Customer relationship management systems for customer retention in a life insurance organisation in South Africa
Abstract
By examining the role and value of customer retention (CR) in the life insurance sector of the South African insurance industry, this paper seeks to uncover the level of clientele receptiveness and willingness to adopt Information Technology (IT)-based Customer Relationship Management (CRM). Arguably, there are changing client needs, and market erosion requires innovative processes and particularly a readiness to accommodate the swift changes in technology. This volatile environment has, over the past decade, created increased competition and uncertain economic futures, which has placed life insurers under pressure and facing a steady increase in policy lapses. The primary objective of this paper is to investigate the role and value of IT-based CRM potential on customer retention in the life insurance industry in South Africa. It is argued, that with technological advances, increased competition, tough economic conditions, and clients becoming more financially conscious, insurers need to seek further and newer methods to retain their clientele.
The study applied a quantitative research methodology by administering existing structured questionnaires to 100 clients at a Walk-in-Centre of a major life insurance company in South Africa to examine the causal link between IT-based CRM and customer retention. The survey concluded that probing unchartered terrain is required in fluctuating times for insurers to be competitive. The implication of the findings is that the speed, at which technology is evolving, is compelling insurers to evaluate new and alternative means of managing client relationships, as clients now drive the economy, not businesses. The very essence of a good CRM programme is its reliance on an IT system innovation, which is advanced enough to analyse the captured client data, transform that data into usable knowledge, which is then used to drive client retention. Explain who will be interested in the findings and why they should care about them. This paper contributes to the understanding, and implementation, of a successful IT-based CRM tool within the life insurance industry
Downloads
References
Klynveld Peat Marwick Goerdeler (2018). The South African Insurance Industry Survey. KPMG, 69.
Wijenayaka, H. M. D. S., Perera, D. A. M., Sanjeewa, W. S. (2015). Assessing Customer Relationship Management Strategies for Creating Customer Loyalty in Insurance Industry. International Research Conference Articles (KDU IRC). Available at: http://ir.kdu.ac.lk/handle/345/1538 Last accessed: 20.03.2023
Klynveld Peat Marwick Goerdeler (2022). The South African Insurance Industry Survey. KPMG, 120.
South African Insurance Outlook 2021 (2021). Deloitte, 13.
Rani, S., Soni, A. K. (2019). Role of CRM Initiatives of Life Insurance Corporation of India to Satisfy the Customers. International Journal of Advanced Scientific Research and Management, 4 (5), 130–134. doi: https://doi.org/10.36282/ijasrm/4.5.2019.1469
Madubanya, P. (2015). The influence of customer relationship management on customer loyalty at a South African life insurance company. Cape Town: Cape Peninsula University of Technology.
Matiş, C., Ilieş, L. (2014). Customer Relationship Management in the Insurance Industry. Procedia Economics and Finance, 15, 1138–1145. doi: https://doi.org/10.1016/s2212-5671(14)00568-1
Nguyen, B. (2011). The dark side of CRM. The Marketing Review, 11 (2), 137–149. doi: https://doi.org/10.1362/146934711x589372
Goodhue, D. L., Wixom, B. H., Watson, H. J. (2002). Realizing business benefits through CRM: hitting the right target in the right way. MIS Quarterly executive, 1 (2), 4.
Sandhu, A., Bice, A. (2014). The seven missing ingredients in a life insurance customer retention program. White Paper. Oliver Wynam.
Günther, C.-C., Tvete, I. F., Aas, K., Sandnes, G. I., Borgan, Ø. (2011). Modelling and predicting customer churn from an insurance company. Scandinavian Actuarial Journal, 2014 (1), 58–71. doi: https://doi.org/10.1080/03461238.2011.636502
Buttle, F., Maklan, S. (2015). Customer Relationship Management: Concepts & Technologies. New York: Routledge. doi: https://doi.org/10.4324/9781315764597
Shanmugasundaram, A. Srilekha, K.S. (2017). Customer Relationship Management in Insurance Sector. IOSR Journal of Business and Management, 19 (6), 31–35. doi: https://doi.org/10.9790/487x-1906023135
Kotler, P., Keller, K. L. (2006). Marketing Management. Boston: Prentice Hall.
