With a century of success and a rock-solid reputation behind it, this Swiss insurer could have rested on its laurels. Instead, it turned things upside down-and came out on top.

CSS VERSICHERUNG

Putting a premium on loyalty

by Karen D. Schwartz

SS Versicherung has enjoyed a century of near-continuous growth, thanks to its focus on providing personalized service in the sometimes-impersonal health insurance industry. The company's Swiss client base now numbers 1.2 million, and the company's 2,000 employees process some 8 million claims every year.

But growth, no matter how welcome, brings growing pains. About 10 years ago, the company decided to bring hundreds of CSS agencies back under the corporate umbrella-a wise move that nonetheless overloaded IT systems with a crushing volume of client, claims and billing data. In fact, the vast amount of data the company now had to collect and process was threatening its reputation as a caring, family-oriented insurance provider.

It was reputation that originally propelled CSS Versicherung to its position as the largest single-brand health insurer in Switzerland. Company executives knew that maintaining a family focus was vital, especially as the Swiss insurance market became increasingly competitive. It soon became clear that, in order to succeed as it moved into its second century, CSS Versicherung had to get back to basics-and that meant putting clients first.

Reto Dahinden, CSS Verisherung's claims director

Diagnosis: System overload
The goal, says Claims Director Reto Dahinden, was to surprise and delight clients with insight and compassion by helping them find the most effective treatment, negotiating favorable terms with doctors and hospitals, providing prompt payments and ensuring that clients had the insurance package most appropriate for their needs.

Reaching that goal was a challenge, given the limitations of the company's existing database, salesforce automation system and homegrown claims information system. These systems were no longer able to even process mission-critical data, much less analyze the data in ways that would help CSS Versicherung better serve its clients. "We weren't able to even calculate premiums anymore, because there was so much data and it took so long," says Dominik Bardenhofer, head of campaign management.

To manage client and business data more effectively, company leaders decided in 1998 to implement an enterprise-wide Teradata Warehouse. The system, which stores all of the business's data, has enabled the organization to solve its most pressing problem. Premiums, which previously took weeks to calculate-if they could be calculated at all-now take just a few hours. "If you can't calculate premiums quickly or can't calculate them at all, customers won't sign up," Bardenhofer notes. "In other cases, we would have to estimate the premiums, and if we were off, we would lose money."

Another primary use of the data warehouse is to analyze and compare invoices-a difficult project, considering that few of the country's 14,000 physicians use the same codes and tariffs for the same illness. "There are dozens of ways to treat the flu, and by comparing invoices from different doctors, you can find out which are more cost-effective and which work best," Dahinden explains. "That keeps our costs lower, and that's the ultimate goal." Similarly, the system allows the company's staff to negotiate effectively with more than 400 hospitals so clients can use the hospitals that are most cost-effective and medically sound.

Treatment: Data analysis
After the company's core processes were under control, Bardenhofer and his team began exploring the system's other capabilities. Although they knew it was capable of customer relationship management (CRM) tasks, they were pleasantly surprised by the possibilities and began to rethink the way the company approaches its clients.

Health insurance for every man, woman and child ALTHOUGH MANY BELIEVE THAT THE HEALTHCARE SYSTEM in the United States is the world's most complex, the Swiss healthcare system is a strong contender for the title. This is due in large part to the fact that doctors and hospitals are not restrictedon how they can treat an illness. Additionally, all Swiss citizens must pay for services upfront and then request reimbursement from their insurance company. Add to that significant billing complexity-Swiss doctors charge separately for each health-related product or service, even if it's dispensing one pill-and you've got a healthcare system that's every bit as difficult to navigate and maneuver as those of much larger countries. For Swiss health insurance companies, this complicated set of rules and regulations necessitates a carefully orchestrated approach to developing and selling insurance policies. The news isn't all bad, however. Thanks to the 1994 Swiss Federal Law on Compulsory Health Care, all citizens must carry health insurance that provides payment for sickness, accidents and maternity, and they are required to provide proof of insurance at every turn, whether visiting a physician or applying to move into a new community. But just because everyone must have health insurance doesn't make it an easy sell. Reto Dahinden, claims director at CSS Versicherung, says, "It certainly creates opportunity if you can figure out who is a candidate for each type of insurance, but to do that effectively, we still have to learn everything we can about our customers so we can target the most appropriate products to them."

