Up Close and Personal.

The Internet and wireless technology are helping to manage customer relationships for marketing, selling and servicing insurance policies.

The full impact of the Internet and wireless revolution on the insurance industry has yet to be measured. Companies have been slow to enable online sales, largely due to regulatory constraints, channel conflict and security concerns. Also, because the typical insurance transaction is only occasional, an investment in sales technology has not been compelling--but change is necessitating action.

Recently passed legislation is loosening the restrictions that historically constrained the industry. With the new Gramm-Leach-Bliley law, financial-services companies, such as banks and investment firms, now can sell insurance products. In addition, online financial portals are emerging as a threat to the industry. The question arises--will insurance remain a stand-alone business or will it become a line item in a larger financial relationship with a bank or brokerage? In the United Kingdom, where financial services were deregulated in the mid-1980s, insurance is almost always handled as part of a more holistic financial relationship. There, insurance products are sold even in supermarkets.

Although the adoption of sales technology has been slow, companies are less reluctant to implement Web-enabled customer-service functionality. As insurance products--such as auto, home and life policies--continue to become commodity products on the Internet, insurers are exploring ways to differentiate their products based on attributes other than price. Investment in online customer-service applications provides efficiencies and cost-related benefits for the company, and, if implemented correctly, can differentiate one company from another. At the same time, customers are demanding the ability to contact their insurance provider anytime, anywhere and any way--demands that are easily met with Web-based technology. Insurers are aware of customer service expectations, and they will need to actively integrate Internet and wireless technologies into their current customer-service processes to increase retention and customer satisfaction and to stay competitive.

Value Proposition

The value of implementing electronic customer relationship management (eCRM) is clear. A successful e-business will acquire and convert a customer once but serve a customer many times, cross-selling and upselling each time. Furthermore, customers will increasingly tend to spend their money on relationships with companies they trust and that provide the right products and services through the right channels. Companies that develop close, high-integrity relationships with customers will prosper and grow.

A recent Andersen Consulting research report demonstrates the value of eCRM. The study found that a typical $1 billion company could increase profitability by as much as $150 million a year by achieving top performance in eCRM capabilities. Improving customer-interaction capabilities is one of the single-largest impact areas, as reported in the cross-industry study. Besides offering companies an effective means to retain and serve existing customers, to reduce costs and to differentiate themselves from their competition, having eCRM capabilities has been shown to have a direct impact on sales to new customers. While the potential power of anytime, anywhere customer service will help a company acquire and retain customers, failing to use emerging technologies could risk a company's retention rate and, ultimately, its market viability.

ECRM involves the application of techniques and technologies to maximize mind share, market share and wallet share across the three key customer-facing business functions: e-marketing, e-sales and e-service.

Four primary techniques support an eCRM strategy: personalization, tracking/tracing, e-communications and e-knowledge. Personalization involves ensuring that the customer receives customized content, product offers, capabilities, product combinations and prices. Tracking and tracing require the recording of click-streams and customer information to predict behavior and modify the online strategy and personalization strategies. E-communication involves the synchronization and application of e-mail, chat, voice and video interactions. E-knowledge is the management and provision of information, ranging from frequently asked questions to online discussion forums. Its purpose is to maximize the long-term value of a customer. The application of eCRM principles will prove vital in the battle for online customers, particularly as new technology reaches a greater volume of consumers.

ECRM in Insurance

Insurers are pursuing different methods of adopting eCRM. To understand the varying degrees of adoption, Xcelerate assessed 120 leading insurance companies and plotted the results against a Continuum of Adoption. The assessment defines eight specific e-business functions and analyzes whether a company has incorporated that particular functionality into its e-business. Based on our analysis, nearly 77% of companies surveyed currently are offering limited eCRM on their Web sites. These sites enable basic interaction between the site and the customer or policyholder. These sites allow customers/policyholders to download forms for submission via regular mail or fax, to submit data online for quotes or claims, and/or to find a local agent. The distinction is that there is no interactivity between the two parties, just one-way communication.

Other companies are offering more sophistication on their sites. Of companies surveyed, 32% fall into the second tier of eCRM functionality. With enhanced eCRM, there is significantly more interactivity between the customer/policyholder and the company. These sites allow for basic two-way communication between the company and the customer/policyholder and, in most cases, are personalized and customized to meet the customer/policyholder profile. Functionality that allows customers/policyholders to store quotes online and access their personal policies is a benefit that typically also supports endorsement processing.

The third tier of eCRM functionality allows for customer self-service. On these sites, all of the customer-service functions are available online in real time. Only 7% of the surveyed companies currently offer this level of functionality. A customer/policy-holder can access account data, such as annuity balances; receive instant quotes; pay premiums online; and access online customer-service support through chat rooms, instant messaging or interactive video.

These technologies and techniques are being implemented to complement and extend current customer-service capabilities. Take, for example, the 360-degree relationship model of eCRM. In this model, information is stored and used from the initial interaction with a customer through after-sales support. By tracking these customer touch-points, the company can send the customer an e-mail form asking for feedback the day after the interchange. Also, the company can catalogue the interactions and use the information to create better products and services. As customer service becomes more of a differentiator in the insurance industry, companies will continue to look for better, more efficient ways to serve their customers.

Wireless Ways

Beyond Internet access to accounts and information, technology is enabling customer service to become wireless as well. These technologies are enabling more effective ways to acquire, retain and serve customers. Wireless technology is, in one sense, merely another incremental element of an e-business. But its application (specifically wireless integrated voice and data technology) will enable anytime, anywhere access, which will truly accelerate e-business. The technology is real, it is available now, and it is increasingly cost competitive. Northern Europe already has seen tremendous adoption of wireless-data technology. For example, taxicabs are equipped with wireless "request boxes" linked to e-mail for premier corporate accounts. Cellular phones are available with larger screens for video-conferencing and full-color, Internet-based interaction. The United States is only 12 to 18 months away from experiencing the monumental business and technological impact of wireless applications that Europe and Japan a re using now.

Insurance companies are using the Internet and wireless technologies to arm their sales forces with tools to better serve clients. Yet, based on our analysis, the current adoption rate has been slow, with only 2% of insurance companies currently using wireless technology. They are enabling download and upload functions of policy and account information for agents to access before meeting with a client. Some companies are incorporating handheld computers so they can access motor vehicle reports, loss and credit reports, and policy and agency information and engage in real-time exchange of data with field-claims and marketing personnel. Although the full impact of the Internet and wireless revolution on the insurance industry has yet to be measured, it is clear that eCRM applications will be some of the first adopted by the industry, providing considerable payback for those early adopters.

William Morelli is vice president in the insurance practice, Graham Clark is managing director for eCRM practice, and Steven Tesler is strategist in the insurance practice for Xcelerate Corp., Fort Lauderdale, Fla.