324 Int. J. Business Competition and Growth, Vol. 2, No. 4, 2012 relationship management as a correlate of organisational performance in the Nigerian insurance industry Folake F. Olowokudejo* Department of Actuarial Science and Insurance, Faculty of Business Administration, University of Lagos, P.O. Box 184, Akoka, Yaba, Lagos, Nigeria Fax: 08062704956 E-mail: kudejomrs@yahoo.com *Corresponding author A.O. Fagbemi Department of Business and Human Resource Management, School of Management Science, National Open University of Nigeria, Victoria Island, Lagos, P.O. Box 3896, Festac Town, Lagos, Nigeria Fax: 08060963172 E-mail: ayodelefag@yahoo.com Abstract: This study aims to find out if there is any relationship between customer relationship management and organisational performance in the Nigerian insurance industry. Relevant literature was reviewed and a model was conceptualised and tested by means of empirical data collected through a questionnaire survey. The findings confirm that there is a positive relationship between customer relationship management and organisational performance. It was also found that companies image and branch network intervene in the relationship between CRM and organisational performance. The study made significant contribution to knowledge by identifying the CRM variables that enhance organisational performance. The study recommended that insurance companies should improve on their CRM practices in order to enhance organisational performance. It is also recommended that a stakeholder s forum should be organised regularly in order to bridge the communication gap between the staff and customers so that their perceptions can be synchronised. Keywords: customers perception; customers; staff; business competition and growth; correlation; survey; customer relationship management; CRM; organisational performance; insurance industry; organisational characteristics; Nigeria. Reference to this paper should be made as follows: Olowokudejo, F.F. and Fagbemi, A.O. (2012) relationship management as a correlate of organisational performance in the Nigerian insurance industry, Int. J. Business Competition and Growth, Vol. 2, No. 4, pp.324 340. Copyright 2012 Inderscience Enterprises Ltd.
CRM as a correlate of organisational performance 325 Biographical notes: Folake F. Olowokudejo is a Lecturer at the Department of Actuarial Science and Insurance, Faculty of Business Administration, University of Lagos, Nigeria. She has a PhD in Marketing from the Lagos State University, Ojo, Lagos, Nigeria. Her research interest are in the following areas: recapitalisation in the Nigerian insurance industry; religion and insurance; social responsibility, business ethics and organisational effectiveness in the Nigerian insurance industry; customer relationship management and organisational performance in Nigerian financial institutions; cyber risk exposure and prospects for cyber insurance in Nigeria. A.O. Fagbemi is an Associate Professor at the National Open University of Nigeria. She is member of the Institute of Personnel Management Nigeria, African Association of Public Administration and Management, Nigerian Institute of Training Development, and Institute of Management Consultants Nigeria. She is a Consultant to the West African Management Development Institutes Network on Women in Development. She has previously researched into: relationship between job performance and motivation in the Nigerian public service; variables of job satisfaction in an office environment; motivation of workers in a Nigerian university; among others. 1 Introduction relationship management (CRM) in the insurance sector involves reading the consumers changing needs and creating services to satisfy these needs. It also involves communicating the availability and benefits of these services to customers. CRM identifies the present and future markets, selects the markets to serve and identifies the progress of existing and new products. It also includes managing these products in such a way as to persuade customers to use them at a profit thereby ensuring survival and success of the financial institution. In recent times, insurance companies have had to device different marketing strategies due to the increased competition posed by the emergence and growth of new financial institutions in Nigeria and the changing needs of customers. Others include: the changing economic and business environment that followed the expansion of the economy, the high percentage of money outside the banking system and the low level of public awareness. Effective management of customer relationship is becoming important in the insurance industry because if an insurance company develops and sustains a long-term relationship with its customers, its competitors cannot easily poach them. This therefore offers sustained competitive advantage (Gruen et al., 2000). Insurance companies can increase their profits by ensuring enduring customer relationship over time, instead of seeking to get more profit from any single transaction. In order to survive in the dynamic business environment, relationships form the differentiating factor in view of the similarity of services. The quality of the relationships differentiates one organisation from another. Also, because relationships determine the future value of an organisation, there is a need to keep a relationship score card that describes the strengths, weaknesses, opportunities and threats (SWOT) of the relationships (Achumba, 2002). Adopting CRM effectively tends to give an organisation distinctive or comparative advantage over competitors, because it enables them to communicate effectively with the
