cup corporation
DESCRIPTION
Management control systemTRANSCRIPT
CUP Corporation
The Management Control Process – Performance Measurement
Nataraj S F043Ashutosh 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
Recent trends in the industry
Increasing
CompetitionIncreasing
Competition Increasing Client Price Sensitivity
Increasing Client Price Sensitivity
Shorter ContractsShorter
Contracts
More cancellation of existing contracts
More cancellation of existing contracts
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
Virtuous Cycle
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
Issues with Existing Decentralized Customer Care
1
2
3
New Solution : Integrated Customer Care Center
Customer Care Centre (CCC)
One telephone number for all problems
One telephone number for all problems
Staffed 24 X 7Staffed 24 X 7
90% of the time, problems addressed on first callRest 10% on follow-up call
90% of the time, problems addressed on first callRest 10% on follow-up call
Function: Central Services Profit Center
Function: Central Services Profit Center
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
Measures “What”
Measurements How
Reduce Lapse Rate
Efficient
Cost Effective
Customer Satisfaction
Lapse Rate Defection rate
Calls solved on first try
Call rate charged
Customers pleased with call center
•Lapse Rate trend•Defections by product line•Awareness of call center
•% of calls solved first time•No. of repeat calls•No. of transfers
•Average length of call•No. of rings until pick up
•CC customer satisfaction•CC mentioned in general survey•Customer rating of CC staff•Rep satisfaction with CC
Thank You