Salmi Said
Multimedia Campus, International Graduate School of Multimedia Management, Boschstr. 5, D-24118 Kiel, Germany
Dirk Frosch-Wilke
University of Applied Sciences Kiel, Sokratesplatz 2, D-24149 Kiel, Germany
Hilke Spoerel
IKK-Direkt, Kaistraße 101, 24114 Kiel , Germany
Keywords: e-Business, Customer relationship management, online closed member area.
Abstract: German compulsory health insurance companies are in intense rivalry and for most of these companies
customer loyalty is a critical success factor. E-Relationship marketing as a basic concept in business field is
constantly on improving new means of managing customer relationship. The marketing departments in the
health insurance industry have developed different tools of attracting their customers.
One of the new strategies that are used today by industries in general and compulsory as well as private
health insurances in particular is the implementation of an online closed member area that offers exclusively
some benefits for their customers in order to create a long term customer relationship.
For this reason we have benchmarked different national and international closed member areas of some
health insurances. Using these results, we have developed a concept of an effective closed member area for
a German health insurance as a part of the customer loyalty policy of this company. In fact, implementing
this closed member area by a health insurance company will be very helpful in enhancing a long-term
customer relationship and maintaining the competitive policy of that company.
The appearance of the Internet has been a revolution
in the economic field; companies have found in it a
source of support to their offerings. Furthermore the
Internet is increasingly used as a tool to enhance
relationship marketing between companies and their
customers. Companies find in this new technology
some characteristics that are new, unique and more
efficient with less cost than what they were using as
technologies before this invention (Brock, 2000).
In fact, a striking characteristic about the Internet is
that it has opened the path toward a new form of
companies, namely the virtual companies. These
companies are rather functioning at the level of
marketspace than marketplace (Stapleton et al,
2001). However, maintaining customer relationship
in the virtual market requires from companies
developing strong marketing policies. Hence, this
paper will be devoted to the development of an
online closed member area as a new tool of E-
marketing for virtual health insurances. For this
reason, our current investigation will go through the
following steps:
The German health care system and the need of
developing a new e-marketing policy.
The role of online closed member areas in the
strategic approach for health insurance
companies (national and international).
The process of developing an effective online
closed member area for health insurance
This analysis shall provide a conclusion for the
usefulness and the effectiveness of implementing an
online closed member area by health insurance
Said S., Frosch-Wilke D. and Spoerel H. (2007).
In Proceedings of the Third International Conference on Web Information Systems and Technologies - Society, e-Business and e-Government /
e-Learning, pages 135-140
DOI: 10.5220/0001276501350140
2.1 An Overview about the German
Health Insurance Market
The German health care system maintains two
different ways of citizens’ health protection; namely,
the private health insurances (PHIs) and the statutory
or public health insurances (SHIs). About 90 % of
German inhabitants are statutorily insured, whereas
only 9 % are privately insured (Joecks and Ribhegge
Germany contains about 70 PHI providers (Spoerel
2003) and about 283 SHIs (Herles 2004). SHIs are
part of the German social system and form the core
of public rights. Their tasks are to secure the health
of their customers (Herles 2004). Their main
characteristic, on the contrary to PHIs, is that all
members are equally treated; in the sense that,
although there are some differences concerning the
fees paid by different members, all customers have
the same health benefits. Moreover, SHI members
do have a free choice of their health insurance
company and every SHI company has to accept all
membership inquiries received.
In fact, each German citizen has the right of being a
member of the health insurances in the country; but
the choice of being private or statutorily insured
depends on the personal income of each member
The German health care system has set the market
segment for all SHIs. This segmentation includes the
mandatory and the voluntary members and depends
on the yearly income of a person (Schmidt 2005).
2.2 The Intensity of Competition in the
Health Insurance Market in
The intensity of rivalry among existing competitors
is very high. The fact that almost everybody has to
be statutory insured and only some few people can
leave to have a private insurance increases the
number of clients and simultaneously enhances the
competition between different parties. This intensity
among SHIs is very high due to different factors.
The first one is that about 95% of the companies
duties are already regulated by the German health
care law (Spoerel 2003); this means that all
competitors offer almost the same basic benefits for
the customer and that there is almost no difference
between the performances of the different
insurances; only almost 5% which is free for further
management for statutory health insurances. The
second one is related to the exit barriers that are high
for most competitors because of economical and
governmental reasons (Dess and Lumpkin 2003).
Economical reasons are the result of the companies’
high fixed assets that is represented in the different
shops and other real estates; whereas, the
governmental reason is related to the government
discouragement of exit out of concern for job loss.