326 F.F. Olowokudejo and A.O. Fagbemi customers and know their needs and wants. It also highlights the reasons why they continue to patronise the organisation s products and services, why some leave the organisation, and the strategies to use to manage such relationships effectively. When long-term relationships exist between organisations and customers, the distance between them becomes shorter and the organisation benefits from repeat purchase and the goodwill of the customer (Jackson, 1985; Gronroos, 1990). This research focuses on the CRM issues in insurance companies. This is because although, globally, performance in the insurance industry is a theme that has attracted considerable research, not much study has been carried out about the performance of Nigerian insurance companies much less its relationship with the marketing strategy adopted. Thus, there is a clear need for further research with a relationship perspective. The objectives of this study are to determine the relationship between CRM and organisational performance in the insurance industry, to identify the organisational characteristics that intervene in the relationship between CRM and organisational performance in the insurance industry and to compare the perception of employees and customers of the CRM strategies adopted by insurance companies. This paper is in seven sections. After this introduction, Section 2 is on conceptual clarifications. Section 3 deals with methodology, Section 4 presents the data gathered, Section 5 discusses the findings while Sections 6 and 7 are on conclusions and recommendations respectively. 2 Conceptual clarification Organisations have started realising that they have ignored their most important asset the customer, particularly after the first sales. Now, organisations are trying to remedy the situation by using technology that can proactively manage this important asset (Brown, 2000). CRM was designed around the customer s perspective with the ultimate goal of improving the customer experience (Dyche, 2002). The competitive environment is changing in favour of the customers. The internet-connected global economy creates unprecedented choices for customers and gives them greater control of the way they do business. Also, the propensity to consume far outweighs the propensity to save due to the prevailing economic situation in the country; and complicating matters for individual company is the economic reality that it costs a company more to attract new customers than it does to retain existing ones (Achumba, 2002; Bose, 2002). In this difficult situation, CRM is an opportunity that insurance companies can avail to rise above minor advantages by developing actual friendship with their customers (Bose, 2002). However, according to many studies (Peppard, 2000; Bose, 2002; Croteau and Li, 2003; Fjermestad and Romano, 2003), CRM may sometimes fail to produce the expected results due to difficulties in overcoming barriers of cost, time, maintenance and the value of information. Even with strong support from information and communications technology (ICT) infrastructure, organisations find it difficult to extract maximum value from their CRM investments because CRM only translate into economic benefits if the users know exactly how to utilise it to deliver value to customers. Moreover, a CRM solution does not guarantee better business performance except it is tailored to the needs of the customers thereby increasing acquisition rate. While organisations are spending substantial amounts of money and resources on CRM tools, its adoption often lead to high customisation costs. For example, studies conducted on the
CRM as a correlate of organisational performance 327 adoption of CRM systems reported that around 30% of firms are successful in actual implementation of CRM (Gan et al., 2006). In a survey of European executives, it was found that CRM systems are widely condemned for not delivering business benefits. Of the executives surveyed, less than a third felt that their CRM systems had lived up to expectations. Industry analysts have also expressed disappointment with the returns that CRM was delivering (Gan et al., 2006). The main difficulties about CRM implementation entail overcoming barriers that cluster around issues relating to cost, deployment time, maintenance and the value of information. Even with strong support from ICT infrastructure, organisations find it difficult to extract maximum value from their CRM investments. This is because CRM solutions that merely link up IT systems do not automatically translate into economic benefits unless adoption issues are addressed and users know exactly how to utilise it to deliver value to customers. CRM is a managerial philosophy that seeks to build long term relationships with customers. It is a comprehensive strategy and process of acquiring, retaining, and partnering with selective customers to create superior value for the company and the customer (Du Plessis et al., 2001). It involves the integration of marketing, sales, customer service, and the supply-chain functions of the organisation to achieve greater efficiencies and effectiveness in delivering customer value. The core of all CRM perspectives is its focus on a cooperative and collaborative relationship between the firm and its customers, and other marketing actors. Dwyer et al. (1987) have characterised such cooperative relationships as being interdependent and long-term-oriented rather than being concerned with short-term discrete transactions. The long-term orientation is often emphasised because it is believed that marketing actors will not engage in opportunistic behaviour if they have a long-term orientation and that such relationships will be anchored in mutual gains and cooperation (Ganesan, 1994). Organisational performance is described as the net result of the combined efforts of all individuals and groups in the organisation. It is what the organisation as a collectivity of management and employees succeed in achieving (Khandwalla, 1977). Organisational performance is one of the most important constructs in management research and without a doubt the singularly most important measure of the success of a commercial enterprise. Performance refers to the assessment of progress, at different organisational levels, toward achieving predetermined goals (Bourne et al., 2003). Prior research has studied business performance from different perspectives, such as financial performance, business unit performance, or organisational performance (Venkatraman and Ramanujam, 1986). To measure organisational performance, one must consider the financial and non-financial performance of a firm (Avlonitis et al., 2001; Gounaris et al., 2003). Organisational performance can be measured bearing four major perspectives in mind viz: financial perspective, customer perspective, internal processes perspective and employee learning and growth perspective (Niven, 2002). A cursory look at the measures reveals an all round view of the interest of the stakeholders of an organisation. The organisational performance is enhanced because marketing efficiency is achieved due to the cooperative and collaborative processes (Sheth and Sisodia, 1995). Introduced by CRM which helps in reducing transaction costs and overall development costs for the company. These brings about two important processes of proactive customer business development and building partnering relationships with the most important customers (Chaitanya, 2005) and eventually leads to superior mutual value creation between the organisation and the customer.