Swift, R. (2001). Accelerating customer relationships using CRM and relationship technologies. New York: Prentice-Hall.
Greenberg, P. (2001). CRM at the speed of light: capturing and keeping customers in Internet real time. Berkeley: McGraw-Hill.
Chen, I. J., Popovich, K. (2003). Understanding customer relationship management (CRM). Business Process Management Journal, 9 (5), 672–688. doi: https://doi.org/10.1108/14637150310496758
Bose, R. (2002). Customer relationship management: key components for IT success. Industrial Management & Data Systems, 102 (2), 89–97. doi: https://doi.org/10.1108/02635570210419636
Ryals, L. (2005). Making Customer Relationship Management Work: The Measurement and Profitable Management of Customer Relationships. Journal of Marketing, 69 (4), 252–261. doi: https://doi.org/10.1509/jmkg.2005.69.4.252
Bahrami, M., Ghorbani, M., Arabzad, S. M. (2012). Information Technology (IT) as An Improvement Tool For Customer Relationship Management (CRM). Procedia – Social and Behavioral Sciences, 41, 59–64. doi: https://doi.org/10.1016/j.sbspro.2012.04.008
Mitchell, P., Camarate, J. (2017). Life Insurance in the Digital Age. The Omnichannel Revolution. Johannesburg: PWC, 4.
Du Plessis, L., Roberts-Lombard, M. (2013). Customer loyalty in the South African long-term insurance industry. Acta Commercii, 13 (1). doi: https://doi.org/10.4102/ac.v13i1.167
Smit, A. J. (2010). The competitive advantage of nations: is Porter’s diamond framework a new theory that explains the international competitiveness of countries? Southern African Business Review, 14 (1), 105–124.
Jaradat, S., Almomani, S., Bataineh, M., Almomani, S. (2013). The Impact of PorterModeìs Five Competence Powers on Selecting Business Strategy "An Empirical Study on Jordanian Food Industrial Companies". Interdisciplinary Journal of Contemporary Research in Business, 5, 547.
Laudon, K., Starbuck, W. H. (1996). Organizational information and knowledge. International Encyclopedia of Business and Management, 4, 3923–39
Bruijl, G. H. Th. (2018). The Relevance of Porter's Five Forces in Today's Innovative and Changing Business Environment. doi: https://doi.org/10.2139/ssrn.3192207
Coviello, A. (2015). The Impact of ICT in the Insurance Industry: the Role of Customer Relationship Management. Italian National Research Council.
Wangechi, G. P. (2010). The relationship between firm valuation methods and market value for companies quoted at the NSE. University of Nairobi.
Hess, K. M. (2018). Who's Responsible? (It's Complicated.): Assigning Blame in the Wake of the Financial Crisis. Midwest Studies in Philosophy, 42 (1), 133–155. doi: https://doi.org/10.1111/misp.12087
Al-Khaffaf, M. M., Abdellatif, H. J. (2011). The Effect of Information and Communication Technology on Customer Relationship Management. International Journal of Customer Relationship Marketing and Management, 2 (4), 67–75. doi: https://doi.org/10.4018/jcrmm.2011100105
Fadun, O. S. (2013). Information and communication technology (ict) and insurance companies’ profitability in Nigeria. Journal of Accounting, Business and Management, 20 (2).
Razaq, A. O. (2010). Evaluation of ICT Penetration in Selected Insurance Companies: The Lagos Experience. Journal of Emerging Trends in Computing and Information Sciences, 1 (1).
Sapa, S. G., Phunde, S. B., Godbole, M. R. (2014). Impacts of ICT Application on the Insurance Sector (e-Insurance). IBMRD's Journal of Management & Research, 3 (1), 311–320.