This strong market competition has brought with it
the difficulty for customers to differentiate between
competitive offers. In fact a leading price position
can be one factor but not be the only way to retain
customers. For this reason, the quality of after sale
services and image of the insurance company can be
of crucial meaning. This image is only attained by
implementing some effective loyalty programs.
The technological development and the intensity of
competition have helped in the appearance of new
concepts in the marketing field. Relationship E-
marketing as a new paradigm in marketing field was
the result of this intensity. Its main task is
developing adequate marketing instruments for
enhancing and maintaining relationships with
customers. One of these instruments is developing
online closed member areas as a new form of
customer loyalty programs. Studies have proved that
the success of health insurances today depends on
their success in implementing effective loyalty
programs. According to Reichheld and Sasser
(1990), loyalty programs lead to customer loyalty
and the latter increases the firms’ profitability
through cost savings and revenue increase. The
importance of the customer’s loyalty depends on the
extent of its ability to increase customer retention.
Reichheld (1993) reported that an improvement of
customer retention by 5% leads to a profit between
25% and 85% for the company. Hence, when a firm
increases its customer retention rate, the competitive
advantage of that firm increases. This is because that
the expense of acquiring new customers is higher
than retaining existing ones.
WEBIST 2007 - International Conference on Web Information Systems and Technologies
3.1 Characteristics of Online Member
Member areas are a new form of marketing
instruments that most companies are using today to
maintain a long-term relationship with their
Sandler & Tischirhart (1997) described a member
area as a group of people sharing members’
characteristics and excludable benefits. Sällberg
(2004) suggested that member area is a form of
access program that provides customers with
exclusive events to which they otherwise would not
gained access. Helmke & Dangelmaier (2001) argue
that a club area shall improve a psychological
relationship with customers since the latter choose
this membership voluntary and as a result they shall
be rewarded by some exclusive services. Helmke &
Dangelmaier further suggested that there are two
types of member areas; namely an open member
area and a closed member area. In the case of health
insurances, a closed member area is characterised by
extensive services and refers to membership allowed
only for customers; whereas an open member area
allows a pseudo membership for anyone who wants
to login and is characterised by limited services.
Further more, Butscher (1995) stated that a member
area is a loyalty program strategy initiated by the
company to unify existent and potential customers.
Similarly, Holz (1997) tried to identify a club area
through six elements:
A marketing instrument.
Initiated and organized by the company.
Unifying target segments
Offers exclusive services to the members of the
Its prior aim is attracting and maintaining
Based on a permanent contact with members to
strengthen the relationship.
To sum up what is stated so far, we can say that a
closed online member area is a social context that
forms an exclusive community where members have
the privilege of some benefits offered by company
over the Internet, which differentiate them from
other non-member customers; this area is based on
mutual communication that is necessary in analysing
members’ needs and developing a company strategy
that enhances an emotional relationship with
3.2 The Purposes of Online Member
We have already stated that a member area is a form
of loyalty program. But there are some more
purposes of member areas, which has been identified
by Butscher (1995) and Holz (1997):
Customer retention through some exclusive
benefits for loyal customers.
New customer attraction
Building and optimizing a customer database,
which is necessary for implementing services
that suit customers’ needs.
Profit maximizing of the company
Supporting the core product and market research.
Enhancing a better image of the company.
Implementing a communication tool for the
Hence, membership areas are organized around
important goals and this is why developing such
areas takes a considerable effort. We have defined a
process for developing such member areas and have
used this process exemplarily for a health care
4.1 Important Characteristics
We start with benchmarking of different closed
member areas of health insurance companies that
shall identify the design of these areas from the
registration until the log-out (Puscher, 2005).
Further, we make use of the Seven Cs framework by
Rayport & Jaworski (2003), which is intended to
provide an extensive method to understand the
different choices to implement a user interface of an
e-business mode. This framework includes: context,
commerce, connection, communication, content,
community, and customization.
4.2 Benchmarking of Online Closed
Member Areas of Some National
and International Health
By applying the models above, we have tried to
define the main characteristics of some online closed
member areas of some health insurances in Germany
and USA.
4.2.1 Online Member Areas of Some
German Health Insurances
The German health insurances that are analysed are
compulsory health insurances. For the sake of
avoiding any kind of advertisement to any of these
health insurances, we will rename them with
company “A”, “B” and “C” which are
representatives for the evaluated companies.
