1 Journal of Economic Development, Management, IT, Finance and Marketing, 4(1), 12-26, March Brand Loyalty in Insurance Companies Sancharan Roy, (B.E., MBA) Assistant Professor, St. Joseph's College of Business Administration, India Abstract The globalization of competition, saturation of markets, and development of information technology have enhanced customer awareness and created a situation where long-term success is no longer achieved through optimized product, price, and qualities. This research is focused to determine the effects of brand value, which is perceived by customers based on the services offered by the insurance company preferred, on the level of loyalty towards insurance companies. This study was carried out based on descriptive research model. Analysis was employed in the study so that the extent to which the level of customer satisfaction about each of the services offered by insurance companies influences the level of customer loyalty to insurance companies can be determined. Keywords: Brand loyalty, Brand value, Insurance Company, Service Introduction This paper examines brand loyalty in insurance industry from the consumers perspective. The central thrust of the marketing activities of a firm is often viewed in terms of development, maintenance, or enhancement of customers loyalty toward its products or services (Dick and Basu, 1994). According to research studies, it can cost as much as 6 times more to win a new customer than it does to keep an existing one.(rosenbarg et al. 1984)
2 Journal of Economic Development, Management, IT, Finance and Marketing, 4(1), 12-26, March This paper therefore, presents new empirical evidence on the development of brand loyalty in insurance markets, and draws particular attention to the role of bonds in loyalty development in order to bridge that gap. Brand loyalty According to Aaker (1991) brand loyalty reflects how likely a customer will be to switch to another brand, especially when that brand makes a change, either in price or product features. Brand and customer loyalty is a buyer s overall attachment or deep commitment to a product, service, brand, or organization (Oliver 1999). The loyalty concept is similar in meaning to relationship commitment, which is described by the relationship marketing literature as an enduring desire to be in a valued relationship (Morgan and Hunt 1994). Loyalty manifests itself in a variety of behaviors, the more common ones being recommending a service provider to other customers and repeatedly patronizing the provider (Fornell, 1992). There are many advantages of brand loyalty. According to Delgado-Ballester and Munuera- Aleman (2001) the interest in brand loyalty derives from the value that loyalty generates to companies in terms of: A substantial entry barrier to competitors An increase in the firm s ability to respond to competitive threats Greater sales and revenue A customer base less sensitive to the marketing efforts of competitors Further, Rowley (2005) identifies the benefits of brand loyalty as:
3 Journal of Economic Development, Management, IT, Finance and Marketing, 4(1), 12-26, March Lower customer price sensitivity Reduced expenditure on attracting new customers Improved organizational profitability Research Methodology One random sampling frame of adult-aged individuals who reside within India was used to recruit participants to this web survey. Randomly selected sampling frames were selected from different industry professionals. The survey was completed within 60 days with a sample size of 416. Objective of the study: The aim of this study is to determine the effects of brand value, which is perceived by insurance customers based on the services offered by the insurance company preferred, on the level of loyalty towards insurance companies. Reliability Analysis of the Research: It is possible to say that the research is reliable as a whole, according to the coefficient of reliability α = Findings: Exhibit 1: Demographic details As can be seen in Table 1, 59.6 % of male, and 40.4 % of them are female customers. When the monthly incomes of the members are examined, it has been seen that % of them have monthly income as Rs , 35.58% of them have monthly income as Rs ,
4 Journal of Economic Development, Management, IT, Finance and Marketing, 4(1), 12-26, March % of them have monthly income as Rs , 8.6 % of them have monthly income as Rs more than it.
5 Journal of Economic Development, Management, IT, Finance and Marketing, 4(1), 12-26, March Table 1 Nationality Frequency Percent Indian Other 0 0 Gender Frequency Percent Man Woman Age Frequency Percent and above Education Frequency Percent Primary school High school Graduate Master Doctorate Monthly income (Rs) Frequency Percent and above Exhibit 2: Insurance companies meeting of expectations As can be seen in Table 2, customers were asked if the services provided by an insurance company met their expectations in terms of value for money, and 78.8% of the customers stated that their expectations were met while 21.2% of them gave negative response to this question. As can be seen in Table 2, the money spent by customers meet their expectations to a great extent. On the other hand, the 21.2-percent negative response points out that identifying customers wants and needs accurately and meeting them has become really important for insurance companies.