Oghojafor, B. E. A., Aduloju, S. A., Olowokudejo, F. F. (2011). Information technology and customer relationship management (CRM) in some selected insurance firms in Nigeria. Journal of Economics and International Finance, 452–461.
Bazini, E., Madani, F. (2015) ICT Application in the Insurance Industry: Its Impact in Customer Relationship Management. Academic Journal of Interdisciplinary Studies, 4 (3), 307–311. doi: https://doi.org/10.5901/ajis.2015.v4n3s1p307
Malit, A., Muendo, D. (2017). The effect of information communication technology strategy implementationon organizational performance of insurance sector in Kenya. Strategic Journal of Business & Change Management, 4 (2).
Anabila, P., Awunyo-Vitor, D. (2013). Customer Relationship Management: A Key to Organisational Survival and Customer Loyalty in Ghana’s Banking Industry. International Journal of Marketing Studies, 5 (1), 107–117. doi: https://doi.org/10.5539/ijms.v5n1p107
Nikhashemi, S. R., Paim, L., Haque, A., Khatibi, A. K., Tarofder, A. K. (2013). Internet Technology, CRM and Customer Loyalty: Customer Retention and Satisfaction Perspective. Middle-East Journal of Scientific Research, 14 (1), 79–92.
Cant, M. C., van Heerden, C. H. (2004). Personal Selling. Lansdowne: Juta & Co. Ltd.
Oketch, S. (2014). Challenges of Customer Retention by Madison Insurance Company in Kenya. Nairobi: University of Nairobi.
Epetimehin, F. M. (2011). Achieving Competitive Advantage in Insurance Industry: The Impact of Marketing Innovation and Creativity. Journal of Emerging Trends in Economics and Management Sciences, 18–21.
Coviello, A., Trapani, G. D. (2013). New deal of insurance marketing, the role of ICT Italian case studies. Italian National Research Council.
Kotler, P., Keller, K. L. (2008). Marketing Management. New Jersey: Prentice Hall.
Pilecki, M. (2007). Customer retention is a process, not an event. Best Practices. Forrester, 2.
Loots, M. (2012). An integrated communication approach to client retention in the short-term insurance industry. Pretoria: University of Pretoria.
Ofosu-Boateng, I. (2020). Influence of customer relationship management on customers’ retention in the insurance industry in Accra, Ghana. British Journal of Marketing Studies, 8 (2), 77–95. doi: https://doi.org/10.37745/bjms/vol8.no2.pp77-95.2020
Guillen, M., Nielsen, J. P., Pérez-Marín, A. M. (2008). The Need to Monitor Customer Loyalty and Business Risk in the European Insurance Industry. The Geneva Papers on Risk and Insurance – Issues and Practice, 33 (2), 207–218. doi: https://doi.org/10.1057/gpp.2008.1
Walliman, N. (2001). Your Research Project: A step by step guide for the first-time researcher. London: Sage Publications Ltd, 322.
Nayak, J., Singh, P. (2015). Fundamentals of Research Methodology: Problems and Prospects. New Delhi: SSDN Publishers and Distributors.
Kothari, C. (1990). Research Methodology: Methods and Techniques. New Delhi: Wiley Eastern Limited.
Kumar, R. (2011). Research Methodology: A step by step guide for beginners. London: Sage Publications.
Copyright (c) 2023 Michael Twum-Darko, Raafiq Abrahams
This work is licensed under a Creative Commons Attribution 4.0 International License.
Our journal abides by the Creative Commons CC BY copyright rights and permissions for open access journals.
Authors, who are published in this journal, agree to the following conditions:
1. The authors reserve the right to authorship of the work and pass the first publication right of this work to the journal under the terms of a Creative Commons CC BY, which allows others to freely distribute the published research with the obligatory reference to the authors of the original work and the first publication of the work in this journal.
2. The authors have the right to conclude separate supplement agreements that relate to non-exclusive work distribution in the form in which it has been published by the journal (for example, to upload the work to the online storage of the journal or publish it as part of a monograph), provided that the reference to the first publication of the work in this journal is included.
