Canadian Underwriter


June 1, 2001   by Martin Power of Editorial Edge Inc.

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In this new age of technology, insurers must beware. The rules for developing winning customer relationships are changing in unpredictable ways. At the heart of the matter is the advent of the Internet and e-commerce. Even the most savvy of marketing scholars are scrambling to keep up on with how cyber relationship building is going to affect current business models. Clearly the stakes are going to be high. For those who do not keep up with rapidly unfolding e-business developments there is a good chance they will be voted out of the “customer tribal council” very early in the game.

To begin understanding what is happening in this evolving, dare we say, paradigm shift, we must look at its driving force – technology. At the very advanced end of the scale insurers now have at their disposal the tools to do a quick analysis of potential customers based on the very way they click through a website. The idea is to identify hot prospects and start the process of building a long lasting relationship even before live contact is made.

For instance, Eloqua Corporation has developed a hosted software application that it says can cut sales cycle time by as much as 50%. “You can tell a lot about a potential customer by what information they click on, what forms they fill out and what tools they download from a website,” says Eloqua CEO Mark Organ.

The application then draws on database information to begin building a profile while at the same time employing web marketing tools, such as email and chat capabilities, to make a quick and timely approach to a potential customer. The sales rep in the field can be alerted to a hot prospect quickly by a WAP-enabled wireless device allowing for immediate two-way communication with the customer. “Getting all that advance knowledge from website behavior cuts back on prospecting time and gives sales reps information they need to approach potential customers in the most appropriate and efficient way,” says Organ. “There is also the potential to develop and market new products that are tailored to customer needs.”

The thinking about the new technologies has loosely coalesced around the CRM movement, meaning customer relationship management. Here the array of new technologies and ideas about CRM intermingle in search of a business approach that will allow customers and industry to reach new levels of a “customer relations nirvana”.

In CRM parlance, the type of technology Organ refers to is classified as analytical and collaborative.

Customer strategies

The next major step in the CRM revolution is what is called the organizational phase. This is when an organization’s technology, marketing, sales and service functions are made to serve an overall customer relations strategy.

However, at the moment “there is no silver bullet application that can bring together all these components of a CRM strategy,” says Laura Pollard, president of CRMA Canada.

The shape of the ultimate CRM model and how to achieve it is still a work in progress. “It’s like creating a new species we haven’t yet classified. People still don’t know what all the components are let alone how to put it altogether.”

People in the CRM fraternity are talking of creating “a single view” or “360-degree profile” of the customer. The customer is fully serviced, advised and educated, even pampered, at every level of contact with a sales organization. While the entire concept is still a work in progress, Pollard says getting started on a CRM strategy is essential to survival. She points to studies indicating that companies on average lose about 50% of their customers every five years. The cost of getting new customers, according to a recent article in the Harvard Business Review, is seven times the cost of retaining old ones. And increasing customer retention by only 5% can have the effect of doubling profits.

Put that together with Pollard’s warning that new customers are only going to get harder to find as the “baby boomers” age, and insurers have good reason to sit up and take notice of CRM.

Building Internet info

The primary benefit of Internet-based CRM is taking existing information and data and bundling it so that management can track customer relationships and sales process execution, says Clarence So, director of product marketing for This way sales forecasts can be tracked and new marketing directions taken. It all translates into better handling of accounts and “improved satisfaction for the customer,” he says.

For example, the system allows for much more refined targeting of emails directed at customers. “The customer is less likely to be bombarded with spam [junk email],” a term used for email campaigns aimed at largely undefined audiences.

But Canadian insurance companies appear to be cautious when it comes to CRM. Doug Grant, of Insurance Canada, says a large chunk of insurance is sold in Canada through intermediaries, and that is hindering advanced e-commerce selling systems from getting a solid foothold. “It’s difficult to link the front-office data with the back office data in a meaningful way to capitalize on CRM’s capabilities in this environment,” he says.

Agents and brokers are considered the owners of the customer relationship and information about these relationships tends to be guarded, Grant says. Early e-commerce experiments are occurring at the larger direct-selling insurance carriers who own the entire customer relationship process.

However, he does believe that e-commerce based marketing and selling are here to stay and it is probably only a matter of time before breakthroughs for advanced e-commerce systems are made on all levels of the insurance industry. “The Eloquas, and folks like that, who have the technology will find customers to try it out. When they find it works, others will hear about it and want it because it is a more meaningful way to drive insurance marketing.”


The time lines for adoption will be governed mainly by whether the marketing and sales infrastructure is economically sound. The cost-benefit analysis still has to be done on these technologies, says Grant. The results will be important, he adds, especially to the many brokers and agents who thought that by putting up a website they would become rich. Of course, that just has not happened. In retrospect, people are now asking, “where was the business model?”

That is a sentiment echoed by Clarica’s vice president of eBusiness, Diana Deverall-Ross, who says, at the moment, advanced CRM applications are “technology in search of a business model.” Deverall-Ross says, when it comes to the more advanced CRM web-based technology, “Right now there is the technology but not a big problem to solve. Usually it works the other way, we have a problem and go looking for a solution using technology.”

Pollard sums up by saying there is still a lot of room in the insurance industry to see things more from the customer’s perspective. She says companies and products are “siloed”, meaning the customer still has to go to a number of sources to get all their needs met. But, she notes that, in the ideal CRM world, “it’s about the customer. They have a policy and whether it was sold by an agent or the company directly makes little difference when they are calling for more information and service follow-up.” In the future, she adds, “you are going to have to provide customers with delight, not just good sales and service”.

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