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CRM in financial services: Strategies for action

Financial services firms face unique challenges in managing their customer relationships, but a new wave of technology and best practices are helping to guide the way.

For most businesses, truly understanding the customer seems an insurmountable challenge

Still, there are strategies and methods that can cut the madness for financial services firms, even as they sort through their unique CRM challenges.

The insurance industry, for instance, is facing product and go-to-market complexities that need different types of CRM strategies for success.

At the heart of the insurance industry is the relationship between insurance providers, their agents, and end customer policyholders. Consequently, insurance providers must understand their agents while they also need an intimate understanding of policyholders.

"Most CRM projects in insurance companies have been business-to-business (agents) but most are wondering how they can beef up their business-to-consumer side," explained Kimberly Harris-Ferrante, a vice president and distinguished analyst with the insurance industry advisory service at Stamford, Conn.-based Gartner Inc. "So they need to simultaneously have part of the business B2B2C and part B2C running in parallel, and a lot of CRM systems aren't built to support both models running in a single instance for a single company."

As companies look to roll out CRM systems, Harris-Ferrante recommends they look for newer-generation CRM systems that can handle both models.

"Even if an insurance company isn't planning to sell policies directly to consumers -- irritating their agents -- one day their CEO or board might want to sell policies direct to consumers, maybe with a different brand or logo," she said. "Maybe not now, but these conversations will inevitably happen."

Financial services firms outside of insurance face similar challenges in managing customer data.

So how can these companies tackle CRM?

Financial services firms are rolling out CRM projects, Harris-Ferrante said, just in the property and casualty division or the life insurance division -- all by line of business in relatively isolated projects.

"So we find redundancy, and how can you have a single customer view if you've got four or five single customer views by line of business?" she said. "We don't tell clients to stop doing CRM because their legacy policy systems are a mess."

Instead, companies need to understand they are working on short-term tactical solutions.

"We recommend that companies build toward a common goal -- having, for example, a standard technology platform so that even if you are deploying on lines of business, you're deploying with the same vendor so at some point you can reconcile since you would theoretically have a common data structure, a common database, a single system into which you can pull it all together into a single instance -- even if you don't have a single instance today," Harris-Ferrante said.

"Having that governance, that vision, that enterprise strategy will help guide you, even if you're making short-term, tactical siloed approaches. We tell our clients to look ahead to how they might pull this together as they work on the granular levels."

Using technology to tease out best practices

According to Richard Snow, global vice president and research director for Ventana Research's customer and contact center practice, financial services companies are rapidly beginning to adopt smarter analytics products, which are being used to help understand the "voice of the customer."

"I'm seeing the adoption of text analytics, speech analytics, social media analytics, and then as you drill down further into technology, I see an increasing uptake in desktop analytics," Snow said.

Financial services firms, for example, can use analytics to show which agents are handling high-value sales calls and see how well they do it, ultimately letting a company analyze these successful processes.

A handful of banking companies, Snow said, are working to use all of their customer information as they interact with the company to not only provide a 360-degree-view of the customer but also to manage the customer experience. If a bank, for example, knows the last time a customer called a call center, what he responded to, the last time he was on the Web, what he responded to in customer surveys, the bank can match that profile to a high-value agent.

"A system can then advise an agent what they should be selling, what should they should be cross-selling, and even vice versa, what shouldn't be offered," Snow said.

Despite the tantalizing possibilities, Snow said most financial services firms need to realize that a 360-degree-view of the customer is essentially a myth.

"Once you get through the hype, ask, which data sources can you get to? Because you've got CRM data, financial data, billing data, customer service data," Snow said."But now also you have customer letters, emails, customer tweets, customer blogs, recordings of call. You've got so many sources of customer data in so many formats that bringing it all together into a fabled 360-degree-voice of the customer isn't really possible.

"There isn't a single vendor that can take every source of customer data, bring it all together, rationalize it, aggregate it and produce anything real," he said.

CRM in financial services more than technology

"Even before the technology, you have to know if you have the right products for the customers," Harris-Ferrante said. "We ask our clients to look at their products, and it's a very uncomfortable discussion because no one wants to admit they have the wrong products."

Simpler insurance products like auto, home and term life insurance are being purchased online in more automatic, self-directed models at the same time these products are packaged and sold with other products through agents. The processes and channels are dizzying.

"Companies are introducing process variety, moving from a one-size-fits-all approach to a very complex matrix of different processes, products and content based upon demographics, life stages and life events," Harris-Ferrante said. "What this now means is that when you have a CRM conversation with an insurance company, you're simultaneously having a business process management conversation."

In addition, insurance companies are incredibly siloed with both diverse and similar lines of business and brands. It's almost impossible to get all of the lines of business into a single CRM instance, much less into a coherent strategy. Each line of business manager has their own challenges and goals, and they can't exactly wait for a cohesive push from an executive management team.

In addition, customer and product data represent huge challenges.

"Most companies don't have the plumbing yet -- it's hard to think big picture if you don't have the governance, structure, and accessible data," Harris-Ferrante said.

Putting the pieces together

Kate Leggett, a senior analyst of customer service and call center processes for Cambridge, Mass.-based Forrester Research Inc., is seeing several trends that are paying off for financial services firms.

"I see a focus on the multichannel experience, the consistency of experience, from walking into store, being there, to online chat," Leggett said. On the back end, this is translated into a deep integration of knowledge into CRM where corporate assets are available to agents and customers in unified ways, so an agent in a retail environment has access to the same customer data as an agent in a call center.

"I see a deep focus on business process in CRM as an effort to standardize agent actions and to be able to ensure that you meet compliance guidelines, which is especially important in heavily regulated industry of financial services, where huge penalties can be incurred," Leggett notes.

Incorporating business intelligence into a CRM solution, Leggett says, can be one of the more effective ways to gain tangible CRM benefits.

If two customers with essentially the same product profiles call a financial services firm, their experience may need to be radically different. If one is a happy customer, and the other is a dissatisfied customer who has called four or five times before, that's critical information to have.

"If they call in, at what point do you push an offer to each of the customers? What offer do you push? And is it even appropriate to push an offer?" Leggett said.

Of course, if agents can use real-time analytics to help guide them, they can drastically affect the outcome of either call -- and finding these areas of opportunity with agents can be one of the more successful areas for CRM projects in financial services organizations.

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