Giving Customers Full Attention: Health insurers must refocus management strategies on retaining membership and providing better access to information. (Technology).

The mantra in health care today is to become a customer-driven organization that develops enduring relationships with its customers. As a result, customer relationship management is beginning to gain a foothold in the health-care industry.

A recent YOUcentric survey of senior executives responsible for e-business and customer relationship management service stated that the single-most important factor in evaluating a customer relationship management solution is the ability to integrate with existing technology, followed by customization. A solid return on investment from executives' customer relationship management strategies was another significant survey finding.

It costs a health-care insurer between $250 and $750 to market to a new member. Database marketing produces a 1% to 2% response rate. However, real-time relationship marketing based on event triggers results in a 15% to 20% response rate.

There are customer relationship management tools that can be used to understand the behavior characteristics of an insurer's most profitable members. By taking that knowledge and applying it to prospect lists, the insurer can market to those most likely to buy its products and services.

These tools also can help companies understand the behavior of members who leave. If an insurer understands the characteristics of those who left the network and can apply that analytic against its current membership to find those with the potential of disenrolling, the insurer can work to retain those members. Reducing member defections by 2% a year equates to reducing costs by more than 10%, according to Frederick Reicheld's The Loyalty Effect.

The use of the Internet and the creation of Web sites to improve efficiency and service and lower administrative costs are where most health insurers have begun. They have automated the front- and back-end administrative processes, such as name, address, primary care physician and claim-status changes. But does this make the insurer a customer-driven organization?

The answer is--somewhat. It is a move in the right direction. But the growth of customer relationship management in other industries is in analytical customer relationship management for mission-critical intelligence. For a health-care organization to do this requires that it develop a clear strategy with specific success metrics and an organizational alignment and culture change.

Tillinghast-Towers Perrin recently conducted a survey of U.S. health insurance chief executive officers to take a closer look at who they believe are their customers. According to the results, 93% of CEOs think their customers are their members, followed by employers (90%), brokers (68%), employees (65%) or providers (57%).

But when asked what they perceive to be the most important strategic issues facing their companies over the next five years, 43% of CEOs said provider relations, followed by contract issues. There seems to be a bit of a disconnect between their strategic issues and their view of providers as customers.

Top management support, including a strategic customer relationship management road map and the assignment of a top officer responsible for the implementation of that road map that will cut across the entire organization, is a critical first step.

The corporate officer also will be responsible for resolving any issues associated with data quality and data discipline.

Another important factor involves bringing about a corporate change so the organization is customer focused, the needed organization and personnel changes occur, and staff in that organization understand the concept of a customer-driven company. In addition, the business should be skilled in the techniques appropriate to being a customer-centric organization.

Finally, an enterprise customer relationship management technology should be put in place in three-to five-month increments. This not only will assure return on investment but it also will bring about the necessary funding for subsequent phases as the road map is implemented.

Geraldine Ostling is a senior health-care consultant for NCR Corp., Guilford, Conn.