The biggest change, Dahinden says, is a switch from less-effective mass campaigns to more-effective one-to-one marketing. Today, CSS Versicherung uses the client information contained in its Teradata Warehouse to mount sophisticated CRM analyses and campaigns, enabling it to reap big rewards by streamlining its marketing efforts.

More than anything, executives are excited by the prospect of strengthening the company's position as a family-focused insurance provider.

"We can now create marketingcampaigns based on family-focused events, such as expecting a child, moving to a larger home, or the third birthday of a child, which might spark the purchase of dental insurance for that child," Dahinden says.

One of the biggest CRM successes the company has had to date is in the area of event-driven marketing-a client-oriented marketing strategy in which every marketing effort is customized for the recipient. The system can coordinate and analyze all detailed information stored in the data warehouse for a particular client, such as claims information, prescription information and medical diagnoses.

"It allows us to define which customers we should contact. If the customer has a chronic disease or illness, for example, we would have the information to tell him that he should consider changing medications or treatments," Bardenhofer explains.

The ability to analyze data at such a granular level has helped bolster the company's sales efforts. In the past, salespeople were forced to conduct cold calls to convince an existing client to make needed changes. But with event-driven marketing, "salespeople now have a reason to call the client. You've given the salesperson all the information he needs to sell the client the product he needs," Bardenhofer says. He estimates that the new system generates about 85,000 sales leads per year, 15% of which turn into actual sales. That's significant given that the industry average is 0.5%-3%.

The system lets CSS Versicherung conduct more effective upselling and cross-selling campaigns. "We've always had the customer's basic information, but we've never been able to use it effectively," Bardenhofer notes. "Now we can take that information, such as notice of an impending birth, and try to sell that customer a policy more suited to a family than a couple."

Dominik Bardenhofer, CSS Versicherung's head of campaign management

CSS Versicherung has begun using the system to conduct both demand- and potential-based segmentation. Based on the answers to a series of seven to 10 "power questions," the system can now separate luxury-focused clients from price-sensitive clients, allowing for more appropriate marketing messaging. The procedure is much the same for potential-based marketing, which uses collected data to create a value for each client. The value determines whether a client should receive additional product offers. It also keeps salespeople from trying to sell too many products to clients who may not need or want them.

Bardenhofer expects the CRM effort to pay off well in the long run, not only in increased sales, but also in increased client loyalty. He says, "Our customers are always pleasantly surprised when we contact them about an impending birth or special birthday, because normally, once you are insured, you never hear from your insurer. It's a great way to build customer loyalty."

Prognosis: Excellent
There are always adjustments to be made when adopting a new way of doing business. For CSS Versicherung's employees, the new system has created a corporate environment where employees are required to perform much more detailed analysis and negotiations. But the biggest change has occurred in the salesforce. Long accustomed to making cold calls and receiving little or no management support, salespeople can now effectively approach clients and prospects based on leads generated by the Teradata system. Management has also gained valuable insight into sales activities and is now able to manage and support the department more proactively.

In the box Teradata Warehouse powered by: Teradata Database V2R4.1, 4 node 5150 NCR Server (production), 4 node 4700 NCR Server (T&D) Storage: 1.59TB total disk space Operating System: UNIX MP-RAS Teradata Utilities: REEL/ASF2, BTEQ, FastExport, FastLoad, MultiLoad, MVS Host Utilities Tools/Apps.: Business Objects, Cognos

"This technology allows us to see who is doing what on a daily basis, so they have to make their quotas," Dahinden explains. "It takes some adjustment to get used to doing business this way." Ultimately, however, the system makes every sale a little easier to get, thanks to detailed client information.

As company executives become more comfortable with the system, they plan to make even more effective use of its capabilities. One goal is to expand event-based marketing campaigns beyond existing clients to reach prospective clients. Although collecting enough data to make such a marketing campaign effective will be difficult, it's far from impossible. "We are constantly surprised by what we can do with this system," Dahinden says. T

Karen D. Schwartz has written for Information Week, CIO and Business 2.0.

GLOBE ILLUSTRATION BY SIMON SHAW

Teradata Magazine - Q3 2003