Smooth Selling Ahead: Sales Force Automation Improves Insurance Sales Cycle

The health insurance industry is one of the most complex on the planet. With hefty government regulations, it’s a tall order to offer high-quality coverage efficiently. And for Empire Blue Cross and Blue Shield of New York, which relies heavily on independent brokers to generate sales, success depends on making its product more valuable, more convenient and easier to sell than the competitor’s.

Empire took a serious look at its sky-high administrative costs and convoluted sales and enrollment process, and realized it had to streamline. Having a paper-based, delay-filled sales process wasn’t exactly endearing the company to brokers. And the practice of generating more than 60 copies of each new client’s enrollment forms was hardly helping Empire’s bottom line. An effort to reduce that paperwork evolved into a Web-based sales-force automation system that empowered Empire’s network of independent sales brokers to serve customers efficiently.

A Complex Sales Process

As the largest health insurance provider in New York, Empire manages more than 29,000 corporate employer accounts, of which about 26,700 are small to midsize companies employing 50 people or fewer. Empire services these “community rated” employers via some 1,800 registered independent sales brokers. Because each customer’s needs are different, brokers must produce customized coverage estimates for each one. For example, some companies want preferred provider plans, and some want health maintenance plans. Each plan has different “riders,” or options, attached, such as vision care or prescription coverage.

In the past, a broker would call Empire’s broker relations department, pass along the customer’s specs and then wait for Empire to calculate a price quote. The broker then relayed the quote back to the customer, who would either accept it or ask for modifications?in which case the broker had to contact Empire again and request a revised quote. When a quote was finally accepted, the broker filled out and filed one set of paperwork while the customer filled out a group application and sent it directly to Empire. Whenever Empire revised its plan structure, brokers found themselves with outdated enrollment forms.

“We would use the forms we had on hand, submit them to Empire, who would reject them because our forms were outdated,” says Thomas Vazoulas, an account broker with Corporate Consulting Services, an independent consultancy based in New York City. “Then we’d have to fill out more forms. It was discouraging to have to use up that much time just to redo forms and get the process done.”

The company then made 60 copies of the enrollment paperwork, filing it within 11 departments at Empire. Even then, fully 67 percent of the forms had to be returned or double-checked by phone with the brokers because of errors or omissions.

Since they couldn’t generate quotes themselves or process the paperwork, the brokers were completely dependent on Empire’s broker relations staff, who were around only during normal business hours. As a result, it took about 27 days to shepherd a new customer through the sales and enrollment process. Then employees had to wait another week to 10 days to get their ID cards. “Most clients look immediately for the ID cards,” says Vazoulas. “If they’re delayed, the clients don’t feel secure because they don’t know if their health plan is in effect.”

The Quest to Streamline

In late 1998, Stephen Bell, vice president of e-business operations, and Kenneth O. Klepper, senior vice president of systems, technology and infrastructure, began developing a “print on demand” system to reduce the vast mountains of quickly outdated benefits brochures and contracts that sat in storage rooms. In the process of working out the details, Bell and Klepper got a glimpse of how inefficient the sales and enrollment process really was. In April 1999, Empire brought in David B. Snow Jr. as COO. With a list of core business practices in hand, he zeroed in on sales and enrollment as an area ripe for change. “It was labor-intensive, slow and cumbersome,” say Snow, who now serves as both president and COO.

First, Snow and his team took a hard look at the existing paper-based process. They took over a conference room and created a color-coded map of the sales process; no one had ever before tracked it from start to finish. “It was like a grapevine,” Bell says of the process map. “It just got bigger and bigger. For the first time, we realized that there were 33 redundancy audit checks?where we go over information to make sure it’s correct?built into the process. We had created this nightmare.”

They began by eliminating all the loops and unnecessary steps, such as the need for brokers to keep calling the company for revised quotes. “Wherever there were repeats, we tried to eliminate them,” Bell says. The team managed to cut the essential steps from 80 to 40. That was the easy part, he says; then came the daunting task of finding an application to make the streamlined map a reality.

