When it comes to IT's place at a car insurance company, it's not just behind the curtain, keeping the quoting and billing apps and databases humming. At Progressive Insurance, IT is center stage, driving business at the point of the customer.
Progressive began a national advertising campaign in June for Name Your Price, a Flash-based Web application, developed by the IT team in cooperation with several other business departments, that inverts the typical car insurance shopping process. Customers start by inputting the price they want to pay rather than navigating coverage options before a price is quoted. (The company noticed with the old system that once a price was quoted, customers would adjust coverage to tweak the cost.)
Progressive also knows that any time a customer must take additional steps on the site, that lowers the "finish-to-start ratio," a measure of the shoppers who complete the quoting process. Buying car insurance requires shoppers to enter a lot of information about themselves and the cars they want to cover. They also have to sort through a variety of potentially confusing options.
"People can get tired of giving us data and get out of the quote before we give them a price," says Progressive CIO Raymond Voelker. "It's not about Web server errors. It's about them getting bored or frustrated and leaving."
Dale Willis, who manages the Name Your Price application, lives and dies by the finish-to-start ratio. The easiest way to boost that ratio is to offer cheaper rates, but the company can lower rates only so far, of course, and pricing is the responsibility of the products division. So Willis' challenge is to improve the ratio with the only arrow in his quiver: the user interface.
To that end, Name Your Price provides a more interactive experience than a typical online quoting system. The key element is a slider bar that shoppers move back and forth. As shoppers slide the bar, they're shown changes in price and coverage options in real time, rather than having to wait for the back-end servers to recalculate rates and refresh the users' browser with the new information.
Name Your Price has yielded a 5% increase in the number of customers who choose to buy a policy once a quote is initiated online, a Progressive spokeswoman says. No other car insurance company offers a similar quoting application.Name Your Price touches several systems, including the company's quoting and billing systems, as well as an application that matches Progressive's insurance products to different insurance requirements for all 50 states. Those back-end systems don't just support Name Your Price. Phone reps and independent agents who sell Progressive policies have their own software that communicates with the quoting, billing, and product systems, and those systems produce and display information in different ways than Name Your Price does.
By decoupling consumer, phone, and agent applications from the back-end systems, Voelker and his team don't have to maintain separate quoting and billing systems for those transactions. The process also lets Progressive build applications and user interfaces tailored to each user group.
Independent agents, for instance, don't want an interface like Name Your Price, Voelker says. Because they're well versed in the nuances of coverage options, agents prefer detailed tables and other components that would boggle a do-it-yourself Web consumer. And Voelker says his tech teams are able to devote more time to creating and refining the user interface of Name Your Price instead of doing complex software development on the back-end systems.
"We don't want to be in the business of heavy client application software," Voelker says, "but we wanted performance because of the importance of the finish-to-start ratio."
The company's developers also rewrote code to speed up communications between the product system, which has the information on coverage options, and the quoting app.
Name Your Price is a textbook example of IT-business alignment--and ultimately IT-customer alignment. The project's main sponsors were CEO Glenn Renwick and CIO Voelker. A project manager oversaw the app from start to finish. His team included developers on the quoting, billing, and product systems; test engineers; business analysts; and process consultants. Seventy-five percent of the team was dedicated to the application full time. The project was completed in 10 months.
The ROI Consideration
Voelker says the company has a program, called IT 2.0, whose two key objectives the CEO and CIO share when evaluating the outcome of a project: speed to market and "financial throughput."
Speed to market is the length of time it takes to go from an idea to a working product. Progressive breaks this measurement into components to identify sticking points. For example, did the business development plan slow the project? Were the business and technical requirements incomplete? Were there major holdups in software development or product testing? Did the pilot phase take longer than anticipated?
Financial throughput is a basic ROI measurement in which the company measures dollars the project brings in against the costs to get it done.
It's one thing to suggest turning the typical insurance shopping process on its head, and another to make it happen by providing a real-time, interactive tool in the customer's browser. By bringing IT face to face with Web consumers, Progressive is creating closer bonds with its customers and driving the car insurance market in new directions.
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