Kajal Final Project.docx

DRT’S A. E, KALSEKAR DEGREE COOLEGE MUMBRA, THANE-400612. A PROJECT REPORT ON:

CUSTOMER RELATIONSHIP MANAGEMENT IN INSURANCE SECTOR WITH REFERENCE TO MUMBRA OF (BANKING AND INSURANCE) SEMESTER VI SUBMITTED BY: Pandey kajal vikramaditya PROJECT GUIDE:

PROF. MOHSIN PATHAN UNIVERSITY OF MUMBAI ACADEMIC YEAR 2018-2019

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DECLARATION

I, Miss Pandey kajal vikramaditya student of B-com. Banking & Insurance Semester VI (2018-2019) hereby declare that I have completed the project on CUSTOMER RELATIONSHIP MANAGEMENT SECTOR WITH REFERENCE TO MUMBRA.

IN

INSURANCE

The information submitted is true and original to thebest of my knowledge.

Signature of Student (pandey kajal vikramaditya)

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ACKNOWLEDGEMENT

I would like to thank the University Of Mumbai for giving me this opportunity of taking up such a challenging project which has enhanced my knowledge about the modern banking products and services offered by banks. I respect and thank our principal and co-ordinator MISS.ARJUMAND RAWAL for giving me an opportunity to do the project work in “CUSTOMER RELATIONSHIP MANAGEMENT IN INSURANCE SECTOR WITH REFERANCE TO MUMBRA.” and providing us all support and guidance which made me completes the project on time. I am very grateful to PROF. MOHSIN PATHAN under whose guidance I was successfully able to complete my project. I wish to thank her for all the suggestions and guidance on the related topic of my work. I am thankful to her because of her friendly approach and kindness to me. I would also like to thank the LIBRARIAN of our college for providing me relevant information and books in the library.Last but not the least, thankyou to my colleagues. I would also like to express my gratitude to my family and friends in completing my project.

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INDEX

SR.No.

CHAPTER

1.

Introduction of insurance

2.

Customer relationship management

3.

CRM in insurance

4.

Analysis and interpretation

5. 6.

Suggestion Conclusion

7. 8.

Annexure Reference

PAGE NO.

RM implemented in insurance sector . finally the project is concluded with suggestions.

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CHAPTER 1 INTRODUCTION OF INSURANCE

1.1 INTRODUCTION OF INSURANCE 1.2 DEFINITION OF INSURANCE 1.3 MEANING OF INSURANCE 1.4 ORIGIN OF INSURANCE 1.5 ORIGIN AND DEVELOPMENT OF INSURANCE IN INDIA 1.6 FEATURES OF INSURANCE 1.7 ROLE AND IMPORTANCE OF INSURANCE 1.8 FUNCTION OF INSURANCE

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INTRODUCTION OF INSURANCE Insurance occupies an important place in the complex modern world since risk, which can be insured, has increased enormously in every walk of life. This has led to growth in the insurance business and evolution of various types of insurance covers. The insurance sector acts as a mobiliser of savings and a financial intermediary and is also a promoter of investment activities. It can play a significant role in the economic development of a country, while economic development itself can facilitate the growth of the insurance sector. This chapter provides an overview of the insurance sector in India, its origin and growth. It begins by defining insurance as a concept, followed by a discussion on the importance of insurance for individuals, households, and the economy. The penetration of the insurance business and insurance density in India are compared with those in other countries. The need to create and enhance the level of awareness about different aspects of insurance is also discussed.

DEFINITION OF 'INSURANCE' A financial risk management tool in which the insured transfers a risk of potential financial loss to the insurance company that mitigates it in exchange for monetary compensation known as the premium.

MEANING OF INSURANCE Insurance is a means of protection from financial loss. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. An entity which provides insurance is known as an insurer, insurance company, or insurance carrier. A person or entity who buys insurance is known as an insured or policyholder. The insurance transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate the insured in the event of a covered loss. The loss may or may not be financial, but it must be reducible to financial terms, and must involve something in which the insured has an insurable interest established by ownership, possession, or preexisting relationship. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated. The amount of money charged by the insurer to the insured for the coverage set forth in the insurance policy is called the premium. If the insured experiences a loss which is potentially covered by the 6

insurance policy, the insured submits a claim to the insurer for processing by a claims adjuster.

ORIGIN OF INSURANCE Maritime insurance is the oldest form of insurance and is followed by life insurance and fire insurance. Insurance was prevalent in ancient Greece and among the maritime peoples with whom the Greeks traded. It developed first as a means of spreading the huge risks involved in early maritime enterprises, evolving much later during the fourteenth century in the commercial cities of Italy. This practice of marine insurance gradually spread to London during the sixteenth century. The history of marine insurance is closely associated with the origin and rise of Lloyd’s group of ship-owners. Today, Lloyd’s is considered the largest underwriter in the world. In the USA, the first insurance company was established by Benjamin Franklin in 1752. Since the midnineteenth century, insurance has developed significantly to cover other kinds of risks.

ORIGIN AND DEVELOPMENT OF INSURANCE IN INDIA In India, the history of life insurance can be traced to 1818 when Anita Bhavsar started the Oriental Life Insurance Company in Kolkata. This organization was basically founded to serve European clients and hence Indians who opted for an insurance cover were charged a much higher premium. The reason given was that Indians had a lower life expectancy on account of their lifestyle, while in fact this was a planned effort to keep Indians out of any kind of progress. The company failed in 1834.Then, in 1870 the British Insurance Act was passed and the last three decades of nineteenth century saw the emergence of the Bombay Mutual Life Assurance Society (1871), which became the first organisation to charge the same premium from all residents of India irrespective of their origin or nationality. The Oriental (1874) and Empire of India (1897) insurance companies began their activities in the Bombay Residency in the late nineteenth century. This period, however, was dominated by foreign insurance offices such as Albert Life Assurance, Royal Insurance, and Liverpool and London Globe Insurance, which did good business in India.

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FEATURES OF INSURANCE 1. Sharing of Risk: Insurance is a device to share the financial losses which might befall on an individual or his family on the happening of a specified event. The event may be death of a bread-winner to the family in the case of life insurance, marine-perils in marine insurance, fire in fire insurance and other certain events in general insurance, e.g., theft in burglary insurance, accident in motor insurance, etc. The loss arising nom these events if insured are shared by all the insured in the form of premium. 2. Co-operative Device: The most important feature of every insurance plan is the co-operation of large number of persons who, in effect, agree to share the financial loss arising due to a particular risk which is insured. Such a group of persons may be brought together voluntarily or through publicity or through solicitation of the agents. An insurer would be unable to compensate all the losses from his own capital. So, by insuring or underwriting a large number of persons, he is able to pay the amount of loss. Like all cooperative devices, there is no compulsion here on anybody to purchase the insurance policy. 3. Value of Risk: The risk is evaluated before insuring to charge the amount of share of an insured, herein called, consideration or premium. There are several methods of evaluation of risks. If there is expectation of more loss, higher premium may be charged. So, the probability of loss is calculated at the time of insurance. 4. Payment at Contingency: The payment is made at a certain contingency insured. If the contingency occurs, payment is made. Since the life insurance contract is a contract of certainty, because the contingency, the death or the expiry of term, will certainly occur, the payment is certain. In other insurance contracts, the contingency is the fire or the marine perils etc., may or may not occur. So, if the contingency occurs, payment is made, otherwise no amount is given to the policy-holder. Similarly, in certain types of life policies, payment is not certain due to uncertainty of a particular contingency within a particular period. For example, in term-insurance then,