6 Journal of Economic Development, Management, IT, Finance and Marketing, 4(1), 12-26, March Therefore, insurance companies should increase communication channels with their customers and also become involved in studies aimed at measuring customer satisfaction and value by using techniques like questionnaires. Apparently, customers attach a great deal of importance to fulfillment of their wants and needs. In this respect, insurance companies have to provide their customers with services designed to create higher values for their customers and to increase customer loyalty to insurance companies. Thus, it seems obligatory for insurance companies to provide various options in value-oriented services such as insurance cover, increasing sales promotions, reminders for the payment of premium, add-on services. Furthermore, communication channels with customers should be increased so that customer wants and needs can be identified more accurately and services should be provided continuously through a strategy from which all customers in the market can benefit. Table 2 Meeting of expectations Frequency Percent Yes No
7 Journal of Economic Development, Management, IT, Finance and Marketing, 4(1), 12-26, March Table 3 Experiencing negative situations Frequency Percent Never experience Rarely experience Experience Too much experience 4 1 Certainly experience 4 1 Exhibit 3: Efficiency of Insurance Company s attitude towards negative situations As can be seen in Table 4, those customers who had stated that they had had a negative experience concerning the insurance firm chosen (n=116) were inquired about the extent to which they found companies attitude towards problems efficient. The responses indicate that 51.7% of the customers regard the insurance firms attitude towards the problems experienced as efficient. On the other hand, 24.1% of them provided neither positive nor negative responses while 17.2% of them stated that they found the insurance firms attitude towards the problems inefficient. This situation shows that the personnel of the companies should receive more training and there should be more effort about the management of customer relations. Also, insurance companies should ensure that their personnel have a feeling of satisfaction and contentment about their job. It is only natural that a member of staff with a complete training and a feeling of contentment about his or her job will adopt a more positive attitude towards customers.
8 Journal of Economic Development, Management, IT, Finance and Marketing, 4(1), 12-26, March Furthermore, a well-qualified employee could help increasing customers level of loyalty to insurance firms by creating more customer value on behalf of firms. Table 4 Efficiency of company s attitude towards negative situations Frequency Percent Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree Exhibit 4: Communicating suggestions and complaints As can be seen in Table 5, customers participating in the survey were asked whether they thought their suggestions and complaints were conveyed to the relevant departments of insurance companies or not. According to the results, 51.0% of the customers stated that they thought their suggestions and complaints were conveyed to the concerning departments of insurance companies. On the other hand, the percentages of those providing negative responses for this question and those giving neither positive nor negative responses were 18.27% and % respectively. This situation points out that the units of insurance where suggestions and complaints are evaluated prove inefficient. Customers may have the opinion that when their remark about a negative situation is conveyed to the relevant unit it is ignored. In this respect, it becomes critical that customers suggestions and complaints be evaluated by the relevant unit
9 Journal of Economic Development, Management, IT, Finance and Marketing, 4(1), 12-26, March and immediate feedback is communicated to customers. Resolving an issue and providing feedback about that may lead to a change of negative opinions about insurance companies even if customers have experienced a negative situation. Table 5 Communicating suggestions & complaints Frequency Percent Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree 4 1 Exhibit 5: Determinants of Insurance Choice and Satisfaction level As can be seen in Table 6, in terms of services and criteria, the questions in the first and second parts of the study were aimed at the services provided and factors affecting customer value such as brand image, insurance cover, safety of premium paid and human resources management. It is considered that each of the services and criteria questioned is included simultaneously by one or more factors affecting customer value. When the order of importance assigned by customers to the services provided by the insurance they prefer is examined, it can be seen that the services of great importance are, in a descending order, less calls from sales team (O=4.86) and am I getting what I was promised (O=4.74) followed by safety of premium paid (O=4.54). Other services following them are reminders for the payment of premium (O=4.49), minimum charges
10 Journal of Economic Development, Management, IT, Finance and Marketing, 4(1), 12-26, March (O=4.46) and timely payment at the time of mishappening (O=4.37). These are followed by How is the salesperson explaining the nitty-gritty of the insurance plan (O=4.34), which indicates that service factors also may play a more significant role. The importance assigned by customers is followed by Insurance cover (O=4.33), brand image of insurance (O=4.27) and Effective insurance policy (O=4.19). When the factors satisfying customers about the services of the insurance they choose are examined, it can be seen that customers are satisfied most by less calls from sales team (O=4.62) and am I getting what I was promised (O=4.51) followed by ease of claiming the money (O=4.13), minimum charges (O=4.11) and availability of on-line services (O=4.08). How is the salesperson explaining the nitty-gritty of the insurance plan is lower (O=3.68) than that for other service factors, which plainly reveals the fact that insurance firms should become engaged in more actions to create more customer value in their activities. As Table 6 demonstrates, the satisfaction and importance levels assigned by customers vary significantly for all the services of the insurance preferred except for add-on services and availability of online services. The least satisfying factors based on level of importance are how is the salesperson explaining the nitty-gritty of the insurance plan (O O =4.34; O T =3.68), safety of premium paid (O O =4.54; O T =3.93) and insurance cover (O O =4.33; O T =3.81). Apparently, customers express dissatisfaction with the insurance company chosen particularly in terms of the satisfaction levels they expect from these services. In other words, it seems that their expectations are not met and the value created by Insurance Company for customers cannot be perceived.
