Ensuring satisfaction
Editor's note: Sally Martin is a management consultant with General American Insurance, St. Louis, and Susan Spaulding is president of Market Directions, Inc., a Kansas City, Mo., research firm.
Whether or not the Clinton administration finds a way to get its health care reforms through Congress, insurance companies in the 1990s and beyond will have to be extremely competitive to survive. Even if the administration fails, the continuing explosive growth of the industry will demand further consolidation.
To retain their customer base, health insurance providers large and small must be very attuned to meeting customers' needs. Nowhere is that need more apparent than in group coverage - the meat and potatoes of industry earnings.
General American Insurance, a St. Louis firm with $197 billion in life insurance and $8.6 billion in assets, recently launched an internal and external assessment of customer satisfaction with its group insurance operations. General American has 2,000 group insurance clients, covering 2 million employees and dependents with group medical and life insurance.
The company's management consulting services, which structured and managed the project, sought the help of two firms with the research. It called on TARP inc., an Arlington, Va., customer service consulting firm, for help with creating a model of how General American's employees contribute to customer satisfaction. To talk to its customers, General American retained Market Directions, Inc., a Kansas City, Mo., research firm.
Market Directions explored customers' satisfaction and dissatisfaction through in-depth interviews, focus groups and telephone interviews, and then prioritized the factors that respondents said contributed most to satisfaction.
Service gaps
While the external assessment focused on the gap between the service customers wanted and what they felt they were receiving, the internal assessment focused on the gap between the service employees felt they were delivering versus what they would like to deliver. For the internal research, General American's consulting group looked into the effectiveness of the existing customer service system, relying heavily on observation and staff interviews. The General American consulting group monitored service representatives and interviewed 160 employees, most of whom worked in Group Operations.
The internal assessment was launched to identify organizational and operational barriers that prevented the company from delivering outstanding customer service. The system General American had in place for handling customer contact was analyzed using TARP's 19-function framework, which assesses the effectiveness of 19 customer contact functions such as screening calls, formulating responses to customer inquiries and using customer contact data to shape internal policies. General American employees were asked to identify what was preventing them from serving their customers better.
In the external assessment, Market Directions used qualitative and quantitative techniques, exploring satisfaction in various areas though interviews with brokers, benefit administrators and employees of client companies. Focus groups were conducted with benefit administrators and employees; in-depth telephone interviews were conducted with brokers.
The group sessions began by defining satisfaction in the eyes of General American customers. The core elements of satisfaction were then prioritized based on importance. Using a probing technique called laddering, the most important factors were explored, helping Market Directions uncover the ultimate benefit of each to the individual and, therefore, to General American.
The results of the qualitative assessment provided the basis for the quantification, the objectives of which were to investigate overall satisfaction, validate which factors were important to satisfaction, learn how well the insurance company performs and determine which factors most directly affect customer satisfaction. Based on what they found, General American's consulting group and Market Directions recommended areas needing improvement.
Hundreds of interviews
After conducting more than 300 telephone interviews with benefit administrators and 500 personal interviews with client- company employees, Market Directions compiled rankings of the most important factors involved in customer satisfaction. The employees noted claims processing, consistent coverage, and prompt, professional telephone service, among others.
The exact areas of customer satisfaction Market Directions measured were reliability (performing promised service adequately); responsiveness (willingness to help customers and provide prompt service); competence (having the skill and knowledge needed to perform the service); courtesy (demonstrating respect, consideration and friendliness); access (being readily approachable and easily contacted); communication (informing customers in a way they understand); and customer needs (understanding what the customer wants).
Advanced analysis was applied to routine cross tabs. Quadrant analysis provided an excellent look into the external assessment of General American and showed the company what was important and what needed to be improved on for high performance ratings. Factor analysis identified which attributes were most important, and regression analysis showed which factors carried the most impact on overall customer satisfaction.
Prioritize improvement
A joint presentation was made to several levels of General American management using detailed charts and graphs to express what was reamed. The company plans to improve communication with its customers and has acted to meet customer requirements. The research helped prioritize improvement efforts based on what is most important to the customer and it is driving General American's long-range (1995-1997) planning.
In addition, the results of the research will be used to create targeted surveys on particular aspects of the insurance company 's service. This in-depth research will enable General American to become much more cost-efficient and will lead the company to
improved sales and longer-term relationships with its clients. By investing in market research General American received solid, reliable information on what its customers want in an insurance company. The data will help it chart a path that it confidently can take into the future.
General American is certainly not alone. Many insurance companies are doing the same in the way of reengineering, because market pressures are forcing higher levels of efficiency and productivity among competitors. With so much competition in the industry, companies that are not reorganizing to provide better customer service might be in for dark days not too far down the road.