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payment is made only when death of the assured occurs within the specified term, may be one or two years. Similarly, in Pure Endowment payment is made only at the survival of the insured at the expiry of the period. 5. Amount of Payment: The amount of payment depends upon the value of loss occurred due to the particular insured risk provided insurance is there up to that amount. In life insurance, the purpose is not to make good the financial loss suffered. The insurer promises to pay a fixed sum on the happening of an event. If the event or the contingency takes place, the payment does fall due if the policy is valid and in force at the time of the event, like property insurance, the dependents will not be required to prove the occurring of loss and the amount of loss. It is immaterial in life insurance what was the amount of loss at the time of contingency. But in the property and general insurances, the amount of loss as well as the happening of loss, are required to be proved. 6. Large Number of Insured Persons To spread the loss immediately, smoothly and cheaply, large number of persons should be insured. The co-operation of a small number of persons may also be insurance but it will be limited to smaller area. The cost of insurance to each member may be higher. So, it may be unmarketable. Therefore, to make the insurance cheaper, it is essential to insure large number of persons or property because the lesser would be cost of insurance and so, the lower would be premium. In past years, tariff associations or mutual fire insurance associations were found to share the loss at cheaper rate. In order to function successfully, the insurance should be joined by a large number of persons. 7. Insurance is not a gambling: The insurance serves indirectly to increase the productivity of the community by eliminating worry and increasing initiative. The uncertainty is changed into certainty by insuring property and life because the insurer promises to pay a definite sum at damage or death. From a family and business point of view all lives possess an economic value which may at any time be snuffed out by death, and it is as reasonable to ensure against the loss of this 9

value as it is to protect oneself against the loss of property. In the absence of insurance, the property owners could at best practice only some form of self-insurance, which may not give him absolute certainty. Similarly, in absence of life insurance, saving requires time; but death may occur at any time and the property, and family may remain unprotected. Thus, the family is protected against losses on death and damage with the help of insurance. 8. Insurance is not Charity: Charity is given without consideration but insurance is not possible without premium. It provides security and safety to an individual and to the society although it is a kind of business because in consideration of premium it guarantees the payment of loss. It is a profession because it provides adequate sources at the time of disasters only by charging a nominal premium for the service.

FUNCTIONS OF INSURANCE The functions of insurance can be studied into two parts: 

Primary Functions



Secondary Functions.

PRIMARY FUNCTIONS: 1. Insurance provides protection:

The main function of the insurance is to provide protection against the probable chances of loss. The time and amount of loss are uncertain and at the happening of risk, the person will suffer loss in absence of insurance. The insurance guarantees the payment of loss and thus protects the assured from sufferings. The insurance cannot cheek the happening of risk but can provide for losses at the happening of the risk.

2. Risk-Sharing:

The risk is uncertain, and therefore, the loss arising from the risk is also uncertain. When risk takes place, the loss is shared by all the persons who are exposed to the risk. The risk sharing in ancient time was done only at time of damage or death, but today, on the basis of 10

probability of risk, the share is obtained from each and every insured in the shape of premium without which protection is not guaranteed by the insurer.

SECONDARY FUNCTIONS: Besides the above primary functions, the insurance works for the following functions:

1. Prevention of loss:

The insurance joins hands with those institutions which are engaged in preventing the losses of the assured and so more saving is possible which will assist in reducing the premium. Lesser premium invites more business and more business causes lesser share to the assured. So again premium is reduced to, which will stimulate more business and more protection to the masses. Therefore, the insurance assist financially to the health organization, fire brigade, educational institution and other organizations which are engaged in preventing the losses of the masses from death or damage.

2. It provides Capital:

The insurance provides capital to the society. The accumulated funds are invested in productive channel. The dearth of capital of the society is minimized to a greater extent with the help of investment of insurance. The industry, the business & the individual are benefited by the investment & loans of the insurers.

3. It improves Efficiency:

The insurance eliminates worries and miseries of losses at death and destruction of property. The care-free person can devote his body & soul together for better achievement. It improves not only his efficiency, but the efficiencies of the masses are also advanced.

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4.It helps Economic Progress:

The insurance by protecting the society from huge losses of damage, destruction and death.Provides an initiative to work hard for the betterment of the masses. The next factor of economic progress, the capital, is also immensely provided by the masses. The property, the valuable assets, the man the machine & the society cannot lose much at the disaster.

THE ROLE AND IMPORTANCE OF INSURANCE The following point shows the role and importance of insurance: Insurance has evolved as a process of safeguarding the interest of people from loss and uncertainty. It may be described as a social device to reduce or eliminate risk of loss to life and property. Insurance contributes a lot to the general economic growth of the society by provides stability to the functioning of process. The insurance industries develop financial institutions and reduce uncertainties by improving financial resources. 1. Provide safety and security: Insurance provide financial support and reduce uncertainties in business and human life. It provides safety and security against particular event. There is always a fear of sudden loss. Insurance provides a cover against any sudden loss. For example, in case of life insurance financial assistance is provided to the family of the insured on his death. In case of other insurance security is provided against the loss due to fire, marine, accidents etc. 2. Generates financial resources: Insurance generate funds by collecting premium. These funds are invested in government securities and stock. These funds are gainfully employed in industrial development of a country for generating more funds and utilised for the economic development of the country. Employment opportunities are increased by big investments leading to capital formation.

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3. Life insurance encourages savings: Insurance does not only protect against risks and uncertainties, but also provides an investment channel too. Life insurance enables systematic savings due to payment of regular premium. Life insurance provides a mode of investment. It develops a habit of saving money by paying premium. The insured get the lump sum amount at the maturity of the contract. Thus life insurance encourages savings. 4. Promotes economic growth: Insurance generates significant impact on the economy by mobilizing domestic savings. Insurance turn accumulated capital into productive investments. Insurance enables to mitigate loss, financial stability and promotes trade and commerce activities those results into economic growth and development. Thus, insurance plays a crucial role in sustainable growth of an economy. 5. Medical support: A medical insurance considered essential in managing risk in health. Anyone can be a victim of critical illness unexpectedly. And rising medical expense is of great concern. Medical Insurance is one of the insurance policies that cater for different type of health risks. The insured gets a medical support in case of medical insurance policy. 6. Spreading of risk: Insurance facilitates spreading of risk from the insured to the insurer. The basic principle of insurance is to spread risk among a large number of people. A large number of persons get insurance policies and pay premium to the insurer. Whenever a loss occurs, it is compensated out of funds of the insurer. 7. Source of collecting funds: Large funds are collected by the way of premium. These funds are utilised in the industrial development of a country, which accelerates the economic growth. Employment opportunities are increased by such big investments. Thus, insurance has become an important source of capital format.

