- Where Insurance & Technology Meet

CRM 2.0: Back to the Future ‘Market of One’

At a point in the somewhat distant past – a bit after the industrial revolution, but before Al Gore created the internet – the concept of a ‘market of one’ became fashionable.  It was a brave concept, but it became mired in the first implementation of Customer Relationship Management (CRM) systems.

Both CRM and the ‘market of one’ concept are making comebacks.  We don’t believe that this is just clever repackaging. We’d like your thoughts.

CRM 1.0, it started out so simple….

The premise of Customer Relationship Management is elegant in its simplicity: systems  keep track of all interactions with customers and prospects.  The goal is to improve sales 1) by targeting products and services to market segments, and 2) by improving content and quality of individual contacts with prospects and customers (follow up ticklers, etc.)

The “Market of One” approach takes the CRM approach to the next level:  targeting individuals with customized products, services and delivery based on known preferences of that one customer.  A Powerpoint presentation from 2002 (ascribed to IBM) paints the picture of a customer seeking an on-line insurance quote being met by  and intelligent electronic switch which can access the customer’s personal information, and present a customized configuration of the product which best meets the customer’s needs.


Pretty compelling stuff for an insurance marketer, yes?

So what went wrong?

CRM software has had a chequered implementation history within the insurance industry  We believe there are two issues:  Data and Process.

P&C insurers and brokers were among the first industries to use systems for processing business.  Early systems were built to handle high volume standard transactions to suport billing and accounting. Customer information  was not considered a high priority.

Once implemented, it was expensive to change the systems.  CRM information was brought into separate systems not effectively integrated with the base processing databases.  This led to the second problem: Process.

Automating sales functions is less straight-forward than billing and accounting.  Every sales person has her/his own nuances.  Adding a new task – such as keying information into a computer, or asking customers extra questions – only gets in the way of closing deals. Sales reps, sales managers, and executives lost interest at that point.

Result:  Most CRM systems were underutilized or sat idle.

Then came the perpetual soft market …

We believe that the Market of One approach is not only a real objective, but being realized by insurers who are using the next version of CRM systems.  What’s changed?  Again, two developments:  the unending soft market and changing consumer expectations.

Insurers are facing unprecedented competition, much of which is price driven.  New marketing tactics are required to survive.  Effective use of data is one of the best options for many insurers.

For example, a recent Insurance Networking News featured Dave Grove, VP product management at Ohio Mutual Insurance Group, describing how his company turned to iterative rating and re-rating policies using multivariate analysis to remain competitive in the auto insurance space.

These same analytic tools allow a tailored communication approach for Ohio Mutual’s agents and consumers when premium changes are made.  According to Grove, this approach improves retention and allows Ohio Mutual to compete with much larger competitors.

… and changing consumer expectations …

The second factor is the new consumer.  In past, we all had the working assumption that consumers did NOT want to give us more information than what was necessary.  Not universally true any more.  We have noted elsewhere in this space (see, e.g.  How Do Customers Want to be Served?) that consumers willingly give away data IF (BIG IF) it improves their shopping experience and has high degree of confidentiality (data is only used for the purposes the customer authorizes).

But they expect us to know.  If they have told us they want texts, not email, we send email at our peril.

CRM 2.0

Suppliers have gotten the message CRM 2.0 is more than another database.  It includes analytics and links to multiple communication channels.  It supplies real time access to current policy and customer data, and it is becoming adaptive. learning preferences as the customer relationship matures.  Most importantly, Sales people use it.

What do you think?

Are you considering implementing any customer tools?  If so, what are the drivers?  If not, why not.