Have you heard about the New York delivery business that had 72 delivery vans insured under 72 different accounts, each with slightly different names or phone numbers? How about the company buying employee benefits whose name was entered into multiple paper files and applications spelled 14 different ways during new-account processing, extending the effort to 25 days?
Stories like these occur every day at most insurance carriers in the United States. The blame lies primarily on antiquated systems, policy- or account-centric processes, and a lack of focus and understanding of what should matter most in business: the customers.
Customer-centric master data management (MDM) projects often present the best remedy - a simple, low-cost solution that can create a competitive advantage by integrating customer data in order to gain a deep understanding of the customer.
Repositioning corporate strategies around customers and their information allows a company to improve service through an increased knowledge base, and the potential benefits are too large to ignore. High consumer expectations resulting from customer-centric strategies in other industries underscore the need for insurers to strategically attack the management of customer data at an enterprise level. The impact of centralized customer data is felt on both the customer-facing frontline as well as in the back office, improving both the top and bottom lines.
Top-line growth results from:
- improved product design and pricing;
- improved marketing campaigns;
- increases in customer-facing sales time; and
- difficult-to-measure, yet increasingly important, "customer experience."
Bottom-line impact includes:
- service efficiencies (e.g., shorter call times) that increase customer profitability; and
- multiple areas of operational savings (e.g., faster amendments processing) that cut overall costs.
Let's first look at the benefit side of the equation. Why should an insurance business executive care about an integrated view of a firm's customers? Because there are several tangible savings benefits that can be achieved. For example, one insurer estimated its call center savings would approach $3 million as a result of a 15 percent increase in "one call" issue resolutions. But achieving these benefits is dependent on companies reorienting toward the customer - and away from internal processes.
Successfully shifting from a policy- and account-centric line of thinking toward a highly customer-centric approach requires a strategic plan and a gradual approach. It involves changing processes and systems, adapting focus and incentives, and adjusting fundamental behavior. Clearly, there can be significant risks along the way, and the ability to view these risks ahead of time will pay considerable dividends.
But insurers should not assume that these projects need to be costly, difficult, and filled with risk. Creating a customer-centric technology and business environment should be an ongoing process -- with tangible benefits along the way -- rather than one mammoth project. Discrete steps that yield measurable business value can be taken without spending millions of dollars up front. Creating a system that feeds from existing front- and back-office systems can be minimally invasive; oftentimes, taking advantage of the new, integrated customer views involves only slight changes to data entry fields. Initially applying the concept to just one major policy system often yields substantial improvements by uncovering duplicate entries, relationships between entries, and complex product ownership within a single system that may otherwise go unnoticed.
The reach and integration of the master customer repository can then be gradually expanded by subsequent projects that utilize and extend the customer view by adding data, functionality and insight. The key concept there is iterative delivery with clear and measurable objectives that ultimately builds an enterprise asset over time. Unlike other business applications that need to have a rich set of functions from the outset, a customer data hub can start with a modest set of data and functions. For example, imagine a powerful search functionality that overcomes issues of data quality, spelling, and data definitions, or enriching customer data with third-party demographics to better target marketing and sales activities.
Beware the temptation to do too many things at once or to make the customer view dependent on bigger projects such as implementing a service-oriented architecture or integrated transaction environments. In our opinion, these are different initiatives and should be treated as such. The benefits of integrating a customer view can be achieved without becoming entangled in other major technology directional changes and can fit nicely into an insurer's existing applications and processes.
About the Authors
Stephen Marik Brockman and Oliver Halter are leading industry analysts for Diamond, a management and technology consulting firm serving Global 2000 clients. Brockman is a Principal in Diamond's Insurance practice with more than 14 years of experience in marketing and strategic planning.
Halter is a Partner in Diamond's Healthcare practice focusing on operational data strategies, customer data integration, and multichannel integration. For more information, visit www.diamondconsultants.com.
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