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CHAPTER 2

INTRODUCTION OF CUSTOMER RELATIONSHIP MANAGEMENT

2.1 INTRODUCTION OF CRM 2.2 DEFINITION OF CRM 2.3 MEANING OF CRM 2.4 HISTORY OF CRM 2.5 ORIGIN OF CRM 2.6 ADVANTAGE AND DISADVANTAGE OF CRM 2.7 GOAL OF CRM 2.8 FEATURES OF CRM 2.9 CRM PRINCIPAL 2.10 TYPES OF CRM 2.11 CRM-A POWERFUL TOOL

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2.1 INTRODUCTION OF CRM Customer Relationship Management (CRM) is a business process with outcomes that optimize customer satisfaction, revenue and profitability by organizing around customer segmentation, fostering customer satisfying behaviors and implementing customer centric activities. Every time customers approach an office, they arrive with a set of expectations, which may be related to the existing services provided by the company or new needs. What happens next will determine their experience, which in turn will shape their future behavior. A good experience may increase their loyalty and tendency to deal with the insurance company again; while a poor experience may make them take their business to a competitor. The ability to recognize this phenomenon and actively manage it forms the basis of customer relationship management. The promise of customer relationship management is to build a customer-oriented strategy. CRM focuses on nurturing customer loyalty, thereby gaining market share, profitability and business growth. Several commercial CRM insurance packages are available which vary in their approach to CRM. However, as mentioned above, CRM is not just a technology, but rather a comprehensive customer-centric approach to an Organization’s philosophy in dealing with its customers. This includes policies and process, front-of-house customer service, employee training, marketing systems and information management. Hence it is important that any CRM implementation considerations stretch beyond technology, towards the broader organizational requirements. The objectives of a CRM strategy most consider a company’s specific situation and its customer’s needs and expectations. Information gained through CRM initiatives can support the development of marketing strategy by developing the organization’s knowledge in areas such as identifying customer segments, improving customer retention, improving product offerings(by better understanding customer needs),and by identifying the organization’s most profitable customers. CRM strategies can vary in size, complexity and scope. Some companies consider a CRM strategy to only focus on the management of a team of sales people. However, other CRM strategy can cover customer interaction across the entire organization .many commercial CRM insurance packages that are available provide features that serve sales, marketing event management, and project management and finance.

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2.2 DEFINITION OF CRM “Customer relationship management (CRM) is a co-ordinate approach to the selling process allowing the various operational customer contract and sales promotional functions of an organization to function as a whole”.

2.3 MEANING OF CRM Customer relationship management (CRM) is an approach to managing a company's interaction with current and potential future customers that tries to analyze data about customers' history with a company and to improve business relationships with customers, specifically focusing on customer retention and ultimately driving sales growth. One important aspect of the CRM approach is the systems of CRM that compile data from a range of different communication channels, including a company's website, telephone, email, live chat, marketing materials, and social media. Through the CRM approach and the systems used to facilitate CRM, businesses learn more about their target audiences and how to best cater to their needs. However, adopting the CRM approach may also occasionally lead to favoritism within an audience of consumers, resulting in dissatisfaction among customers and defeating the purpose of CRM. Customer relationship management (CRM) refers to the principles, practices and guidelines that an organization follows when interacting with its customers. From the organization's point of view, this entire relationship encompasses direct interactions with customers, such as sales and service-related processes, and forecasting and analysis of customer trends and behaviors. Ultimately, CRM serves to enhance the customer's overall experience.

3.4 HISTORY OF CRM Emergence of customer relationship management software[ The idea of customer relationship management began evolving in the early 1970s, when customer satisfaction was evaluated using annual surveys or by front-line asking. At that time, businesses had to rely on standalone mainframe systems to automate sales, but the most technology allowed them to do was to categorize customers in spreadsheets and lists. The key 16

year was 1982, when Kate and Robert Kestnbaum introduced the concept of Database marketing, namely applying statistical methods to analyze and gather customer data. Four years later, Pat Sullivan and Mike Muhney from Dallas released their customer evaluation system called ACT! based on the principle of digital rolexes, offering for the first time a well-shaped contact management service. The trend was followed by numerous developers trying to maximize leads' potential, including Tom

Siebel who

signed

the

first

CRM

product Siebel

Systems in

1993.[7]Nevertheless, customer relationship management as a term became popular only in 1997, thanks to the work of Siebel, Gartner, and IBM. In the period between 1997 and 2000, leading CRM products were enriched with enterprise resource planning functions, and shipping and marketing capabilities.[8] Emergence and development of mobile CRM During 1999, Tom Siebel introduced the first mobile CRM app called Siebel Sales Handheld. The idea of a cloud-hosted and moveable customer bases was soon adopted by other leading providers at the time, including PeopleSoft, Oracle, and SAP. The beginning of the 2000s will also be remembered by Microsoft’s entrance on the CRM market. Once the company acquired Navision, it synced contact management with its leading products Outlook and MS Office, and designed a CRM of their own called Microsoft Dynamics. The first open-source CRM system was developed by SugarCRM in 2004, after which Amazon also introduced its CRM called EC2/S3. During this period, CRM was rapidly migrating to cloud, as a result of which it became accessible to sole entrepreneurs and small teams, and underwent a huge wave of price reduction. Emergence and development of social CRM It is only in 2009 that we get to speak of social CRM. During this year, developers considered the options to profit from social media's momentum, and designed tools that help companies become accessible on all users' favorite networks. Many startups at the time benefited from this trend to provide exclusively social CRM solutions, including Base and Nutshell. The same year, Gartner organized and held the first Customer Relationship Management Summit, and summarized the features systems should offer to be classified as CRM solutions.

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In 2013 and 2014, most of the popular CRM products were linked to business intelligence systems and communication software to improve corporate communication and end-users' experience. In the last two years, the leading trend is to replace standardized CRM solutions with industry-specific ones, or to make them customizable enough to meet the needs of every business. Future expectations In the years to come, CRM solutions are expected to become more intuitive and easier to use, and delivered exclusively as SaaS services. Another development users should expect is for CRMs to make communication seamless, and unify all customer communication in a single channel.

2.5 ORIGIN OF CRM CRM originated in early 1970s when the business units had a manifestation that it would be advisable to become ‘customer emphatic’ rather that ‘product emphatic’. Birth of CRM was because of this heedful perceptiveness. The famous writer and management consultant Peter Drucker wrote; ‘The true business of every company is to make and keep customers’. Traditionally every transaction was on paper and dependent on goodwill which created hindrance in clutching customers. People used to work hard in entertaining customers by presenting new products with astonishing services; they were ready to work overtime for grasping more and more customers for increasing business. This too resulted in customer satisfaction and loyalty up to some extent, but at the end of the day there was no such bonding or relation between the two to carry on with future business smoothly. Previously business was quite easy as it was mere a one-to-one dealing without any specific process. But with time, due to incoming complexities in communication, it found itself in troubled waters. Emerging of new strategies and technologies in global marketplace and a mammoth degree of competition in business, the approach needed to be changed to proactive rather than reactive. Origination of CRM turned out to be a piece of cake for all suppliers and customers due to its advantages. Customer relationship management came as a process that dealt with relationships with customers surpassing the whole business.

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Originally customer relationship management was based on three major principles; shielding the current customers, fostering new customers and enhancing asset value of all the customers. With the advent of CRM which was integrated with high end software and technology, business perspectives were totally changed. A CRM system eventually emerged as consisting of company-full of information which is depicted sophistically to increase business profit and meliorate customer satisfaction and loyalty, on the same hand reduces business cost and investment.

2.6 ADVANTAGES AND DISADVANTAGES OF CRM Following are some of the benefits of CRM: 1. Centralization and Sharing of Data With Customer Relationship Management (CRM) systems, data is stored in one centralized location, making it ready accessible to all members of a business or organization. This enables the company’s staff to more easily communicate with and market to their customers. 2. Better Customer Service CRM systems are capable of storing detailed information about each customer, such as their history of orders, correspondence, survey responses, and marketing emails. Having such information easily accessible can significantly improve the speed and quality of customer service. This in turn gives employees more time to time to focus on sales, marketing, and other priorities. 3. Higher Customer Satisfaction CRM systems make customers feel more like they are part of a team than merely a sales statistic. This sense of partnership often makes for a happier customer who is more likely to do repeat business and refer a potential new customer. 4. Improved Marketing Efforts Records contained within a CRM system may be analyzed in order to more effectively market to each individual in a company’s database. Customer demographics, order histories, and survey results may be studied in order to determine which group(s)are best to target in each specific marketing campaign. Crossselling and up-selling can also be more effective when companies are equipped with this information. 5. More Profit 19

The combination of more efficient customer service, more effective marketing, happier customers, and more sales translates to a more profitable business.

