.

The next Leadership Forum conference will be the Insurance Standards Leadership Forum, co-produced by Insurance & Technology and ACORD, September 18, 2002, at the Roosevelt Hotel in New York City.

For more information about this event, and to register, visit www.insurancetech.com/events/islf.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio