Riding the Whirlwind

Strategic Interactive Marketing for the Insurance Industry

Key Points:

Recommendations

Strategic Interactive Marketing needs to be customer, not technology driven.

Vision and frameworks will help to avoid fragmentation and wasteful developments in this unpredictable environment.

It needs a new step-by-step approach that promotes two-way dialogue, understands real needs and develops trust.

This report describes the SIM Framework based on 3 cycles: the Relationship Cycle, the Purchasing Cycle and the Communications Cycle.

Consumers are using the new mediums to support a Pull strategy. Companies must use Push mode to direct these consumers.

2.4 Recommendations

2.4.1 Strategic Interactive Marketing needs to be customer driven, not technology driven. Technology can enable new paradigms but cultural and social reasons may prevent their adoption. Action by competitors and non-competitors (e.g. media barons) may be the biggest influence.

- Vision and Frameworks -

2.4.2 It is difficult to define precise plans when the technology and market place are developing so quickly and in unpredictable ways. A Vision provides a picture of the future. It helps to avoid fragmentation and wasteful developments. A useful means of creating a vision are scenarios as they avoid reliance on a single view of the future.

2.4.3 A framework is provided for organisations to develop their specific offerings. It includes models, processes, techniques, and technology solutions.

2.4.4 The ultimate form of Relationship Marketing is 1-to-1 Marketing, but if organisations consider this unattainable or undesirable they can implement it to a lesser degree.

2.4.5 Most current uses of the new interactive mediums employ one-way mass communications but with electronic mediums users can erect electronic barriers. "Shouting louder" has no effect what-so-ever. It needs a new step-by-step approach; one that promotes two-way dialogue, understands real needs and develops trust.

2.4.6 The Customer Acquisition & Ownership Cycle provides a framework for analysing communications. Each stage has different information needs, a learning element, and a series of linked communications.

2.4.7 Consumers are using the new mediums to support a Pull strategy whereby they have the initiative. This has significant implications for companies who must seek new ways of using Push mode to direct consumers.

2.4.8 Push mode requires a base of personal information on customers. Using this information customers are sent highly targeted and personalised communications. It must include some form of enticement, not to buy, but to communicate back. In return for the "enticement" customers are asked for further personal information.

All mediums need including and they must be used in an integrated way. This requires co-ordination within organisations and with distributors. Customers need a choice of which medium to use.

An Architecture helps to turn vision into reality. At a high level, it is likely to consist of front-end delivery systems, back-end customer databases & legacy systems, and a middle "glue" layer.

Developing an architecture is a major undertaking but fortunately "off the shelf" adaptable frameworks are available for the insurance industry.

Key components of the architecture include:

• a product metabase.
• a policy database based on Object Technology.

_{- Include all Mediums -}

2.4.9 There is a need to include all mediums, both current and planned acquisitions. There may be opportunities to help customers acquire and learn how to use them, an initiative that well involves partnerships with suppliers. The mediums must be used in an integrated way and this requires co-ordination within the organisation and with distributors. Customer's choice of mediums needs to reflect their ownership of the mediums, their preferences and capabilities.

2.4.10 An Architecture helps to turn vision into reality. It provides a framework for identifying interfaces, and for creating a co-ordinated development plan. At a high level, an architecture is likely to consist of front-end delivery systems, back-end customer databases & legacy systems, and a middle "glue" layer.

- Insurance Frameworks Available -

2.4.11 Developing an architecture is a major undertaking but "off the shelf" frameworks are available for the insurance industry. They have supporting tools for tailoring the framework to the company's own situation.

2.4.12 A product metabase is a key component. It is a definitive description of a company's products and services including the processing rules. Computer systems, staff and customers will all use it.

2.4.13 The policy database based on Object Technology provides a robust means of capturing all the unique attributes of each contract. Customer databases will hold "soft" & "hard" data.

2.4.14 Business Objects become the main components rather than product systems.

2.4.15 Processes need to strike a balance between automation, flexible response, and ROI. Processes and staff capabilities need to be in harmony.

2.4.16 Communications databases record all customer interactions. Marketing rules trigger unique and targeted messages to customers when specific events occur.

• use of Business Objects as the main application component.
• processes that strike a balance between automation, flexible response, and ROI.
• communications database to record all customer interactions

- Middleware Links Old to New -

2.4.17 Middleware has two key roles: it "glues" together legacy systems to the new distribution mediums; and it supports distributed component based systems for greater flexibility and reliability.

2.4.18 Distributed objects allow different companies in the value chain to interoperate in a way that is transparent to the customer.

2.4.19 A telecommunications infrastructure must provide security, reliability, responsiveness, support for a variety of end-user devices and different media formats, and links to a variety of locations, possibly via 3rd party networks.

• use of marketing rules to trigger unique and targeted messages to customers when specific events occur.
• a middleware to "glue" together legacy systems and to distribute the components.
• a robust and secure telecommunications infrastructure.

An incremental approach to implementation is recommended and it may be necessary to take a long term view. Risk management and active project management are vital.

Effective use of the new mediums requires an agile and responsive organisation. The management style is likely to be a mixture of self management and task management.

- Incremental Approach -

2.4.20 After creating the vision and overall architecture it is best to implement using an incremental approach. This allows adaptation in response to organisational learning, customer adoption, and new technological advances. It minimises the cost of likely "blind alleys".

2.4.21 It may be necessary to take a long term view. A vision and a strategy, which relates to the long term survival and prosperity of the company, provides the justification. Risk management and active project management are vital.

- Agile Organisation -

2.4.22 Effective use of the new mediums requires an agile and responsive organisation. Existing capabilities need assessing and where necessary enhanced. McKinsey's 7 S's model helps organisations to identify the areas to address. Developing Shared Values and Beliefs linked to the Vision is a key to developing all the other aspects.

2.4.23 Strategy defines key actions and capabilities along the major dimensions of marketing, product & service development, sales and channel distribution, business systems and processes, and management of alliances & partnerships.

2.4.24 Systems require capabilities in both information technology and in organisational processes, methods and controls.

2.4.25 Staff need the skills and aptitude for developing customer relationships, service and sales.

2.4.26 The management style is likely to be a mixture of self management for customer facing activities and task management for organisational activities.

2.4.27 Network structures support a responsive and result oriented organisation.

2.4.28 For staff to develop appropriate new skills requires a learning environment.