Once A Silver Bullet,
CRM Is Now A Dirty Word

At the turn of this century, customer relationship managementtheidea that technology will enable us to determine the wants andneeds of our most profitable customers and develop products andservices aimed at themwas hailed as the paradigm that would givenew life to the insurance industry.

Today, following highly publicized CRM project failures in theindustry, experts say the technology endures, but the term inspiresfear and loathing among customers and potential customers.

“CRM is a dirty word,” declared Kimberly Harris, researchdirector for the financial services industry at Raleigh, N.C.-basedresearcher Gartner. While CRM was once seen as a “silver bulletthat would save the industry,” the results have been disappointing,she said.

“A lot of companies are struggling [with CRM systems],” shecontinued, noting several key issues:

Insurance companies still dont agree on who the “customer” istheinsured or the agent?

CRM is often seen as an information technology purchase, ratherthan as a solution that involves the entire company.

In some cases where they have been implemented, CRM systems wereunable to support a carriers business requirements.

On the other hand, companies still want the benefits CRMtechnology has promised, Ms. Harris noted. She said Gartner isseeing a “renovation” among buyers who “want to meet the CRM utopiabut dont want to call it CRM.”

While CRM applications were initially sold as “horizontal”solutions that werent specifically designed for the insuranceindustry, that trend has changed in recent years, said Ms. Harris.“Today, [CRM buyers] want to build loyalty among their agents, orenhance their claims management functions, or make their customerinformation files available to the whole company,” sheexplained.

CRM vendors today are either “horizontal, vertical or in themiddle,” Ms. Harris observed. Those in the middle “are trying towalk the insurance talk” by placing insurance terms in a horizontalproduct demo, she noted.

Todays vertical CRM products, she said, are able to recreate“typical” insurance processes based on best practices.

In terms of spending, Ms. Harris said the spending on “ongoing”CRM implementations has declined, while there has not yet been an“uptake” in spending on new CRM deals. While such deals are stillbeing discussed, wary buyers have lengthened the purchase processand have place more stringent requirements on the sellers.

“The main problem with CRM is that the category is way toobroad; it encompasses many things,” said Matthew Josefowicz, ananalyst with New York-based Celent Communications. The three mainareas of focus for CRM are contact center management, data masteryor business intelligence, and managing marketing programs, heexplained.

“What we see these days in insurance is less of an interest inthe broad category and more in solving specific problems,” hecontinued. “If the contact center system is inhibiting performance,a company will focus on that. The customer data issue has now beenput in the business intelligence/data mastery box, as it should be.Customer data is no different than any other enterprise data.”

CRM is such a “dirty word” because of large-scale projects thatwere poorly planned and executed, he noted. “People are happy tohave something else to call it.”

When CRM was first in vogue, customer behavior data didntnecessarily include other data in the company that may be linked toit, Mr. Josefowicz said. Buyers thought they merely had toimplement the technology, then business will be betterwithoutactually knowing how that would happen or why, he explained. Nothought was given to cross-selling or to linking with other data tomaximize its value.

“The category of CRM is less important [today],” Mr. Josefowiczdeclared. “People are pulling out the elements of what used to becalled CRM and addressing them to support their businessstrategies.”

He added that traditional CRM vendors are bifurcating intoeither contact center management specialists or data specialists.The latter are pulling away from contact management and focusingmore on managing and extracting information from customer data andunifying it with other customer data.

Will the term CRM cease to be used? “Its such an establishedterm, and companies have dedicated CRM practices, [so] the termwill limp along,” said Mr. Josefowicz. “Companies have more of aninterest in solving business problems, whether its called CRM ornot.”

“CIOs and CEOs are getting more sophisticated about buying CRMproducts,” he added. “Some tech vendors will bemoan the loss ofeasy money, but now all sides are focused on sustaining value.”

“Basically, CRM has never been a bad idea,” according to JamesBisker, senior analyst, insurance, for the Needham, Mass.-basedTowerGroup. “Insurance has wanted to do these things for manyyearsrecognizing who their customers are and whether or not youhave the same customer on two different lines.”

“CRM is a labeling and marketing pitch, but the complexity ofwhat it needed to do got in the way,” he continued. He assertedthat “more successful” CRM programs introduce the concept andprovide users with tool kits, instead of providing the wholesolution in one fell swoop.

Mr. Bisker said CRM has been a success for several vendors, butthey have “approached it as an additional product, assuming thatyou are already consolidating your data. If you werent preparedfrom a business or systems standpoint, it was always a problem. Youhave to have all your ducks in a row to make this work. CRM is agreat idea, but the implementation is much harder than they thoughtit would be. The basic concept is to know as much as you can aboutyour customer.”

According to Mr. Bisker, carriers are telling CRM vendors, “Webelieve you, but we want it in smaller chunks now.” Today,“potential buyers are very suspect of large-scale projects,” henoted. “They need concise deliverables and realistic ROI targets.Youve got to show ROI for segments of the overall CRM program.

“We have to be careful of point solutionsthat put one thing onwhile another breaks,” he continued. “The reality is that thesesystems must produce every day; you cant do open heart surgerywhile the patient is running down the road. You have to have astrategy for serving customers better that will have stages.”

Mr. Bisker said there is “a renaissance” in recognizing thevalue of CRM to a customer-centric strategy. “Carriers are wise tocontinue to invest in the solutions and infrastructure changesnecessary to achieve that strategy,” he stated. “That, ironically,is classically what an agent does.”

Mr. Bisker said the “bell curve” is racing toward puttingcustomer centricity first and recognizing its value. Impediments tothis have been the silo nature of data sorting as well as themultitude of data channels and the need to synchronize them. CRMcan provide such functions, bringing together data from all thechannels, he asserted.

“CRM has a place to go,” he concluded. “Companies shouldntignore it.”

Where budgets are limited, CRM doesnt have to be “a hugeproject,” he explained. Companies may only start with part of a CRMproject as a strategy for the present”a solution that grows withthem.”

Reproduced from National Underwriter Edition, January 16, 2004.Copyright 2004 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.