As Published In February 2007

Insurance CRM

A Sizable Advantage
By Karen J. Bannan

Pearl Insurance gets closer to its customers with Siebel software.

Who says the little guy never wins? In the world of insurance marketing, brokering, and third-party administration, two companies dominate the scene: New York-based Marsh & McLennan and Chicago's Aon. Combined, these giants account for almost US$27 billion in market capitalization. Two years ago, Pearl Insurance, a subsidiary of the Peoria Heights, Illinois-based Pearl Companies, was competing alongside hundreds of other small companies for the remainder of the market. Winning any portion of Aon's and Marsh & McLennan's customer bases would require a strong sales team and, even more, the ability to assess and track marketing programs and target the most attainable—and profitable—potential customers with pinpoint accuracy.

"Being a smaller company imposes priorities on our business model," explains Mike Murphy, executive vice president and chief sales and marketing officer for Pearl Companies. "One of the biggest challenges is being able to achieve a 360-degree view of customers—knowing which customers have what products, what products they're most likely to be interested in, what their buying trends are, and how Pearl can bring value."

Out with the Old

Indeed, because of the need for this 360-degree view, by 2000, Pearl had already outgrown two customer relationship management (CRM) systems to help it market its two main product lines: liability insurance for professionals and affinity group insurance member benefits for association members. The first CRM system, a custom product, couldn't scale and grow, and the second system couldn't provide enough visibility into customer behavior or integrate with the company's back-end systems, says Murphy. It also lacked Web capabilities.

"We're a direct marketing entity, but we're a hybrid, in that within some of our vertical markets, we have four different sales channels," Murphy states. "And so we must have a CRM system that's flexible enough to support multiple sales channels within the vertical. For example, we use direct mail, as well as a variety of sales methods—sales over the phone, sales in person, and we may also have a partner channel such as a broker."

Looking to solve this problem, Pearl purchased and installed Oracle's Siebel Customer Relationship Management Professional Edition. The company also installed Siebel Insurance, Siebel Insurance Call Center, Siebel Sales, and Siebel Service.

Everybody's Business

Companies such as Pearl are making the leap to integrated CRM for several reasons, most of which relate directly to the Web. "One of the things that's driving the insurance industry to CRM is the requirement that everybody has instant access to everything 24 hours a day, seven days a week," explains Murphy. "Our customers expect that when they place a call, we can give them an answer within seconds—almost instantly. Our salespeople want information instantly too. As a manager, I want access to information instantly. The push is to have everything at the speed of light."

This need is universal across all customer segments, Murphy says. The industry also faces another challenge: using data to its fullest potential. "One of the biggest challenges facing our industry is integrating the legacy systems that everybody has with today's technology like Siebel, so that you can share the data from one system to another into a common repository," he explains.

Snapshot Pearl Insurance www.pearlinsurance.com Year founded: 1954 Number of employees: 260 Oracle products and services: Oracle's Siebel Customer Relationship Management Professional Edition, Siebel Insurance, Siebel Financials 7.5.3.15, Siebel Business Relationship Management Mid-Market Edition (MME), Siebel Individual Health Policies MME, Siebel eInsurance Call Center Base MME, Siebel Data Quality Matching MME, Siebel Campaigns for Financial Services MME, Siebel Advanced Sales for Financial Services MME, Siebel Advanced Service for Financial Services MME, Siebel eCampaigns for Financial Services MME, Siebel Tools Complete MME, Siebel eFinance Sales Base MME, Siebel Insurance CRM Call Center Base

Finally, volume is definitely an issue. Three years ago, Pearl was marketing to a third of the prospects and customers it handles today. Start to finish, those campaigns took three to five business days to complete. Today, says Murphy, the company is able to send out 5 to 10 marketing campaigns per day. "And that entails creating and doing the targeted segmentation, generating the marketing list, creating the campaigns in Siebel, assigning the proper follow-ups and monitoring the performance and completion of events, including responses and effectiveness," Murphy says. "We could do more if needed, and that's the key. We can do more and we can do it more efficiently." That's one of the most significant takeaways, says Murphy.

When Pearl switched to Siebel Customer Relationship Management, it was immediately able to start marketing and selling differently to its prospects and customers than it had in the past. For example, Pearl recently found itself competing for the business of the affinity group New York State Society of CPAs, going up against Marsh & McLennan, Aon, and USI, the fifth-largest broker in the world. The affinity group was already working with one of the companies, so Pearl, as a comparatively small company, had a tough sell. However, after showing the client how the Siebel program could help it create a systematic marketing model, Pearl came out on top. Pearl used Siebel Customer Relationship Management to create highly targeted profiles for the organization. Those profiles, in turn, enabled the group to sell more effectively to its members, and give those members another reason to stay within the organization.

"Because of Siebel Customer Relationship Management, we were able to unseat, if you will, their incumbent broker, and that business was ultimately placed with Pearl," says Murphy. "We became the endorsed administrator and marketer of the New York State Society of CPAs effective January 2006."

