Customer Relationship Management (CRM) is arguably the most debated issue when trying to define what it actually means and how it should be implemented. So what is CRM?

If you gathered 100 marketers together and asked them to describe what CRM means you would get 100 different answers, all perfectly acceptable to their own personal circumstances, but different nonetheless. So just to add to the confusion here's my two pennies' worth:

CRM is managing the relationship you have with your customer to enhance your brand, service, products or reputation with them, to enable you to do business with them more frequently, in a personalised fashion and through channels that they prefer.

CRM is about treating customers as individuals, communicating with them as individuals and providing services to them as individuals. Intelligent decision-making has to be the way forward for CRM – the ability to take information and use it to enhance the value of the customer in the client organisation.

In a perfect world this would be easy, but for most industries, and in particular insurance, I believe this will represent a real challenge. The reason I say this is because of the nature of the relationship between a broker/insurer and the customer. Is the relationship possible?

For most insurers and brokers I would suggest that, in the majority of cases, contact with a customer is once or maybe twice a year, usually to renew a motor or buildings insurance policy or to deal with a claim.

Compare this to the relationship a supermarket has with a customer. A supermarket you visit daily, weekly or monthly, you purchase multiple products and your interaction or “relationship” will include direct contact will store staff, your loyalty card, communication/offers via mail, purchasing by phone or internet and all of this on a regular basis. Supermarkets look at the frequency, recency and monetary value of your purchases and from this can customise offers and communications.

So, having made the comparison – can an insurer/broker really embrace CRM?

I believe the answer is yes. Maybe not in the same way that a supermarket would approach it, but insurers and brokers can maximise their customer relationships by embracing the basic elements of CRM to improve the communication, loyalty and profitability of its customers.

Information is the key

No matter how CRM is viewed it is information that underpins all CRM strategy. Information has to be obtained, stored and analysed in order to be able to treat customers as individuals. This information is invaluable in:

  • cross-selling of products – cost effective cross-selling is most efficient if the timing is right, the product is relevant and needed by the customer
  • understanding how customers want to deal with you – their channel preference. Some customers need face-to-face contact, others are satisfied with telephone conversations, others prefer the internet, some are mail responsive
  • segmenting customers into groups – splitting customers and prospects into loyalty groups, high to low customer value, identifying early adopters of new products, identifying customers with a potential to defect etc.

    Customers once segmented can be treated much more as individuals whenever they make contact with you, providing the information can be used at any customer “touchpoint”.

    Marketers embracing CRM have a number of key issues to deal with, for example:

  • What information is currently held on existing customers, lapsed customers and prospects? Is it transactional only? Is the name and address accurate and complete? Is there any lifestage/lifestyle information? Are there any obvious purchasing indicators?
  • What opportunities exist for gathering further information from customers? what information would be valuable for future strategy? What information would provide immediate cross-selling opportunities?
  • Is existing technology sufficient to be able to cope with additional information? Is investment required on hardware or software? Is there sufficient internal analytical skill to segment customers?
  • Are there any outsourcing opportunities? These include purchasing of information/data, segmentation products, software products, complete outsourced bureau solutions.
  • Do customers have the opportunity to communicate by all channels – email, telephone, mail, internet, personal visit?
  • Can customers be identified immediately, and correctly identified, through whichever channel they choose to communicate? And can the information held determine which way they should be dealt with?
  • Are communication rules standardised across each channel so that no matter what channel a customer uses, the way they are dealt with and the decisions that are made are the same?
  • Does the collection, storage and usage of information meet with current Data Protection Act (DPA) law?
  • Paul Kavanagh is the client services manager for Experian's prospect targeting insurance team and survey manager in the data acquisition team. He is also a member of the Institute of Direct Marketing.

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