While many companies have been disappointed with the results of their CRM investments, American National Insurance Company (ANICO) is bucking the trend and making Customer Relationship Management (CRM) work. At LOMA’s Emerging Technology Conference, Gary W. Kirkham, vice president and director of planning and support, American National Insurance Company, discussed how ANICO is using advanced technology to expedite access to legacy system data, reduce agent training time, ensure consistent delivery of information and eliminate redundant work processes.

American National has a long history of prosperity. Founded in 1905, the company has seen 98 years of growth and profitability and 92 consecutive years of dividends. With 3.4 million policyholders and $2.2 billion (US) in revenue, American National continues to prosper. But keeping its world-class customers happy takes dedication, dependability and the willingness to change internal support processes.

ANICO set out to optimize its customer support activities and build for flexibility and change. This was no easy task when you consider all of its distribution channels—captive agents, independent agents and direct marketing. Plus the company covers almost all the product lines.

The company’s success is a result of a long-term business strategy built on product and channel diversification. This is a challenge for information technology because the strategy has resulted in an array of different platforms. "We were looking for an approach to more effectively service our customers across four different platforms," stated Kirkham.

"Our original goal was simply to make the customer service representatives’ interactions with the back-end systems a little easier. ANICO faced obstacles when trying to get the right information in the right hand at the right time. Customer Service Representatives (CSRs) were ‘dive-bombing’ into multiple legacy systems by different paths to get needed customer information," Kirkham explained. Although the CSRs’ efforts to service customers were valiant, the results were inconsistent, statistically out of control and ineffective. Furthermore, training CSRs to navigate multiple systems was costly and a constraint on the growth. Finally, the caller abandonment rates were totally unacceptable.

"Software is never the sole solution to a business problem. Software is an enabler; other things have to happen to achieve success in the long run. You really have to change the DNA of the business," Kirkham said. The company needed a business solution that was rules controlled and process-driven, a solution that could meet ANICO’s requirements. "We had studied the concept of a single work station for our customer service reps," Kirkham said. The company piloted several different approaches before it came across information about PegaSystems.

At this point the company decided to research various products to see which fit best with its needs. "We went to Gartner Group in late 1997. At that time Gartner said, ‘as far as CRM rules and processes it is a crowded market with no real winner at this time. You will see significant shifts before you complete the implementation.’ I love Gartner but that wasn’t a whole lot of help," Kirkham said. "PegaSystems drew our attention because the interfacing they had developed for the banking industry went against a lot of the same legacy systems that we had."

In the process of researching different software vendors, ANICO discovered that General Electric (GE) was a customer of PegaSystems. "When we found out that GE was one of their customers, one of the first things my boss wanted to do was visit their installation," Kirkham said. "So the marketing team at PegaSystems passed the message that a customer would like to visit its site." GE would not agree to let a competitor come onsite to look at its implementation, but was happy to talk to ANICO over the telephone. "It was a wonderful telephone call. We were very appreciative; they answered all the questions we had about the implementation."

In the first quarter of 1998, ANICO signed a contract with PegaSystems and work began on two parallel efforts. While PegaSystems was working with ANICO’s technical staff to install the base system, ANICO’s health and credit insurance groups began developing process workflow. "We started documenting our "as-is" business processes immediately. We trained workflow architects. One thing we did differently with the project was put the business unit’s subject matter expert in the middle of the requirements definition process. With storyboards and prototyping we could quickly develop "as is" and "to be" models of the business process. We talked to the heads of each division and they were able to produce a clear and articulate spectrum about what they wanted to achieve with this product," Kirkham said. "For example, the credit insurance senior vice president had twelve vital questions he sought answers to in order to service its agents and support teams. Independent marketing knew they wanted to deliver ‘gold’ service for those who produced the profits for the company. Health knew that they had a very complex environment and needed phased project deliverables ‘staged’ over time to deliver benefit along the way without delivering a blockbuster size project."

ANICO created a somewhat nontraditional development team model. "We put together a development team model, with the business process expert in the center. The business process expert knew how the business process worked. There was no need to educate the technical people on the business process," Kirkham said. "We actually trained the business users. In many cases the new workflow architects had been CSRs—actually working on the telephone. These individuals had great knowledge of what was wrong with the old process and the way the old methods worked. They had documented it and knew what needed to be done. We also had good technical people who knew the source data."

Why are processes and rules so important? Kirkham explained that processes make "work" visible. When work is invisible everyone carries their own version of the process around in their head. When a process is visible, then it can be measured, analyzed and optimized. "When you can draw a process and put it up on the wall then you can get people to talk about it," Kirkham said. By documenting its processes ANICO was able to keep them visible, and have a level of consistency in the processes that it had never had before. Also, visible interfaces are easier to engineer.

According to Kirkham, most failures of processes occur at handoff points or organizational boundaries. Having your processes documented can help eliminate the confusion and inconsistency that can often occur at these points.

ANICO used the formula y = f(x1, x2, x3…xn) in developing its processes. The variable y represents the desired outcome, and x1, x2 and x3 are variables that the individual can control to affect that outcome. "This formula is the heart of the process development methodology," Kirkham said. "Effective processes have to be documented, communicated among the team, measured and refined. Well defined processes are the engine for growth and success."

Once ANICO develops and documents a process the company still spends time trying to make the processes better and more efficient. Over time the company has developed a series of standards and guidelines that lead its processes. The company also has a very refined process by which it develops the workflows that make its standards.

There are several factors that can hinder processes in an organization. ANICO did its research to try and avoid these problems. "According to a chart from Gartner Group there are seven areas that kill processes in organizations," Kirkham said. "Number one is technology driven thinking. Business driven thinking that is aimed at the process reveals a totally different picture. You can’t stay at too high a level in defining processes. You really have to get down to the ‘step’ level where the real work occurs. The business unit subject matter experts (SMEs) spent a tremendous amount of time reeducating our whole team on how the business really functions. There have been changes in the business that warranted this reeducation, particularly with all the changes in regulations such as HIPAA, Graham Leach Bliley, USA PATRIOT Act, and many more. Some companies have cultural aversion to process. Fortunately, we did not. There is true benefit in being able to do things in a standardized way. Another reason Gartner sited that processes failed was the lack of sound methods to capture the voice of the user. The voice of the user is key to this process. You need to know what the user thinks about the process, if the process really helps the ultimate customer and if it really adds value."

Processes and rules are separate. Logically, ANICO developed its processes first, then developed the supporting business rules. This worked well since business rules guide processes. "Business rules are those decisions that you want to be able to codify as opposed to letting the CSR make those decisions themselves," Kirkham explained. "That is not to say that the CSRs are not in power, they add tremendous power to the system; but there are certain rules for regulatory reasons that we want the CSR to have within the system."

For example, certain prompts occur on the CSR’s screen depending on who is calling. When an individual calls in about a personal health plan, the first step for the CSR is to answer screen questions to verify who is calling. The CSR needs to determine if the caller is the primary insured, power of attorney, signature holder, beneficiary, agent, or relative. If it is the primary insured, there are questions that the caller must answer that are truly "gatekeeper" questions. Only if the caller can answer those questions, will the CSR proceed.

"We are basically leaving no room for error," Kirkham said. "These rules were invoked and they are standard. There are additional workflows that are only available if you are the primary insured. No judgement is made by the CSR; the information is basically just delivered step by step according to the program."

Over the five years that ANICO has been making these changes the company has learned that defining and adopting processes and rules is a huge organizational and cultural change. "It is not natural to write down what you do. Also, as we move the CSRs away from the old application system we have seen tremendous pushback, because they have learned how to do it the old way. They knew how to navigate the old application system; they knew what to do," Kirkham said. "However, we have been able to assimilate new people and train them in a very short period of time. They aren’t required to know the underlying systems; they just focus on the customer needs and the easy to use front-end interface."

According to Kirkham one of the most difficult things to do was keep the business case and business results in front of the project team. "Technical project teams like the technology. We made some sound decisions in 1998, but a lot has happened in the world of technology since then," Kirkham said. "We made sound decisions in our choice of operating systems. NT 4.0 was the first stable operating system that we chose to go with. The other key thing was TCP/IP behind the firewall. But our team is truly focussed on business benefit, not the latest platform."

You may be surprised by how little it takes to support these call centers. According to Kirkham, ANICO has six employees in the business unit that work on workflows and four full time employees that support the Pegasystems applications. They also have the equivalent of two full time employees in operations that work in the workstations, do security, the helpdesk, and the operating system. "With that group of people we support four call centers, over 150 CSRs and about 2.1 million calls on an annual basis," Kirkham said.

ANICO learned many things along the way. The company learned that the scope and requirements are not major issues if the business unit can utilize the storyboards, prototyping, process and rule engines. ANICO also learned that building partnerships with your vendor is key. "Make your vendor understand how important the project is to your business," Kirkham said. "It has to be a true partnership. They need to understand your business; you don’t want to be just another customer to them. They have to get to know you."

The third area that was really critical was obtaining executive support for a cross-functional Customer Service Action Team (CSAT). Having a CSAT helped focus attention on results. "One of the key things when you implement something like this corporate wide and getting it to stick is having commitment from many levels," he explained. "We implemented this team that had those key individuals."

"We have been in this now for two and a half years and some of the internal best practices that have come out of this have had to do with workforce schedule, and developing additional call center metrics. One of the implementations last year was a quality monitoring system where we actually monitored what our CSRs were saying to the customers," Kirkham said. "It has been extremely helpful being able to look at how the CSRs are appearing to our customers through the system."

ANICO now has four contact centers—a Multiple Line Assistance Center, Independent Marketing Group-Field Support Center, Credit Insurance Customer Service Center and Health Customer Service Center. Once a month ANICO’s Executive Council is delivered a report from all of its contact centers. The report details how the centers are doing against industry standards. "These centers are watched very closely," Kirkham explained. "We are hoping to get recognition for the program and the success we have had with process-centered thinking here at American National."

The business driver for ANICO’s Multiple Line Assistance Center was to give product support and education for agents of a newly acquired company. "After the Independent Marketing call center was developed, our other field forces saw the benefits of it," Kirkham said. "We acquired a property and casualty company in New York and wanted to get this support center up and running quickly to leverage our products across a larger base."

"Our team effectively took the IMG help support center and modified it for this group. It has been in place for about three years. New and enhanced capabilities have made all the difference," Kirkham said. "We have increased monitoring capabilities to manage ACR (Assistance Center Representative) performance, enhanced the CRM application to better manage customer contact, and applied principles of workforce management and staffing." With its Multiple Line Assistance Center, ANICO has measured the average speed to answer; obviously the faster the company can answer the phone and service who is calling the better. ANICO also evaluated the average handling time. This is important because the average handling time is a product of how long the call has been with the ACR and what the call account was like. Grade of service was another aspect that was measured. If more callers receive prompt service then fewer callers will abandon. And fewer callers will complain, thus employees normally experience less stress. So the company measured the number of calls being answered as well as abandonment rates (the number of callers who just gave up because their call was not answered quickly). ACR capacity was also analyzed to see how the average handling time could be reduced.

The third center is the Life Customer Service Center. "As life insurance moved from death protection to wealth accumulation, conservation, upselling and cross-selling becomes strategic," Kirkham said. ANICO’s life customer service operations are not yet converted to PegaSystems, however the preliminary work has been done.

Health is a very complex business and can be intense with respect to being with a customer on a claim. "Our Health Customer Service Call Center is the poster child of call centers," Kirkham said. "We have been doing it for five years and have been able to maintain stable and consistent processes."

ANICO has been very pleased with the success of its Health Customer Service Call Center. "Since we implemented in 1998, we have had an overall reduction of 71 percent in caller abandonment rates," said Kirkham. "We had a 37 percent reduction in caller abandonment rates in the poorest performing year. We had a 61 percent improvement in average speed to answer and 38 percent in our poorest performing year. We are striving to have a 10 to 20 second guaranteed time in which IMG third-party agents have their questions answered."

When you implement a project like this it is important to reflect back on the order of change. Originally, ANICO changed how it did things. Now the company is beginning to change what it does. "We are trying to access the different kinds of customers that are calling us," Kirkham explained. "We are asking who is calling—is it the agent or the insured? Why are they calling? We are evaluating how long it takes to complete these transactions, whether the process delivered the desired results, and if the customer was satisfied with the results and the process."

ANICO envisions this technology growing and spilling into other areas of its business. "We believe in this technology and we believe that this is going to carry into other areas. We also believe in process and that our customers should be able to access us as they choose," Kirkham said. "We want the customer profile to help us assist in servicing that customer. We want measurements, metrics of the total process."

There are several key factors that helped ANICO’s CRM operations become a success. "Number one," Kirkham said, "the business units had a clear business vision and goals. We have been blessed with team players. The teams started with business process. They established an effective design by those who know the business process and rules and an effective connection to the information by those who know the systems. We had team players with "we can" attitudes, little or no politics and strong support from management. The entire team learned the importance of measurement, analysis and continuous improvement. We guessed right a few times based on our collective experience and we have learned from our mistakes. We have a good base technology (DB2, NT, TCP/IP) and we chose a very flexible and adaptable product (PegaSystems). We have been able to make any change that the user has needed us to make."

The cross-functional team was also really important to ANICO’s success on this project. "This team created and maintained executive level, top of mind awareness of a corporate-wide CRM initiative;" Kirkham said, "and provided standards, addressed common needs; educated internally through best-in-class examples; and validated the concepts and practices of the real world."

By coordinating its rules and processes to achieve consistency, ANICO has been able to enhance the quality of its call centers and allow its CRM operations to be a success. The company’s success with this project has allowed them to expedite access to legacy system data, reduce agent training time, ensure consistent delivery of information and eliminate redundant work processes. ANICO discovered that CRM can add value to your organization, but you have to be willing to change.

* * * * *

For more information on LOMA’s technology products and services, visit www.loma.org/imindex.htm.