11 Journal of Economic Development, Management, IT, Finance and Marketing, 4(1), 12-26, March Table 6 Insurance choice & satisfaction level Importance Satisfaction Matched z test O SS O SS Z p Insurance cover Effective insurance policy How is the salesperson explaining the nitty-gritty of the insurance plan Ease of claiming the money Reminders for the payment of premium Add on services Timely payment at the time of mishappening Am I getting what I was promised Safety of premium paid Less calls from sales team Availability of online services Minimum charges(% deducted from premium) Meeting special requests
12 Journal of Economic Development, Management, IT, Finance and Marketing, 4(1), 12-26, March Exhibit 6: Loyalty towards Insurance As can be seen in Table 7, when customers were asked if they would think of not having a lifelong loyalty to the insurance company they preferred or not, 36.8% of them stated that they would be loyal to the insurance they preferred while 33.8% stated they wouldn t. On the other hand, the percentage of those customers providing neither positive nor negative response for that question was 29.5%. As Table 7 clearly shows, the percentage of customers thinking of being loyal to their insurance (36.6%) and the percentage of customers not thinking this way (33.65%) are very close. This situation demonstrates that customers may feel loyal to a particular insurance in direct proportion to the service value offered to them by insurance companies. As customers value perceptions are formed in line with their relative decisions, any value component to be created by an insurance company can be perceived in a different way by any customer. Customers form their preference criteria based on the comparisons among insurances offering the services which create value for them. Customers show preference to the insurance which creates most value for them. However, this does not necessarily mean that a feeling of loyalty to the insurance company preferred is created within customers because a customer may show different preferences among the insurance companies creating most values for him or her. The percentage of those customers providing neither positive nor negative responses for this question (29.8%) seems to support this suggestion. Habits deriving from previous experiences may be a strong determinant for customers insurance choice. However, this habit for an insurance company does not again mean loyalty to that insurance.
13 Journal of Economic Development, Management, IT, Finance and Marketing, 4(1), 12-26, March The concept of loyalty to be formed for an insurance company can be shaped by improving value oriented services and presenting them to customers continuously. Therefore, insurances operating should keep up with developing technology, improve the services creating most value for customers, and provide these series continuously throughout a year except for certain intervals. Table 7 Loyalty towards insurance Frequency Percent Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree Conclusions Today s insurance companies have started to employ various marketing methods and strategies in an intensely competitive environment where product and service differentiation is becoming harder and harder, the number of rival companies is increasing and a new notion of customer whose wants and expectations are increasing day by day is emerging. In order for insurance companies to determine methods and strategies appropriate for themselves, they have to identify accurately the characteristics of the market in which they provide service. They particularly have to ensure customer value, which is defined as providing products and services with qualities different from rival insurances and with most benefit. It is clear that, in addition to insurance
14 Journal of Economic Development, Management, IT, Finance and Marketing, 4(1), 12-26, March cover, criteria such as convenience of paying premium, services and criteria related to comfort such as online services and behavior and attitude of personnel and other service features such as reminders for the payment of premium and meeting special requests are also influential in creating value for customers and ensuring customer loyalty. In conclusion, in marketing strategies aimed at creating value for customers, insurance companies have to determine the services and criteria regarded important by customers accurately and in line with customer expectations. Thus, satisfaction level of customers about the services and criteria offered should continuously be measured. As well as creating a benefit for customers, the services and criteria to satisfy the customers and regarded important by them also create a value and loyalty for customer. The research findings indicate that brand-customer bonds grow stronger as the commitment of the customer for the brand intensifies. Evidence of very high levels of commitment to brands was The current research confirms that, where loyalties develop as a result of emotional attachments, strong bonds can form where the brand becomes established in the life of the consumer. The research also indicates that bonds can form where consumers are loyal for cognitive reasons. References: Aaker, D. (1991). Managing Brand Equity: Capitalising on the Value of a Brand Name, NY: The Free Press. Aaker, D. (1996). Building Strong Brands, NY: The Free Press.
15 Journal of Economic Development, Management, IT, Finance and Marketing, 4(1), 12-26, March Delgado-Ballester, E. and Munuera-Aleman, J. (2001). Brand Trust in the Context of Consumer Loyalty, European Journal of Marketing, Vol. 35, No , pp Dick, A. and Basu, K. (1994). Customer Loyalty: Toward an Integrated Conceptual Framework, Journal of Marketing Science, Vol. 22, No. 2, pp Fornell, C. (1992). A National Customer Satisfaction Barometer: The Swedish Experience?. Journal of Marketing, 56, 1, Morgan, R.M., Hunt, S.D. (1994). The Commitment-Trust Theory of Relationship Marketing?. Journal of Marketing, 58, Rosenberg, L., Czepiel, J.A. (1984). A Marketing Approach to Customer Retention. Journal of Customer Marketing, 1, Oliver, R. (1999). Whence Customer Loyalty? Journal of Marketing, Vol. 63, pp Rowley, J. (2005). The Four Cs of Customer Loyalty, Marketing Intelligence and Planning, Vol. 23, No. 6, pp