Assessing Customer Relationship Management Strategies for Creating Customer Loyalty in Insurance Industry

Abstract

In a strongly competitive and rapidly changing business environment, the need to be market focused and forming strong relationships with customers is more critical than any other time in the past. Today, organizations have understood that customers are their most significant assets and view Customer Relationship Management (CRM) as profitable transaction. This paper addresses the implementation of the CRM Strategies for creating customer loyalty (CL) in Insurance Industry in Sri Lanka. After reviewing several specialized papers addressing issues in customer relationship management in service sector, four communal CRM strategies (i.e. trustworthy behaviour, shows genuine commitment to service, communicates information to customers efficiently and handling potential and manifested conflicts) were identified. A set of attitudinal statements explaining the underlying phenomenon of these CRM strategies were formulated and administered with a sample of customers (n=100) at randomly selected markets located in Western, Sabaragamuwa, Central, and North-Western provinces. Responses were measured on a 5-point Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree). A number of quantitative and qualitative methods, including Correlation analysis and Regression were used to analyse the data using the SPSS (version 17) software. The results indicate that all four CRM strategies used in insurance industry contribute to enhance the loyalty of their consumers. As expected, the outcomes of this study indicate that a significant relationship exists between CRM strategies used by insurance industry and their CL (p<0.001), with ‘Trust’ was rated as the most important factor in this respect ( =4.26; SD = 0.63). The correlation coefficients confirm that the trustworthiness of company (r=0.652, p<0.001), their genuine commitment (r=0.647, p<0.001), good communication (r=0.761, p<0.001), and handling conflicts (r=0.692, p<0.001) are strongly correlated with customer loyalty