Influence of Crm on Customer Loyalty - an Application to the Life Insurance Industry in South Africa

By Roberts-Lombard, Mornay; du Plessis, Leon | Journal of Global Business and Technology, Spring 2011 | Go to article overview

Influence of Crm on Customer Loyalty - an Application to the Life Insurance Industry in South Africa


Roberts-Lombard, Mornay, du Plessis, Leon, Journal of Global Business and Technology


ABSTRACT

This article investigates the influence of CRM on customer retention at a South African long-term insurance organisation. Primary data was gathered using a questionnaire, with items referring to CRM and customer loyalty. Data was factor-analysed. The findings of the study stipulate that CRM positively influences customer loyalty. If the long-term insurance organisation successfully maintained relationships with its customers, intentional customer loyalty at the long-term insurance organisation will increase. CRM in the multiple regression analysis explained 80.2% of the variance (R) in customer loyalty. Therefore, one unit increase in CRM will increase customer loyalty with 89.5% when considering Beta.

(ProQuest: ... denotes formulae omitted.)

INTRODUCTION

Over the past twenty years, the importance of the service industries to the world economy has grown tremendously. In 2003 the service sector contributed to over 80% of the employment and Gross Domestic Product (GDP) of the United States (Zeithaml, Bitner & Gremier, 2006). In the South African economy the service sector contributed 71.4% of South Africa's total GDP in 2006. The services sector is spearheaded by the financial services sector. The services sector employs 65% of the total workforce in South Africa (Datamonitor, 2008a). Since democracy in 1994, there has been increasing competition in the South African financial services industries from niche players and foreign entrants, as technology and financial liberalisation created the stimulus for competition from new areas. The financial services sector has been subjected to changes regarding new regulation, compliance and transparency. The process of démocratisation has also required the banks, insurance organisations and securities markets to examine the extension of services to the great number of South Africans excluded from formal financial provision (Hawkins, 2004). The insurance industry emerged from the cloister of the sanctions era by expanding abroad. The foreign invasion of the banking market has spilled over into the insurance market, as direct writers of insurance policies start to erode the local market. In South Africa, factors such as crime, AIDS, increased competition in the insurance industry and proposed legislative changes have made life more difficult for the institutions that cover consumers' life, health or property. Greater competition has also put pressure on life assurers, who face a steady rise in policy lapses. The industry previously experienced remarkable growth before 1998, but it is now struggling (Business Times, 1998).

An organisation that wants to succeed in today's global competitive market where customers are empowered and brand loyalty erosion is increasing, will have to move to customer relationship management (CRM). Customer relationship management enables organisations to provide excellent real-time customer service through the effective use of individual account information (Kotler and Keller, 2006). This requires a more complex approach, organisations need to investigate customer needs, they have to build relationships with both existing and potential customers, and they will have to satisfy their customers' needs (Rootman, 2006). Organisations realise the importance of satisfying and retaining customers. Acquiring new customers can cost five times more that the cost involved in satisfying and retaining current customers. Organisations on average can lose up to 10% of their customers. When customer defections are decreased by 5%, this can lead to an increase in profits of between 25% - 85%, depending on the industry. The profit rate of a customer tends to increase over the life of the retained customer (Berndt, Du Plessis, Klopper, Lubbe & Roberts-Lombard, 2009; Kotler and Keller, 2006; Ndubisi & Wah, 2005). Long-term insurance organisations such as Liberty Life require a loyal customer base to survive. Loyal customers can be generated through CRM.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Influence of Crm on Customer Loyalty - an Application to the Life Insurance Industry in South Africa
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.