6. Save Time A CRM automates a lot of the usual time-devouring tasks, giving salespeople more time to do what they are actually paid to do: namely, sell to prospects. More time spent in front of potentialcustomers (instead of shuffling paper) means more sales, which makes everyone happy. 7. Look Professional Which do you think looks better to a prospect: a salesperson who keeps all their information in a computer database and can pull up vital details immediately or one who keeps their information on Post-It notes and has to scramble for ten minutes just to find the scheduled appointment time? 8. Save Money Sure, the more impressively arrayed CRMs can cost a lot of money. 9. Secure With a CRM, information is usually stored either in a central database or in the CRM provider’s system. At the very least each salesperson can back up copies of their individual databases to another computer.

GENERAL MISUNDERSTANDINGS ABOUT CRM: Many companies have misconceptions about CRM in regard to assessing customer satisfaction in order to enhance business. There are several misunderstandings in CRM to be checked otherwise these may cost the organization revenue and profits:

1. Identifying CRM with a software system CRM is a business strategy which consists of people and business processes in addition to technological implementations. A successful implementation of CRM is not possible without each one of them. It would be improper to have a successful business purely ‘technology-centric’ ignoring the importance of people and processes. 2. CRM is a complicated system, difficult to understand The meaning of CRM is simple- to fetch customers, retain them and maximize profitability. Because of the fast developing technology there is pressure on IT

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professionals to cope up with the recent developments. If we go back to the times when there was no IT implementation, still customer management has been entirely changed.

3. CRM is expensive and unaffordable by small enterprises It is a myth that IT maintenance cost is unaffordable by small and medium class entrepreneurs. Nowadays Application Service Providers with simple and limited functions have been introduced to provide CRM at affordable prices. Its operation is easy without involving expensive IT professionals. Therefore to target good results emphasis should be on people and procedure strategies and utilize software at the end part only. 4. Wrong assessment for the Return On Investment in CRM In CRM implementation, Return On Investment means the evaluation of returns with the costs incurred. The main causes of poor ROI are ignoring people and procedure strategies, absence of quantified benchmarking to measure the results, lack of vision in strategic acquirement of opportunities etc. These are the points to ponder before implementing a CRM.

2.7 GOALS OF CRM Implementing customer relationship management can be a costly undertaking. Organizations spend a lot of money scrutinizing vendors, buying the right CRM software, hiring, consultant, training employees, etc. The only way in which a company can actually measure its success is if it establishes CRM goals prior to the implementation as in this way it is able to determine whether or not it has successfully implemented CRM. Despite the fact that industries have different business aspects they share some common CRM goals.

SOME OF THE COMMONLY ESTABLISHED CRM OBJECTIVES ARE AS FOLLOWS: 1) Increase in Customer Service : Establishing customer loyalty as one of your top CRM goals is absolutely fundamental to CRM successful implementation. This objective cannot be achieved with the help of a few 21

employees only. Customers need to feel that they have received excellent service. This ensures their continued patronage. Customer retention and brand loyalty is absolutely essential to ensure success. Undoubtedly it is far harder to gain a new customer than to actually keep one. Customer service is the pivotal point around which CRM revolves.

2) Increasing Efficiency: One of the most important goals of CRM is the increase in organization efficiency and effectiveness. This is almost always adopted by every organization. It is necessitated by the fact that increase in efficiency is required to boost success. CRM achieves this through cost reduction and customer retention. Adequate CRM training achieves this goal.

3) Lowering Operating Costs: CRM goals also include the reduction of costs of operation. CRM manages to reduce operating costs through a workforce management system. These reduced costs enable an organization to achieve greater efficiency. If cost reduction is management's objective then the CRM implementation should be carried out in such a way that this is achieved. Throughout the process maximum reduction in costs should be adhered to in order to meet this particular CRM goal. 4) Aiding the Marketing Department: Another goal of CRM is generally aiding the marketing department in all its efforts. This includes marketing campaigns, sales promotions etc. If this is fixated as one of the goals of CRM, then it should be communicated to those involved. This goal is fundamental as it boosts sales indirectly thereby increasing the profitability.

2.8 FEATURE OF CRM Customer Relationship Management is a strategy which is customized by an organization to manage and administrate its customers and vendors in an efficient manner for achieving excellence in business. It is primarily entangled with following features:

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1. Customers NeedsAn organization can never assume what actually a customer needs. Hence it is extremely important to interview a customer about all the likes and dislikes so that the actual needs can be ascertained and prioritized. Without modulating the actual needs it is arduous to serve the customer effectively and maintain a long-term deal. 2. Customers ResponseCustomer response is the reaction by the organization to the queries and activities of the customer. Dealing with these queries intelligently is very important as small misunderstandings could convey unalike perceptions. Success totally depends on the understanding and interpreting these queries and then working out to provide the best solution. During this situation if the supplier wins to satisfy the customer by properly answering to his queries, he succeeds in explicating a professional and emotional relationship with him. 3. Customer SatisfactionCustomer satisfaction is the measure of how the needs and responses are collaborated and delivered to excel customer expectation. In today’s competitive business marketplace, customer satisfaction is an important performance exponent and basic differentiator of business strategies. Hence, the more is customer satisfaction; more is the business and the bonding with customer. 4. Customer LoyaltyCustomer loyalty is the tendency of the customer to remain in business with a particular supplier and buy the products regularly. This is usually seen when a customer is very much satisfied by the supplier and re-visits the organization for business deals, or when he is tended towards re-buying a particular product or brand over times by that supplier. To continue the customer loyalty the most important aspect an organization should focus on is customer satisfaction. Hence, customer loyalty is an influencing aspect of CRM and is always crucial for business success. 5. Customer Retention23

Customer retention is a strategic process to keep or retain the existing customers and not letting them to diverge or defect to other suppliers or organization for business. Usually a loyal customer is tended towards sticking to a particular brand or product as far as his basic needs continue to be properly fulfilled. He does not opt for taking a risk in going for a new product. More is the possibility to retain customers the more is the probability of net growth of business. 6.Customer ComplaintsAlways there exists a challenge for suppliers to deal with complaints raised by customers. Normally raising a complaint indicates the act of dissatisfaction of the customer. There can be several reasons for a customer to launch a complaint. A genuine reason can also exist due to which the customer is dissatisfied but sometimes complaints are launched due to some sort of misunderstanding in analyzing and interpreting the conditions of the deal provided by the supplier regarding any product or service. Handling these complaints to ultimate satisfaction of the customer is substantial for any organization and hence it is essential for them to have predefined set of process in CRM to deal with these complaints and efficiently resolve it in no time. 7. Customer ServiceIn an organization Customer Service is the process of delivering information and services regarding all the products and brands. Customer satisfaction depends on quality of service provided to him by the supplier. The organization has not only to elaborate and clarify the details of the services to be provided to the customer but also to abide with the conditions as well. If the quality and trend of service go beyond customer’s expectation, the organization is supposed to have a good business with customers.

2.9 CRM PRINCIPLES The main principles of CRM can be grouped into seven guiding factors: 1.

Customer focus The first and foremost important guiding principle in CRM is customer focus. Who is a customer? This question is very fundamental. A customer is a person or group of persons who receives the product or service—the final output of a process or group of 24

processes. A customer is the final arbiter of quality, value and price of a product or service. A satisfied customer motivates his fellow members to go in for the service or product that he has already acquired. But a dissatisfied customer always counsels his friends, and fellow members not to go to banks where his experience proved to be wrong or other-wise. So customer’s delight or customer’s satisfaction is the essence of any CRM program. As a part of this focus on customers, banks should ensure that clients are identified; their requirements are determined, understood and met enhancing customers’ satisfaction.

