Case 11-3
CASE OVERVIEW
CUP Corporation is an insurance company with different product line such as health, life, property, casualty and automotive insurances. Companies world wide operations and activities was take over by another major insurance corporation. Over the past 10 years of service, CUP has been on the growing with 25% in the insurance industry. This European based company had series of acquisitions to widen their product line and had goal of growing internally to fulfill expansion needs of its market. The company experienced sudden deflation in growth of the policies during the year of 1995 and after. The growth rate decreased from 9.5 percent to 4.8 percent. The factors that affected in declining growth were economic climate, unemployment, stagnating real income, higher government taxes, increasing competition and many more.
The major issue that company faced was the dissatisfaction of the customers for their inquiries and was in desperate need to create customer care center(CCC) for solving customer’s problem with better solutions. Without CCC department customers would have to wait hours till they get the right agent to speak with and solve their problems conveniently. Company requires professionally trained representatives to answer customers questions to increase company’s credibility. Company decided to use one phone number for all the product line which will be convenient for customers to call on and get solutions for their problems. To figure out the solution to their problem, the company reported that the lapse rate- which is the number of customers canceling contracts in comparison with the total number of contracts. The metaphor that was used to represent lapse rate was leaking bucket which overflows with new customers, while it leaks out at the same time.
QUESTION 1
As an advisor to the project manager, Derrick Westmuller, what set of measures would you recommend?
To achieve positive outcome from the CCC project, the project manager should consider using balance score card system and its measurements. The measurement consists financial, customer, internal and learning growth.
Financial measurement explains that the organization has developed appropriate system to measure company’s financial performance. As mentioned in the case, insurance industry has been experiencing declining in the growth compare to other companies. The main objective of the corporation was to increase its income on insurance premiums, this can be achieved through revenue growth measurement. Other measurements that could be beneficial are measuring return on assets, probability, cutting expenses, cost per exception.
The corporation has suffered high lapse rate, as mentioned earlier lapse rate means high number of customers canceling contracts compared to the total number of contracts. Customers complained on their problems not getting solved easily and they were not able to talk to agents with their problems. To rectify the problems, company made the project to create customer care center, which will provide customers with one number for all the product lines. It will be beneficial for the satisfaction of the customers as they will able to reach representatives directly who will solve 70-80% of the problem and remaining 30-20% complex problems will be solved by experts.
Internal business process of the CUP aimed to provide customers with better service through customer care center. Companies must strike a balance external measures, such as customer satisfaction and measures on internal business process such as manufacturing yields. To maintain the balance between providing 24 hour of customer service and selling product lines, company wanted to keep CCC externally as their agents saw it as a threat. The center would be established outside the existing organizational structure of CUP, which means that it would not be part of any of the product lines or operating divisions. This would make it possible to sign more flexible employment contracts.