Marketing with a Mission

Once a prospect becomes a customer, the Siebel Customer Relationship Management solution helps track the corresponding sale throughout the lifecycle, analyzing potential cross- and up-sell opportunities. Personalization is just one of the by-products of this capability, and yet another reason why Pearl is seeing success against its formidable competition. Pearl is able to customize marketing collateral for its customers down to the smallest of details, says Sharon Harman, the company's director of marketing.

The collateral that Pearl sends to prospective customers "goes out with a logo of the association the firm belongs to, and it's personalized to the broker-owner of the firm," says Harman. "It notes whether we have a relationship with them or have talked to them or quoted them in the past. It is personalized with the contact information of the sales rep for their region, and it contains a customer testimonial from the state in which the firm does business."

Pearl salespeople also benefit every day because they can send faxes and e-mails directly to prospects and customers via the system, says Tim Ward, Pearl's senior marketing coordinator.

"Because of its increased efficiency from using Siebel, our customer management retention team has also been able to increase the number of customers it touches, reducing the overall retention costs," he explains.

For More Information Oracle insurance applications Oracle's Siebel applications

Pearl sales representatives are required to contact every person who receives a marketing message from the company, and they can do so more effectively because they have detailed customer and contact profiles at their fingertips, says Murphy. "This alone has helped us increase sales by more than 100 percent in the last couple of years," he says.

The Big Payoff

Pearl set an aggressive growth goal in 2001: double the company's revenue by 2006, a goal that it achieved earlier this year. Going forward, Pearl has set another daunting target—double it again by 2010. Neither goal would be attainable without Siebel, Murphy says.

"It's possible to piece together specific functionality on a vendor-by-vendor basis, but there would be no interface, no automated fulfillment or seamless integration. And fortunately for Pearl, few of our competitors have these abilities," states Murphy.

"Siebel software is helping Pearl continue to improve data quality, and it provides the capability to perform sophisticated data modeling to understand our customers and their needs," says Lori Johnson, Pearl's chief information officer. "Siebel's workflow also allows us to influence our employees' behavior and hold them accountable for their activities through its ease of data access and ability to monitor the data," she adds.

Murphy says it's because of opportunities like this that the software has become a part of the company's day-to-day workflow. "Having Siebel Customer Relationship Management has allowed us to refine our sales, marketing, and distribution force. It's allowed us to grow our sales force by having them do more with less. They can sell more to fewer prospects now because we know more about them," he says. "At this point, I can't imagine not having that information at our fingertips, at our disposal. Our carrier partners are excited because we've accelerated our new business growth with this model. In fact, our increased efficiency with Siebel has allowed us to triple our quoted business, significantly increasing our return on marketing investment."

Industry Insight Bob Booz, research vice president for Gartner's insurance industry advisory services, spoke with Profit about big changes that must take place in the insurance industry. If the insurance industry wants to increase its profitability and ensure its long-term viability, change is needed, according to Bob Booz, research vice president for research firm Gartner's insurance industry advisory services. And that change has everything to do with data, he says. "The biggest thing that we've learned is insurance companies must treat data as a commodity," says Booz. "The insurance CIO has become not a data owner but a data steward, since other organizations—purchasers, state regulatory overseers, research bodies—are all placing demands on insurance companies to provide that data. The insurance CIO has to meet these data demands as well as be better at disseminating information within the organization." As in every industry, change comes slowly, and even forward-thinking executives have plenty of issues to overcome before they can make this happen. Most significantly, they must overcome their own complacency and fear of losing control, says Booz. In the past, there was a great deal of ownership when it came to data—even within the same organization. For example, medical quality data was owned by the network management department. And such data was never shared with partners or patients. But autonomy means that data isn't being used to its fullest extent. And it also means that companies aren't meeting their customers' needs, says Booz. "Having access to data is critical to the enterprise's success, and it's also expected by consumers," says Booz. "If you go to one popular clothing retailer, they know what you've bought in the past and can suggest things based on that; if I go to a leading travel site, I get pricing and alternate trip options. But if I go to an insurance company as a consumer, I can't get basic information." Consumers, says Booz, compare their experience with an insurance company to their experiences with all other vendors they interact with—retail, banking, and travel—not to other insurance companies. "As an insurance company's CIO, you have to recognize that consumers are not interested in your technology or management limitations," he adds. Data must be available 24 hours a day, seven days a week. Of course, technology enables this edict. There's been an increasing use of business intelligence (BI) and predictive modeling in the insurance industry, but unfortunately, even many companies that have taken a proactive stance aren't realizing the software's full potential, says Booz. "Business intelligence is currently more siloed than pervasive. Successful companies—industry leaders—are making BI and predictive modeling a core competency that's tied to the enterprise's information." A strong CRM strategy is also imperative, especially one that integrates CRM into the overall enterprise data strategy, because it can provide a clear understanding of what customers want, how they can get their information, and where they can access it. The rewards are great, says Booz. "The return on investment for insurance companies is in the underwriting, but it's also measured at the product level, the purchaser level, and at times the individual insurance consumer level," he says. "It really comes down to how an organization looks at the role of information. It's not about processing claims and paying benefits. It's about applying information."