The Company “A” provides a well-organized
member area for its customers, but the offered
content is only limited to detailed information about
reward programs. The closed member area of the
company “B” is more a functional than an aesthetic
area. Members have not only reward benefits but
they have access to many extra services such as
reworking profile or printing health certificates and
other issues. They have also the possibility to
participate in forums and chat rooms. Member data
are more protected as in case of company “A”,
because the confirmation of membership takes place
through e-mail and post and an activation key is
necessary. Company “C” offers a functionally based
member area with an obscure design. Different to
the other companies, this one offers an open and a
closed area. The difference between both areas is at
the level of content, connection and some technical
characteristics. In the open member area, there is no
connection with other websites; similarly the content
of the open area is very limited.
A common characteristic among all evaluated areas
is the design of the member area; actually there is no
difference between the design of the member area
and the starting web page of the insurance. As a
result, the user does not have the feeling of being
inside the closed area and in this case he may loose
the trust that was supposed to be achieved by the
login of this area.
4.2.2 Online Member Areas of Some Health
Insurances in USA
The study of some examples of membership areas
from the USA can be of great help in developing a
sophisticated member area. With regard to this issue,
we will investigate two health insurances. These will
be referred to as company “X” and company “Y”
that proved to have different marketing strategies.
Company “X”: The website does not clearly
present the membership area; still this closed
area is generally well organized and user
friendly. Besides the richness of the design, this
closed area offers its users many benefits such
as: printing different types of certificate forms,
special advices from doctors, detailed
explanation of different issues such as drugs and
their usage, different sickness, special therapies,
and summary about last doctor visits.
Company “Y” offers a closed area that is easy to
use and rich in information; most of the
information is similar to the previous discussed
area, in addition to some other features such as
printing and requesting cards, complaint form
and other issues. After the login, members
quickly notice that they are inside the closed area
because the layout of the closed area is different
from the layout they have seen before the login.
The fact that enhances in members a feeling of
belonging to an exclusive area.
So generally, more importance is given to content,
design, communication, connection, and
customization. Moreover, health insurances in the
USA are using a positive method of customer
loyalty that is based mainly on developing positive
attitudes by attracting customers through the use of
free services than using economical incentives as in
the case of bonus programs.
4.3 Implementation of an Online
Closed Area
Our development of a closed member area for a
health insurance will take three different aspects into
consideration; namely, the initiation, the offerings,
and the maintenance. Our focus on these three
aspects indicates the life cycle of this marketing
4.3.1 The Initiation of the Closed Member
The initiation refers to the set of procedures that are
necessary to be undertaken at the beginning in order
to attract customers to the closed user area. These
procedures can be managed through the fulfilment of
the following characteristics: advertisement,
placement of the login button in the home page,
registration data, and steps of registration
Advertisement should making customers aware of
the existence of an online closed area.
Placement refers to the positioning of the
membership area button on the home page. An
effective place of the membership button is just in
WEBIST 2007 - International Conference on Web Information Systems and Technologies
the middle left side of the home page because in this
way, it is put at the eye-level once the user is
directed to computer screen.
Registration data refers to the data that customers
need to fill in to get access to the membership
benefits. To avoid violation of privacy here it is
crucial that the health insurance goes beyond the
insurance number to check the authenticity of the
user. In fact, increasing authenticity data reflects the
value of the content provided in this area.
Registration steps: Refers to the steps that customers
shall go through from the registration to the login in
the membership area; the usability of these steps
must be simple and must give customers a
convincing feeling of being lead to an exclusive
membership area.
4.3.2 The Offerings of the Closed Member
With offerings, we refer to whatever shall increase
customers’ retention. In fact, immediately after the
log in, the offerings are presented. These include the
context, the connection, communication, and content
of the closed member area. The context refers to the
design of the closed member area. When customers
log in, they shall be guided and supported through a
well-designed area to easily find what they are
looking for; otherwise, they may leave the area
discontented. For this reason, we have developed for
sample membership area the following example of
the features description right after the login. This
will be divided into three main parts that we will
discuss in detail later on: on the left side, we will put
the general offerings of the closed member area; in
the middle a reminder service; and on the right we
will put quick links (see Fig. 1)
In the quick links section we have implemented
issues that are of urgent importance for customers;
these quick links commonly tend to enhance
communication, connection and customization in the
closed member area. The quick links section can be
seen as a necessary support that the customers would
jump to whenever they feel lost or have an urgent
need to get some information.The quick links
section is further divided into several subsections
which include the following:
“Find a Provider” subsection that will offer
information about some providers such doctors,
hospitals, or pharmacies, “Newsletter”, “Call-Back
Service”, “E-mail”, “Telephone”, and “Search
Tools”. These subsections are crucial for the closed
area because they complement each other and offer
customers all possible means that are required to
fulfil their needs.
Reminder Service: This will provide customers with
the infrastructure to plan their daily appointments.
