It is time for group insurers to ask themselves an uncomfortable question. Is spending millions of dollars a year on Customer Relationship Management (CRM) software to service group business really worth it? Often, the answer is a resounding "no". Fortunately, there are some good alternatives for group insurers to stay close to their customers.
The CRM conundrum for group insurers
The concept behind CRM systems is sound. One place to store your interactions with your customers. A way to keep track of sales prospects, and communicate to them.
For business to business sales, this works really well. For a group insurer however, CRM introduces a real strategic dilemma. Who are you primarily in contact with?
The group insurer's sales process will primarily be business to business. They will (in partnership with brokers) quote and sell group insurance products to a business customer (usually the business owner or head of human resources).
Traditional CRM technology works really well for this kind of customer interaction. Lowish volume but high value sales transactions (group insurance policies), sold collaboratively over a period of time. CRMs can track deals in progress, automate follow-ups, and deliver added-value information to prospective customers. CRM software is really good at this.
However, after the group insurance sale is made, servicing group insurance business is suddenly business to business to employee communications. It is much less "salesy", and much more "service-y". The group insurer is now responding to requests for information from employees, providing them with insurance certificates and other policy information.
It is at this crucial transition point - from business to business sales mode (low volume, high sales value) to business to business to employee service mode (high volume, low sales value, service oriented) where generic CRM products start to struggle to add value, and group insurers should closely explore their options.
Why are CRM costs so high for group insurers?
The leading CRM software vendor by far in the insurance segment is Salesforce. In 2023, they raised their prices by 9%, citing introduction of AI functionality as the reason. Other leading CRM vendors, like Microsoft and Hubspot, have also introduced AI into their products and are asking their customers to pay more.
Generic CRM products often really struggle to add value in "group insurance high volume service" scenarios for some quite straightforward business reasons.
CRM Licensing model - CRM software is generally licensed on the basis of how many customer records are on the system. If you are selling a group policy to a business with 10,000 employees - through the sales process that's one customer record (with maybe a handful of customer names attached - just the people at the business involved in the group insurance purchase decision). But when you sell the group policy and then add all 10,000 employee records to the file, all of a sudden you are adding 10,000 records to your CRM license fee costs. This can very quickly grow out of control and not offer value for money spent, in particular if you are not communicating frequently with the employees.
Integrations with your policy system - you will incur costs building and maintaining system interfaces between your Policy Administration System (PAS) and your CRM system.
Online self-service is additional cost CRM feature - The business driver for group insurance CRM is often made around enabling the insured to access online self-service portals and apps. These are almost always additional-cost features from CRM vendors.
Spend on CRM consultants - often, you need to configure or develop low-code processes using the CRM vendor's technology. Chances are you won't have these skills on your team, so you will often spend a lot of money on consultants to make your CRM software try to do something that is a little different than it's out-of-the-box capability.
These costs add up very quickly! They also increase your lock-in with your selected CRM vendor. But customer service and communications is so important - so what is the alternative for group insurers?
It is a matter of knowing what your member-level customer service requirements truly are, then choosing the right tools for the job to be done.
Use CRM for sales, use PAS for servicing
Most good group Policy Administration Systems (PAS) will have a lot of capability to create and store information about insured members in group plans. This can represent an opportunity to save CRM expense by using the capabilities of your PAS system to be your primary repository of information about insured members in group schemes.
We'd recommend that group insurers use CRM solutions when they are selling group business, but use the capabilities of their PAS systems when they are servicing their group business.
Policy admin systems like Sentro can store notes about members, retain their membership certificates and policy information, track underwriting changes, offer online member portals, and much much more. All of these capabilities may negate the need to use a CRM system to provide customer service to members.
If your group plan member communications needs are high volume outbound (for example, maybe you need to send a statement or policy information to all members twice a year), you may find that specialist outbound Customer Communications Management software (such as Airdocs) is a better tool for the job than similar from a CRM vendor. You may get better functionality at lower cost by taking a longer look at your core customer communications needs, and choosing the best tools for the job.
Always do the math
Even if you have a "mandated corporate CRM", your project business case will be charged costs for using it. So insist on close scrutiny of the costs associated with trying to bolt CRM capability on top of your group insurance customer service model. Don't be afraid to ask hard questions, and ask your technical teams why the capabilities of your PAS couldn't be used more to avoid cost, maintain customer service, and improve the economics of your business case and group business profitability.