CUP Corporation

The Management Control

Process Performance
Measurement
Nataraj S
F043
Ashutosh Singh
F104

Company Overview
One of the biggest insurance companies in Europe
Growth rate of >25% over the past 10 years
Had 5 product lines each of which functioned as independent divisions
Exclusive Agents handled 70% of the business

Changing Business Environment

After 1995 growth was flat
Worsening economic climate with increasing economic downsizing
Higher taxes and social welfare levies
Increasing competition
Extensive satisfaction of demand for insurance in Germany

sing
a
e
r
Inc
titio
e
p
Com
n

More
cancellation
of existing
contracts

I n cr
eas
i
ng
Clie
nt
Pric
Sen e
sitiv
Recent trends in the industry
i
ty

Shorter
Contrac
ts

The Issue: Customer Loyalty

Lapse Rate Customer cancellations compared to total contracts
Lapse rate reached DM 850M in 1995 10% of total premium revenue
Problem was customer loyalty cut across product lines a Corporate problem

A Corporate Problem: Virtual Cycle

More contracts customers had longer the loyalty
Customer with 1 contract - high replacement - higher commissions to agents
Hence, customer retention was to be the Strategic Target

Virtuous
Cycle

Issues with Existing Decentralized Customer

Care

New Solution : Integrated Customer Care

Center

One telephone number for

all problems

Customer Care Centre

(CCC)

Function: Central Services

Profit Center

Staffed 24 X 7

90% of the time, problems addressed on first call

Rest 10% on follow-up call

Concerns regarding Integrated Customer Care

Center

Questions
1. As an advisor to the project manager, Derrick Westmuller,
what set of measures would you advise they adopt?
2. Develop a balanced measurement system showing how
the measures and measurement link to what you believe
are the key success factors of the CCC.

Measures (1/4)

Financial Measures

Measures (2/4)

Customer Oriented
Measures

Measures (3/4)

Internal Business Measures

Measures (4/4)

Innovation and learning related

measures

Balanced Scorecard (1/2)

Source: dbkay Associates

Balanced Scorecard (2/2)

Key
Success
Factors
Reduce Lapse Rate

Efficient

Cost Effective

Customer
Satisfaction

Measures
What

Measureme
nts How

Lapse Rate
Defection rate

Lapse Rate trend

Defections by product line
Awareness of call center

Calls solved on
first try

% of calls solved first time

No. of repeat calls
No. of transfers

Call rate charged

Average length of call

No. of rings until pick up

Customers pleased
with call center

CC customer satisfaction
CC mentioned in general survey
Customer rating of CC staff
Rep satisfaction with CC

Thank You