Some customers often forget their next visit to
dentists or other health checks. So, offering them
this service will be very helpful because they will
always get an e-mail in advance that reminds them
about the next appointment. This can be very crucial
for saving extra costs for the health insurance since
customers go to check their health status regularly;
this helps them to stay in good health.
The overview is supposed to offer an idea about the
content of the membership area. We have tried to
develop content for the closed area of a health
insurance that will focus more on services than
bonus programs to maintain a positive customer
loyalty that leads to long term customer retention.
The content of the health insurance will be divided
into three parts; these include the “what can you do”
which will include the possibility of getting
important preventive guide lines to lead a healthy
life, managing the account, checking the medical
history of the user, downloading some forms, and
getting other extra benefits. The “information”
section presents various kinds of information for
enhancing the learning ability of customers and
helping them in developing a skilful background
Figure 1: Features Description of the Sample Membership
concerning some medical issues that are related with
human health; this will include information about
prescription drugs, medical treatment, and medical
The “help” section includes both a glossary that
offers the explanation of some medical terms and a
feedback sub-section that is used as a tool that
allows the closed member area to be developed in a
way that meets customers’ requirements.
4.3.3 The Maintenance of the Developed
Closed Member Area
The maintenance of the closed member area is the
third part to be taken into consideration by the
management of the health insurance; it is not enough
just to offer customers the privilege of this closed
area without any constant maintenance procedures
that serve content revision and services updating.
The maintenance tasks that have to be performed
can be divided into technical maintenance and
content maintenance.
Technical maintenance involves all necessary
technical issues that support the access to and use of
the closed member area. Content management is
related mainly to the different offerings that we have
integrated in the closed member area and should
guarantee that all content is not out of date.
In this paper, we have described the process of
developing an online closed member area in general
and exemplarily for a health insurance company. We
have described first the intensity of competition in
the health insurance market in Germany advantages
and the necessity of loyalty programs in general and
the membership area in particular. Further more, we
discussed the main issues of some national and
international online closed member areas and on the
basis of these we have tried to develop an example
of an effective closed area in the health insurance
industry. The implementation is relying mainly on
services that are crucial to enhance positive attitude
toward the health insurance and hence lead to a
long-term relationship with their customers.
In fact, we identified three main steps that are of
strategic importance in implementing a closed
member area; these are the initiation part, the
offering part, and the maintenance.
In our future research we will evaluate the
contribution of the implemented closed member area
of the health insurance to company’s customer
Brock, J.K. (2000). Virtual Globals – Marketspace and the
internationalisation of Small Technology-Based
Firms. The University of Strathclyde Department of
Marketing, Glasgow.
Butscher, S. (1995). Customer clubs and loyalty
Programmes. Aldershot.
Dess, G.G. and Lumpkin, G.T. (2003). Strategic
Management, Creating Completive Advantages,
McGraw Hill.
Helmke, S. and Dangelmaier, W. (2001). Effektives
Customer Relationship Management, Gabler.
Herles, G. (2004). Die Gesetzliche Krankversicherung,
Holz, S. (1997). Kundenclubs als Kundenbindungs-
instrument. Bamberg.
Joecks, M. and Ribhegge, H. (2004). Das deutsche
Gesundheitssystem, Europa Universität,
Puscher, F. (2005) Die bessere My-Area. In Internet
World, No. 8, pp. 40-46.
Rayport, F.J. and Jaworski, J.B. (2003). Introduction to E-
Commerce, McGraw-Hill.
Reichheld, F.F. and Sasser, E.W. (1990). Zero Defections:
Quality Comes to Services. In Harvard Business
Review, 68 (September-October), pp.105-111.
Reichheld, F.F (1993). Loyalty-Based Management. In
Harvard Business Review, 71 (March-April), pp. 64-
Sandler, T. and Tschirhart, J. (1997). Club Theory: thirty
years later. In Public Voice, Vol. 93, pp.335-355.
Sällberg, H. (2004). On the value of customer loyalty
programs- A study of point programs and switching
costs. Linköping University, Sweden.
Schmidt, U. (2005). Ratgeber zur Gesetzlichenkran-
kenversicherung, Governmental Department of Health
and Social Security.
Spoerel, H. (2003). Konzeption einer Online-Marketing
Strategie am Beispiel einer virtuellen Krankenkasse,
Master Thesis, Multimedia-Campus, Kiel.
Stapleton, D., Gentles, P. and Ross, J. and Shubert, K.
(2001). The Location-Centric Shift from Marketplace
to Marketspace: Transaction Cost-Inspired
Propositions of Virtual Integration via an E-commerce
Model. In Advances in Competitiveness Research,
Vol. 9, No. 1, pp.10-41.
WEBIST 2007 - International Conference on Web Information Systems and Technologies