Because Empire’s sales channel was so complex, Bell decided that Empire couldn’t go with an off-the-shelf application. And he quickly saw the value of moving the process to the Web. Bell and Klepper hired Firepond of Waltham, Mass., to customize its proposal configurator and develop a quote engine and group enrollment process for Empire. Because Empire lacked in-house experience and resources for handling an enterprisewide application (“Mostly, we knew about mainframes,” says Klepper), they kept the IT department close to the project so that staffers could learn from the experience. The department also had to integrate the application with Empire’s legacy mainframes, a process that was tedious but critical, according to Bell.

Empowered Brokers

Empire’s Broker Services Application, which includes the quote engine and proposal configurator and enables online group enrollment, went live in October 2000. The browser-based quote engine frees brokers from having to call Empire to crunch numbers every time they need a quote. Instead, they can now enter the relevant customer data themselves online, and an automated formula generates a quote in a matter of seconds. The proposal configurator lets the brokers go online to create custom proposals according to each customer’s requirements, pull together current information about all the plan options and riders, and print all the relevant, up-to-date information based on the customer’s specifications.

If the client isn’t satisfied with a particular quote, the broker can go back online and change the specifications. Upon making a sale, a broker no longer has to wade through piles and piles of paper, but can go online to enroll a new account. The password-protected system also lets agents maintain customer information online, where it’s accessible around the clock.

Because Bell and his team drafted a panel of computer-savvy brokers and solicited their input throughout the application development process, they wound up with a system that has made life easier for the brokers. By Oct. 31, 2001, all of Empire’s 1,800 independent brokers had registered on the site, Bell says. When the site went live, Empire aimed for getting 15 percent of the brokers to use its self-service functionality. As of October, more than 45 percent were regularly generating their own quotes online.

Empire agents using the site now handle an average of 45 percent more quotes; Vazoulas says that while he used to process 20 quotes a day, he now handles 50. Most important, the enrollment process that once dragged out over 27 days now takes just two to three days to complete online. (Brokers sticking with the paper-based system, however, still have to deal with the time lag.)

“Everything that a customer could ask is answered up front with the system,” Vazoulas says. “The printed quote gives a summary of the entire contract with benefits and riders and details that wouldn’t otherwise be available unless we had a brochure on hand, and those are never up-to-date. The fact that they can see it up front and go over their plan line by line makes it much easier for them.” Because he’s already sent clients custom proposals created with the proposal configurator, when Vazoulas visits them face-to-face, about half have already made up their minds to buy Empire’s services. As a result, he sells on average twice as many Empire policies now than he did before. From a broker’s standpoint, it’s an easier sale with the new technology, he says. Empire measures customer satisfaction through mail surveys, but Bell says it’s too early to gauge whether the company’s Web strategy has had a quantifiable impact on customer relations. Although assessing a client’s level of satisfaction can be difficult, Vazoulas says brokers are not hearing many complaints about the speed of enrollment.

“I can usually tell how happy the customer is based on how much negative feedback I get,” Vazoulas says. “If there’s something they don’t like, I’ll hear about it up front. But with this system, I get no negative feedback.”

In the first six months of 2001, Empire’s small-group sales increased 274 percent compared with the same time period the year before, although the company isn’t sure how much of that increase can be attributed to the new enrollment process. Plans to run an analysis have been shelved, Bell says, in favor of going forward with updates to the site.

In fact, just two months after rolling out Broker Services, the company launched a website that lets individual members access and update their personal data, check claim status and payments, and request ID cards. Last summer, it launched a beta version of a portal for physicians. A similar site for employer groups was slated for completion by the end of 2001. These portals proved invaluable when Empire lost its headquarters at the World Trade Center on Sept. 11. The company used the sites to reassure brokers, members and physicians that Empire was up and running and to post contact information for its other offices.

In 2002, the company plans to create a broker services application to handle customers with more than 50 employees. Empire will also allow brokers to renew contracts online. This time, the IT department is doing the development in-house.

Empire is also concentrating on convincing the independent brokers who are not yet using the self-service functionality of the original Broker Services Application to give it a try. If brokers still call Empire for quotes, they are encouraged to use the Web service by the Empire sales representatives, who use the portal to dispatch quotes. “Like with any radical change, it’s just hard to get people to go with it,” Bell says. A lot of brokers have told him that they’re eager for more functionality on the site?they want to be able to enroll individual employees online. Empire is working on that right now, Bell says.

But getting the most out of the system is an ongoing process. “It’s a matter of focus,” he says. “We are listening to what people want.”