2.

Leadership Persuasion, judgment and decision-making abilities are the main attributes of quality leadership. When there is a slight chance of getting a business but the client is hesitating or in a fix, or not in a position to decide properly, it should be followed up by the relationship manager by patient hearing, mild counseling and to stand by the side of the prospective client to help clear his doubts and to make him feel happy by realizing that he is going in the right direction and he is very right in choosing his requirements. The following points may be found helpful in this regard: (a) It is to be communicated to all employees that all customers should be given a proper hearing and it should be supported from all levels. (b) Ways and means should be identified and practiced of getting and staying closer to customers. (c) Proper respect should be extended to the customers. All relevant information should be collected from them with humble and polite approach. Proper value should be given to their feedback. (d) There should be proper re-action to the information and feedback provided by the customers in designing, developing and providing desired products at afford-able cost.

3. Process approach A process transforms an input into desired output by the use of resources, energies and time. In producing an output there may one single process or a group of inter-related processes. In case of inter-related processes, often the output from one process directly forms the input to the next. For effective functioning of an organization, it has to

25

identify and manage numerous linked activities with the help of different processes for accomplishing its goal.

Proper attention should be given to the following points:  All processes should be de-signed keeping in view the requirements and desires of the customers, within the policy, resource availability, strategy of the company.  All processes should meet the legal and statutory requirements to perform the activity or deliver the product or service.  Time involved in processing should be minimum with least waiting time to the customers. If required delegation of authority and assignment of account-ability at various executive levels should be addressed, revised and fine-tuned to meet the requirements.  All the processes should be properly integrated to meet the goal congruence and should not function at cross-purpose.  There should be in built control mechanism for ease of measuring, reviewing and taking corrective action.

4. System approach Customer’s requirement is one level of commitment. That level implies a system that is reactive and provides to customers what they want but the target should be to achieve more and to exceed the customer’s expectation to accommodate future requirement and to build a cushion against the competitors’ attributes. CRM denotes the management of the entire system and is not confined to only one or the other sub-systems or functional departments. CRM is based on a system approach to management. Its primary objective is to increase value to customers on a continuous basis by designing and improving organizational processes and systems on aongoing basis. Meeting Each sub-system may have its own goal but the goal and objectives of all sub-systems are to be integrated to achieve the overall goal. There may be one sub-system to acknowledge the customer’s order, a separate one to deliver the product within the delivery schedule, another sub-system to comply with the complaints of the customers etc, but all directed to accomplish the goal—value to the customers. The total system as a whole should decide what product to make or what

26

service to offer, what should be the quality involved, what should be the price, what markets and customers to target upon and similar other issues.

5. Involvement of people The fundamentals of CRM bear the genes of customer relationship through involvement of people, i.e., the work-force at the disposal of the organization. The whole gamut of CRM is for the people, of the people and by the people. People involvement at all levels is essential for the success of a CRM program. The bank managers and staff must be in a position to exploit the concept of customer relationship completely. Customer relation may be defined as that dimension of relationship marketing that seeks and ensures customer loyalty by fulfilling promises and continuing to satisfy customer’s wants and needs so that defection is zero. It comprises of three levels of relationships; financial relationship, social relationship and structural relationship. The main focus of financial relationship is frequency marketing programs based on financial incentives such as reduction of processing fees, lower rate of commitment charges, organization of loan mela on special occasions etc. Social relationship programs revolve round a social bonding between company and its customers and establish brand loyalty. Bankers, nowadays, make house calls, offer different services outside their for-mal activities, share the feelings and emotions of clients and even send clients flowers on birthdays and anniversaries. Drawing of money through ATMs instead of physical presence in the branch for withdrawal of cash through cheques or withdrawal forms may be sited as example. To obtain the full benefits of people involvement, the human resource management should focus

on employee

empowerment, productivity linked reward, zero defeat service oriented training and total quality management.

6. Mutually beneficial customer relationship The relationship with the customer should be based on a mutually beneficial relationship. A bank should not concentrate its attention towards earning of profits only, but focus should be directed to the customers’ wealth creation or value enhancement with the motto of earning through service. As an example we can talk of a savings account that’s ‘fixed up’ to give you more interest. It ensures that any balance in your savings account above a certain amount,

27

say, Rs 3,000 automatically gets transferred to a fixed deposit to give you higher returns, which will be swept back into your savings account, when you need it. Sometimes, other benefits are also extended, such as, free personal accident insurance coverage along with fixed deposit scheme above a certain amount and above a certain term. Banks are no more restricting their activities to deposit and advances; rather they work with the mot-to of offering ‘Integrated Total Package Solutions to all needs of a customer. Banks have gone to the extent of booking cinema tickets, paying utility bills, school fees etc. for the ease of their clients who are very busy and do not find time for such work. Many of such activities are not profitable in terms of time and efforts spend by the bank. But banks are carrying out such services for mutual benefits, which pays in the long run. Retention of customers and building a long lasting relationship is the main criteria under this concept.

7. Continual improvement Another objective of CRM is the efforts towards continuous improvement in the customer relationship through the provision of value added ser-vices at favorable cost. Business processes in the areas of finance, system integration, human resource management etc. are to be automated and optimized with an aim to increase the efficiency and effectiveness of operations. The major areas to be targeted are:  Improving the effectiveness of marketing.  Implementing multichannel trigger driven marketing.  Implementing a strategic analysis capability to support strategic decision making.  The ability to deliver the increasing levels service demanded by customers.

 Building A Transparent Communication System And Employee Participation To Better Define The Needs Of The Customers And Deliver The Right Services And Products.

28

2.10 TYPES OF CUSTOMER RELATIONSHIP MANAGEMENT 1. OperationalCRM Operational CRM streamlines the business process that includes Sales automation, Marketing automation and Service automation. Main purpose of this type of CRM is to generate leads, convert them into contacts, capture all required details and provide service throughout customer lifecycle. Sales Automation: Sales automation helps an organization to automate sales process. Main purpose of sales automation is to set standard within organization to acquire new customers and deal with existing customers. It organizes information in such a way that the business can meet customers’ needs and increase sales more efficiently and effectively. It includes various CRM sales modules like lead management, contact management, Quote-to-Order management, sales forecasting. Marketing Automation: Main purpose of marketing automation is to find out the best way to offer products and approach potential customers. Major module in marketing automation is campaign management. It enables business to decide effective channel/s (like emails, phone calls, face to face meeting, ads on social media) to reach up to potentials customers. Service Automation: Service automation enables business to retain customers by providing best quality of service and building strong relationship. It includes issue management to fix customers’ problems, customer call management to handle incoming/outgoing calls, service label management to monitor quality of service based on key performance indicators. 2. AnalyticalCRM Analytical CRM helps top management, marketing, sales and support personnel to determine the better way to serve customers. Data analysis is the main function of this type of CRM application. It analyzes customer data, coming from various touch points, to get better insights about current status of an organization. It helps top management to take better decision, marketing executives to understand the campaign effectiveness, sales executives to

29

increase sales and support personnel to improve quality of support and build strong customer relationship. Features of Analytical CRM: 

Gather customer’s information, coming from different channels and analyze data in a structured way



Help organization to set business methodology in Sales, Marketing and Support to improve customer relationship and loyalty



Improve the CRM system effectiveness and analyze key performance indicators, set by business

3. Collaborative CRM Collaborative CRM, sometimes called as Strategic CRM, enables an organization to share customers’ information among various business units like sales team, marketing team, technical and support team. For example, feedback from a support team could be useful for marketing team to approach targeted customers with specific products or services. In real world, each business unit works as an independent group and rarely shares customers’ data with other teams that often causes business losses. Collaborative CRM helps to unite all groups to aim only one goal – use all information to improve the quality of customer service to gain loyalty and acquire new customers to increase sales. Different types of CRM applications have different features and advantages. So before implementing CRM system, it is very much important for a business to decide future goal and strategy. If you want to choose the best CRM for your business, read our article on ‘How to choose the best CRM software for your business‘.

