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Just after his intriguing presentation at the Customer Care Conference that took place on April 25, 2007 in Athens, Marc Pina, Vice President Marketing of AIG MEMSA, interviewed by “Customer Management” magazine.
“Generate additional revenue without increasing the marketing budget”
Customer management: How does CRM come into play with the phrase ‘insurance is selling a piece of paper and a promise’ that was used in your presentation?
Marc Pina
For example, in the banking environment cross-selling insurance is credible and relevant because insurance is a natural fit as part of the bank’s regular suite of products. For FMCG and other non-financial services enterprises it’s slightly more challenging but not impossible.
We have developed customized solutions that make the insurance offer relevant and credible in the eyes of customers of a number of different non-financial services enterprises. AIG contends therefore that most companies with an inbound service call center can use insurance to deepen and strengthen the relationship with their customers and as the title of the presentation stated “help generate additional revenue without increasing the marketing budget”.
Customer management: Is it possible to transform any type of service call centre into a service & sales centre or should some basic principles be in place?
Marc Pina: The core function of a service call center is service – even with the model proposed in my presentation this does not change. Any cross-selling activity has to blend with the service function and ensure service standards are not compromised.
However, the fact that your customers are calling you presents an opportunity that goes beyond merely providing service. Why not sell them something else especially to those customers who are satisfied with the company and the service? The benefits in terms of building relationships with your customers, improving retention and loyalty, and generating additional revenue, makes this a compelling opportunity.
Insurance is an ideal product to do this as it fulfills a personal need that most customers will have (there are many insurance needs addressed by various products) and involves a medium to long term commitment from the customer to pay the premiums to keep the policy active. The latter point is important because you create a long term revenue stream that grows over time as insurance penetration of your customer database increases.
Yes, there are maybe some situations (e.g. legal constraints) or industries where establishing insurance cross-selling in the service call center is not suitable but I would think this would be the exception rather than the rule. In the European context regulations have made it difficult to contact customers or prospects through traditional direct marketing channels. However, if customers are calling you there is an opportunity (depending on local regulations) to promote and cross-sell product offers to them. The service call center is the obvious customer touch point for doing this.
Customer management: In your experience, how does proactive customer service in the insurance sector affect revenues?
Marc Pina: Insurance products by design presume a medium to long term relationship with the customer, i.e. we want customers to pay their premiums for a number of years. Not only is this essential for the customer to keep their insurance cover active but for us ongoing premium payment is one of the foundations of the business model.
Consequently, customer service (whether proactive or reactive) is one of the many essential activities that boost retention and reduce attrition and therefore has a positive impact on revenues. AIG has focused a lot in recent years on developing techniques and tactics to improve customer loyalty and increase retention with the concomitant benefit of maintaining and growing revenues. Some of these techniques and tactics could be construed as proactive customer service and in the inbound call center cross-sell model we utilize these with our partners.
Customer management: In Greece, we usually hear from our insurance agent a short while before our next payment is due. Other than the above, the common notion is that Greeks would rather have a face to face discussion before buying over the telephone. How do you plan to overcome these difficulties?
Marc Pina: This perception is not unique to the Greek market. One could say that in any market the majority of consumers would prefer face-to-face contact before buying an insurance product. But there are always customers who are prepared to buy certain products (affordable premiums, easy to understand insurance products) direct.
While they are a minority, in the field of direct marketing this minority is more than sufficient to sustain a profitable business model. Of course, for more complex insurance products face-face selling is the only option. In any type of direct marketing activity, the business model does not require everyone or the majority of customers to buy.
The percentage of customers required to buy direct in order to make it profitable depends on many factors and variables. Also some customer might not buy over the phone but will through the mail or some other direct medium. So offering various direct marketing channels for customers to respond and buy can increase the percentage of “direct” customers.
I always use myself as an example. I have never bought anything through the mail or over the phone but a few years ago I started to buy on the internet. This channel allows me to browse and do product and price comparisons (I’m not an impulse buyer like many direct customers) and therefore I’m comfortable buying certain products direct through this medium.
Customer management: Would you mention some of the criteria involved in generating the list of customers with ‘propensity to buy’? Do any of the above apply especially to the Greek market?
Marc Pina: In order to follow a predictive approach in the inbound cross-sell model the host company would need to have existing or invest in systems and software such as a data warehouse, data analysis and data-mining tools, etc. Placed in the right hands these tools and techniques can be used to identify the customers with the highest propensity to buy. In the inbound call center model this information can be provided in real time to the Agent while talking to a customer so that an appropriate product offer can be made.
Many factors influence this analysis, e.g. the insurance product being sold, the target market and products and services offered by the partner company, etc. Various transactional, behavioral, demographic, psychographic, geographic criteria can be analyzed to develop the required predictive models. There are no specific criteria that apply particularly to Greece. Each opportunity is unique and requires you to work through the analysis process to arrive at the criteria that best identifies your potential buyers.
Customer management: Would you find that buying insurance through the internet, through ‘strong’ web content and social computing, a realistic scenario?
Marc Pina: While sales of insurance through the internet has not become a strong sales channel as yet, we are seeing new developments that are starting to show good results albeit still on a fairly small scale. Internet as a standalone sales medium for insurance has not yet proved that effective (online transactions are still small in number) but in conjunction with other direct marketing media and channels (integrated direct marketing campaigns) we have seen a lift in response through the internet. It is a medium that we should keep on plugging away at and eventually we will reap the rewards from trying new ideas and techniques and constant testing.
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Issue 8 | MAy 2007