2.11 CRM – A POWERFUL TOOL CRM is a powerful management tool that can be used to exploit sales potential and maximize the value of the customer to the bank. Generally, CRM integrates various components of a business such as sales, marketing, IT and accounting. This strategy may not increase a business's profit today or tomorrow, but it will add customer loyalty to the business. In the long term, CRM produces continuous scrutiny of the bank's business relationship with the customer, thereby increasing the value of the Customer’s business. Although CRM is

30

known to be a relatively new method in managing customer loyalty, it has been used previously by retail businesses for many years. The core objective of modern CRM methodology is to help businesses to use technology and human resources to gain a better view of customer behavior. With this, a business can hope to achieve better customer service, make call centers more efficient, cross-sell products more effectively, simplify marketing and sales processes, identify new customers and increase customer revenues. As an example, banks may keep track of a customer's life stages in order to market appropriate banking products, such as mortgages or credit cards to their customers at the appropriate time. The next stage is to look into the different methods customers' information are gathered, where and how this data is stored and how it is currently being used. For instance, banks may interact with customers in a countless ways via mails, emails, call centers, marketing and advertising. The collected data may flow between operational systems (such as sales and stock systems) and analytical systems that can help sort through these records to identify patterns. Business analysts can then browse through the data to obtain an in-depth view of each customer and identify areas where better services are required.

31

CHAPTER 3 CRM IN INSURANCE

3.1 INTRODUCTION OF CRM IN INSURANCE 3.2 IMPORTANCE OF CRM IN INSURANCE SECTOR 3.3 NEED FOR CRM IN THE INSURANCE INDUSTRY 3.4 SIGNIFICANCE OF CRM IN INSURANCE INDUSTRY 3.5

CUSTOMER

RETENTION

STRATEGIES

IN

INSURANCE

INDUSTRIES 3.6

FOUR KEY REASON FOR IMPLEMENTING CRM IN

INSURANCE 3.7 STRATEGIES FOR IMPLEMENTING CRM IN INSURANCE INDUSTRY

32

3.1 INTRODUCTION OF CRM IN INSURANCE Customer Relationship Management (CRM) is a business process with outcomes that optimize customer satisfaction, revenue and profitability by organizing around customer segmentation, fostering customer satisfying behaviors and implementing customer centric activities. Every time customers approach an office, they arrive with a set of expectations, which may be related to the existing services provided by the company or new needs. What happens next will determine their experience, which in turn will shape their future behavior. A good experience may increase their loyalty and tendency to deal with the insurance company again; while a poor experience may make them take their business to a competitor. The ability to recognize this phenomenon and actively manage it forms the basis of customer relationship management. The promise of customer relationship management is to build a customer-oriented strategy. CRM focuses on nurturing customer loyalty, thereby gaining market share, profitability and business growth. Several commercial CRM insurance packages are available which vary in their approach to CRM. However, as mentioned above, CRM is not just a technology, but rather a comprehensive customer-centric approach to an Organization’s philosophy in dealing with its customers. This includes policies and process, front-of-house customer service, employee training, marketing systems and information management. Hence it is important that any CRM implementation considerations stretch beyond technology, towards the broader organizational requirements. The objectives of a CRM strategy most consider a company’s specific situation and its customer’s needs and expectations. Information gained through CRM initiatives can support the development of marketing strategy by developing the organization’s knowledge in areas such as identifying customer segments, improving customer retention, improving product offerings(by better understanding customer needs),and by identifying the organization’s most profitable customers. CRM strategies can vary in size, complexity and scope. Some companies consider a CRM strategy to only focus on the management of a team of sales people. However, other CRM strategy can cover customer interaction across the entire organization .many commercial CRM insurance packages that are available provide features that serve sales, marketing event management, and project management and finance

33

3.2 IMPORTANCE OF CRM IN INSURANCE SECTOR In recent years insurance companies, like any other service oriented business, have seen the need to increase the importance of the customer and its retention. Moreover, have realized they need to look at customers as their first priority when making decisions. Therefore, a comprehensive CRM strategy addresses three imperatives: to provide a unified customer-centric enterprise viewpoint, to retaining customers with great services and to control costs. For Insurance companies is difficult to really know each individual client. Clients get lost in legacy claims, policy and billing systems. For companies to truly be involved in each customer’s experience there must be a state of mind implemented to all employees. It must be an attitude that echoes throughout the whole company. By achieving this, a customer-centric company, sales efforts are optimized and customer loyalty is strengthened, as individual customers feel that their needs are understood and met in a way that is hopefully fast and convenient. However, that state of mind cannot be implemented blindly. The customer-centric viewpoint is a foundation for a smarter and more efficient system. An insurance company must also discern which customers are more worthy of their time. It must retain customers that give them great results. This does not mean they should ever mistreat average customers, but perhaps give great customers a certain bonus. Giving perks, rewards and discounts are good ways of going about this. Also it is much easier to retain old customers as it is much more expensive to obtain new ones. Finally one must control the companies’ costs as it expands. CRM can be very useful for this. The first key is for sales to know which opportunity will be more efficient. Meaning which opportunity will give them more profit for less time. Salespeople must find high-reward low-risk customers. The second key is to find systems to faster apply sales but to not lose the connection with the customers. The final key is to know when to lose that connection. Unfortunately every interaction can’t be personal; therefore a company must know when to use automation for the more general transactions.

34

3.3 NEED FOR CUSTOMER RELATIONSHIP MANAGEMENT IN THE INSURANCE INDUSTRY The important factors that establish the need for the customer relationship management in the insurance industry are detailed below: i. Cut-throat Competition There is intense competition among the private sector insurance, public sector insurance and foreign insurance companies and they are all striving their best to attract and retain the customers. New technologies, research facilities, globalization of services, the flood of new products and the concept of providing all the facilities under one roof to provide better customer service leading to customer delight do matter today. 8 ii. Well -informed Customers The customers in the insurance industry today are well -informed. New technology has transcended and diversified all geographical limits. Thus, if an insurance company wants to have more customers, it should develop a good relationship with its present customers, whose recommendations may act as an incentive for the entry of future customers. iii. Decline in Brand Loyalty In the present scenario, brand loyalty is on the decline. The customers are switching over frequently to avail themselves of better facilities from other insurance companies. Newer and superior products and services are being introduced continuously in the market. Thus, the insurance companies have to upgrade their products, improve customer service and create bonds of trusts through proper care of customer needs and regular communications. With the help of the customer relationship management, strong customer loyalty and a good image for the organization can be developed. iv. Improved Customer Retention In the intensely competitive insurance industry, retention of existing customer is vital, which can be achieved through the process of the customer relationship management.

3.4 SIGNIFICANCE OF CRM IN INSURANCE INDUSTRY Insurance companies can no longer view the customer from the perspective of specific products or a snapshot one-time transaction. To maximize lifetime profitability from valued customers, companies must move out from the traditional storage tower mindset. Technology, commoditization, deregulation and globalization have changed the face of insurance business forever. The traditional model of the personalized neighborhood insurance activity is outdated, and is now replaced by national and multinational service providers, backed by technology system and a proliferation of product choices. Insurance companies are realizing that they can no longer look at a customer from the perspective of a specific product or a limited time frame, but must visualize the entire long-term customer relationship to fully 35

understand a client's profitability. From a strategic standpoint, insurance company needs to reconsider their traditional focus on product lines. And so, it is time to adopt a comprehensive view of the customer as part of a continuum – not just individual transactions, but a lifetime relationship

3.5

CUSTOMER

RETENTION

STRATEGIES

IN

INSURANCE

INDUSTRIES FINANCIAL BONDS The first level of strategy to retain the customer is through a strong financial bond, tied to the firm primarily through financial incentives, such as lower charges for greater volume of business for customers who have been with the firm for a long time. This involves providing volume discounts and other price incentives to retain market share and build a loyal customer base. SOCIAL BONDS Insurance companies bind customers with long-term relationship through social and interpersonal bonds as well. Social bonds are much more difficult for competitors to immediately replicate than price incentives. ICICI prudential life insurance company prefers to send its customers birthday reminders, festival greeting cards, renewal intimation through emails and fund performance details. CUSTOMIZATION BONDS Mass customization does not mean providing customers with endless choices of solutions that only make them work harder for what they want. STRUCTURAL BONDS Structural bonds are built by providing a combination of services and going beyond the normal routine. For example private life insurance companies now a day’s offer door step services for customers. It will intact good relationship between companies and customers.

36

3.6

FOUR

KEY

REASONS

FOR

IMPLEMENTING

CRMIN

INSURANCE The Winning Factors: While the banking sector’s business does not completely depend on the customer database, the insurance sector cannot exist without a solid set of databases that include existing customers as well as prospective ones. Procuring these databases is also a major challenge in this sector and therefore optimum utilization and proper management of the data could well be the winning or losing factor for a player. In an industry where the competition is so intense, making customer related data accessible to the sales, management and customer service team in the most efficient, cost-effective and timely manner is a challenge for any CRMsolutionprovider. While there are several players in the market, only a few have made a solid market presence that looks sustainable for the next decade. It is also important to note in this case that the total market share of the private players doubled as recently as the last six years. Though most of these players boast of state-of-the-art CRM software, the solutions have evolved with the market. Today, cold calling is no more quintessential for cross-selling and up-selling, customer relations is no longer about the person that walks into the office but about long term relations built through wealth advice and high quality service. Ensuring that the firm is in line with the IRDA regulations and there is ample scope for the launch of a new marketing strategy is no longer a decision made randomly by the board, but a logical deduction from the CRM data that is on the tabletoday. Integration and segregation Two of the biggest functions of CRM in the present market scenario are therefore integration and segregation. Integration of the data from across the various departments and technical, meticulous and efficient segregation of this data related to claims, policy holders, expired/ new policies, corporate clients, prospective clients, third party policy sellers and agents among others is thus essential. A company choosing to upgrade their existing CRM or implementing a new one to keep up with competition should therefore look for high levels of customization when it comes to these two processes. Customer grievances No matter how good an enterprise’s CRM solution, sales, marketing and customer service department, grievances will remain. While 100% customer satisfaction and claim settlement 37

is

an

illusion,

companies

have

no

choice

but

to

strive

for

it.

Some of the common complaints against insurance companies remain delays in claim settlements, inefficient customer care officers, cumbersome paperwork and opaque claims processing routines. Insurance players in the health and life insurance space have to be doubly careful when it comes to handling customers, sentiments can run high and the media can be quick to spread disrepute. Single point of contact for most departments related to customers, easier navigation, interactive online and telephonic presence with friendlier call center executives are some of the solutions that can be implemented apart from high-end CRMsolutions. Changing landscape The customer today has more money and knowledge than ever before. Impressing them with typical CRM tools like seasonal and birthday greetings is no longer effective. The need of the hour is comprehensive KYC packages where personalized and customized services are provided. With the rapid expansion of the customer base, risk management has also emerged as a major challenge and CRM solutions can go a long way in helping companies implement effective measures to manage risks. Solid portfolio management used to be a manual process even a few years ago as there was a great deal of analysis and inference involved. Today, however, CRM solutions have the power to replace the analyst and come up with inferences that can help the sales team make clear decisions.

3.7STRATEGIES FOR IMPLEMENTING CRM IN INSURANCE INDUSTRY OFFER BETTER SERVICE QUALITY AND VALUE Insurance companies need to focus on their quality parameters in services in order to improve customers' purchase behavior of insurance products (i.e., regency, frequency and monetary value). These include: 1. Creditworthiness, performance ratings or credit scoring of customers. 2. Customer survey and data collection. 3. Act as trustees of their funds and invest the funds to their best advantage; 4. Conduct our business with utmost economy and on sound business principles;

38

5. Build and maintain enduring relationship; Keep the customer informed. EFFECTIVE CUSTOMER SEGMENTATION Market segmentation in the insurance industry can be done effectively by applying analytics to determine which services are cross-selling and/or up-selling and to which type of customers. The following four-tier system is useful in categorizing the customers more specifically The Platinum tier comprises of the insurance companies most profitable customers, typically the heavy investors. They are not price sensitive, and are willing to try new offerings.

UNDERSTAND CORRECTLY THE LIFETIME VALUE OF CUSTOMERS Insurance companies face the problem of losing potential customers because of their non performance market fluctuations. This is because insurance companies do not truly understand the customers' lifetime value. Today, insurance companies offer good products to the customers. (For example less allocation charges, minimum amount of fund management and administration charges. And also provide frequent switches of one fund to another fund with free of cost. Loyal customers are thus neglected, risking the potential lifetime value that they provide. MAKE EACH CUSTOMER RELATIONSHIP MORE PROFITABLE As competition today is very stiff and there is high customer mix rate in the insurance industry, insurance companies are looking more than ever towards increasing profitability from existing customers. Naturally, that means insurance companies are keenly interested in cross-selling a variety of financial products to each customer. KNOW YOUR CUSTOMERS BETTER AND RETAIN THEM In a multi-product environment, it is very difficult to measure customer attrition. But there are some qualitative and quantitative factors which bankers can study in-depth to know and retain their profitable customers. They need to understand why some customers leave the insurance company, why other customers stay, and what they expect most from specific insurance services. Also, it is important to know how the insurance companies can change the minds of customers so that they stay on for a longer time. 39

CUSTOMER PROFITABILITY ANALYSIS This involves measuring the profitability of each customer's business, and predicting the lifetime value. This enables the insurance companies to move towards more profitable marketing, sales and service initiatives. PREDICTIVE MIX MODEL TECHNIQUES These are techniques which predict the threshold levels when a customer would switch the insurance company. Techniques such as logistic regression, decision trees and `neural networks' forecast likely product purchases, and also identify customers most likely to stay and customers most likely to leave the company. CONDUCT WHAT-IF ANALYSIS This determines how certain marketing, sales and service initiatives will impact customer profitability; what schemes and offers can attract customers and when to use them. CREDIT SCORING In insurance services, identifying the creditworthiness of customers is extremely necessary to help minimize risk. BUILD NUMEROUS WAYS FOR CUSTOMERS TO CONNECT WITH THE INSURANCE COMPANY. Insurance companies need to build various channels, such as branches, call centers, online access of insurance company, Renewal premium intimation, in insurance companies and kiosks to help customers contact the firm, thereby enhancing convenience. Technology provides convenience and also enhances productivity, while doorstep services insurance business mainly offers better convenience for the customer. DATA WAREHOUSE AND DATA MINING Data warehouse is an important part of any decision support system. The marketing team needs to decide the action plans, such as campaigns, promotions, special marketing initiatives, etc. These plans are then implemented by means of the several channels used by the companies to reach its customers.

40

INTEGRATION OF FRONT OFFICE AND BACK OFFICE Front office and back office should be well connected with each other, even though they differ in their functions like sales force automation, marketing automation and customer services and support. If insurance companies are unable to integrate their front-office and the back-office systems, this would result in significant operational disadvantage in retaining customers. CUSTOMER LIFETIME VALUE To exploit the future profit potential of customers, marketing practioners have realized that `Customer Lifetime Value' (CLV) is extremely important in implementing CRM. The concept of CLV treats each customer (or market segment) as an investment. The goal of marketing is not only to identify potential customers, but to increase business from existing customers through cross-selling. CLV is a forward looking view of wealth creation. It is the net present value of the likely future profit stream from each individual customer or customer segment.

41

CHAPTER 4 ANALYSIS AND INTERPRETATION

42

Fig.01. Are you aware of insurance policy?

4

Yes No 96

Thus,from the above, 96% of people are aware with the insurance policy whereas 4% are not aware. Fig 02. Have you taken any insurance policy? If Yes, which insurance policy?

INSURANCE POLICY 16

Life insurance

42 42

General insurance None of above

Thus,42% of customer having or want life insurance which is also same in the general insurance policy.

43

Fig 03.Did you aware of CRM term?

AWARE OF CRM

Yes

14

No 86

Thus, 86% of people aware with the CRM strategy whereas only 14% of people are not aware. Fig 04. How frequently do you visit to your insurance company?

VITIS IN INSURANCE

20 Weekly

50

24

Bi-Weekly

6

Fortnighly As and when required

44

Thus, Most of the people are preferred to visited in a branch at as when required and bi weekly. Fig 05.How do you feel when you visit to your insurance company?

22

78

Satisfy

Dissatisfy

Thus, 78% of customer feel more satisfied with there insurance policy and 22 % are dissatisfied. Fig 06. While entering to insurance company, what becomes your expectation?

28

40

Reduced cost Anytime Anywhere'

10

22

personalized Better product

45

Thus,While entering into insurance company the customer expectation will mentioned above. Fig 07.Do the employees pay proper attention towards customer?

PROPER ATTENTION

6

16 28

50

Utmost attention High attention Average attention Less attention

Thus,when conducting the survey most of the customers says that the employees pay average attention. Fig 08. Did you find any difficulty while the employees of insurance company perform their task?

10

8

10

14

Always Often Sometimes Rarely Never

58

Thus, sometimes some of the customers find the difficulties related to task. 46

Fig 09. Did employees get involved in argument with you while dealing?

6

8

34

Always often

40

12

Sometimes Rarely Never

Thus,sometimes employees get involved in argument while dealing and others which is mentioned above. Fig 10. How did you find the employees behaviour while attending customer?

EMPLOYEES BEHAVIOUR

4

8

Most cooperative

10

Very cooperative

28

cooperative

50

Non-cooperative Highly non- cooperative

Thus,Employees behaviour while attending the customer is cooperative. 47

Fig 11. Do you think that the insurance should improve their relationship with customer?

18

Yes

82

No

Thus, 82% of customers feel that the insurance should improve thererelationship. Fig 12. Are you satisfied with the management of this insurance company?

MANAGEMENT SATISFIED

Yes

30

No 70

Thus, 70% of people are satisfied with there insurance policy. Fig 13. How much time do you stand in queue operate your policy?

48

OPERATE YOUR POLICY Up to 10 minutes

24

30

11-20 minutes

21-30 minutes

14

32

Above 30 minutes

Thus,Most of the people spend there time above the 30 minutes. Fig 14.How soon your problems are handled by the insurance company?

14 46 40

Very soon Late Ignored

Thus,The insurance company handled there problems which is mentioned above.

CHAPTER 5

49

SUGGESTION  To educate the customer about the new product, the company can use sms service for reading its customer. Due to large number of customer, the reach of the entire customer in less time may not be possible from its advisors and sales office. This can be a less costly medium of taking direct response of the customer.  Insurance companies should improve their service and leap ahead in customer relationship management by maintaining separate database for high valued customers. Maintaining a comprehensive and exhaustive database indicates as to how Insurance companies can use this information to tap the customers and retain the customers.  Insurance companies do not contact their customers very often. To improve upon relationship, Insurance companies should go in for continual contact with customers. “They should contact their high value customers from time to time and also send updates about latest development in their Insurance companies.  Although all Insurance companies have a relationship manager but objectives and role of managers is not clearly defined. They are being utilized for Marketing, Finance and various other purposes which distract them from real objective of CRM.  All Insurance companies are not actually making an attempt to measure the effectiveness of CRM. The tools for measuring effectiveness are not widely used.  The insurance companies who do not perceive a difference in conventional and relationship marketing should try to change their point of view of they want to survive through cut throat competition from other Insurance companies.  Insurance companies should hold a CRM training workshop with customer facing employees to develop and in still a new attitude to creativity and innovation.  The insurance companies should do proper planning for relationship management.

50

CONCLUSION

 Insurance sector in India is a booming sector and tremendous growth in the past few years.  Affirmative view of the customer about owning an insurance policy which proved that insurance is a need of the day.  Insurance companies have started developing specific CRM iniative to retain customer.  Policy holders also acknowledge the presence of such CRM iniative.  Though many initiatives have been taken up by companies, still CRM in insurance sector is at a nascent stage.  CRM solution can go a long way in helping companies implement effective measures to manage risk.  CRM solution can help the sales team make clear decision.  This research reveals that customer relationship can be improved using information system, and this is being adopted and albeit gradually by the insurance companies in India.  After making the whole project I found that the use of I T can enhance service delivery.  In summary, the study revealed that CRM and IT, if effectively and appropriately combined in service delivery, would minimize delay in customer service delivery and ultimately result in increased profit.  It is to foregone conclusion that none of the policyholders is in the habit of reading and understanding all the policy condition.

51

ANNEXURE

52

53

54

55

Name: Address: Gender: Age:

qualification:

Occupation:

56

1. Are you aware of insurance policy? a) Yes

b) No

2. Have you taken any insurance policy? If yes, Which Insurance Policy? a) Life Insurance b) General Insurance c) None of Above 3. Are you aware of the concept CRM ? a) Yes

b) No

4. How frequently do you visit to your Insurance Policy? a) Weekly b) Bi-Weekly c) Fortnightly d) As and when required 5. How do you feel when you visit to your Insurance company? a) Satisfy

b) dissatisfy

6. While entering to Insurance Company, What becomes your expectation? a) Service at reduced cost b) Service ‘Anytime Anywhere.’ c) Personalized services d) Better service and products. 7. Do the employees pay proper attention towards customer? a) Utmost attention c) Average attention

b) High attention d) less attention 57

8. Did you find any difficulty while the employees of insurance company perform their task? a) Always

b) Often

c) Sometimes

d) Rarely

e) Never 9. Did employees get involved in argument with you while dealing? a) Always

b) Often

c) Sometimes

d) Rarely

e) Never 10. How did you find the employees behavior while attention customer? a) Most cooperative

b) Very cooperative

c) Cooperative

d) Non- cooperative

e) Highly non cooperative

11. Do you think that the Insurance should improve their relationship with customer? a) Yes, I think b) No, It is not necessary 12. Are you satisfied with the management of this Insurance Company? a) Yes

b) No

13. How much time do you stand in queue for operate your policy? a) Up to 10 minutes

b) 11-20 minutes

c) 21-30 minutes

d) Above 30 minutes

14. How soon your problems are handled by the insurance company? a) Very soon

b) Late 58

c) Ignored

59

REFERENCE

WED SITES: www.google.com www.wikipedia.com www.ijmfo.com www.investopedia.com

BOOK: Customer relationship management in banking and insurance DR. SHRADDHA MAYURESH BHOME

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