328 F.F. Olowokudejo and A.O. Fagbemi Figure 1 A model of the relationship between customer relationship management and organisational performance Organisational CRM strategies focused services Use of information and communications technology Complaints management High quality service Timeliness in service delivery Friendliness of employees Competitive charges on services Ease of taking policies Organisational performance Increased profit Increased number of customers satisfaction retention perception of organisational CRM strategies focused services Use of information and communications technology Complaints management High quality service Timeliness in service delivery Friendliness of employees Competitive charges on services Ease of taking policies Organisational characteristics Capital base Company s image Branch network 2.1 Variables in the model CRM is conceptualised through eight variables. The CRM variables selected for this study are customer focused services, information and communication technology, complaints management, high quality service, timeliness in service delivery, friendliness of employees, ease of opening account, and competitive charges on services. The two organisational characteristics variables are companies image and branch network and the organisational performance variables are customer satisfaction, customer retention, increase in number of customers and increased net profit. All these variables were selected from previous marketing and management studies. 3 Methodology The study population consists of the forty seven insurance companies in Nigeria. Twelve insurance companies representing 25% of the total population of insurance companies were chosen as the sample size. A survey research design was adopted. In order to achieve these objectives, three research questions were asked thus Is there any relationship between organisations CRM strategies and organisational performance in insurance companies?; Do the organisational characteristics intervene in the relationship between CRM and organisational performance in insurance companies?; Is there any variation between customers perception and employees perception of the organisations CRM strategies?
CRM as a correlate of organisational performance 329 Two instruments were designed to gather information on the model. These variables were scored on a five-point Likert scales of 1 to 5 from strongly agree to strongly disagree respectively. The average of all the answers to the questions that relate to any particular variable are summed up and averaged to determine the rating of that variable. 3.1 Reliability and validity of the study A pilot study was carried out to do test re-test reliability in order to assess the consistency in their responses in accordance with Bagozzi (1980). Data was obtained from 35 insurance companies employees, and 35 insurance companies customers. Seven employees were selected in each organisation. This includes the branch manager, the marketing manager, the customer care manager, two staff each of the marketing department and the customer care department. A sample of five insurance companies was selected using the random sampling method. This is about 10% of the total population of insurance companies in Nigeria since an absolute minimum sample size of about 30 subjects per group category for any statistical test has been suggested in literature (Alreck and Settle, 1995) to obtain adequate confidence. For insurance companies customers, the Cronbach alpha is 0.946 for 52 items on the questionnaire. Since the alpha level is above 0.70, this instrument can be said to be reliable. However, for insurance companies employees, the Cronbach alpha is 0.689 for 52 items on the questionnaire. Since the alpha level is below the required 0.70, this instrument and the measures cannot be said to be reliable but, when a particular question was removed from the questionnaire, the reliability of the instrument improved as the Cronbach alpha level moved to 0.864. Therefore, one can conclude that the instruments are reliable and will adequately measure the effects of CRM on organisational performance in insurance companies. 4 Data analysis Three hundred and thirty six copies of questionnaires were administered to the insurance companies. Out of these, 288 copies were returned. This represents a response rate of 89.11%. The questionnaire is in two sections, Section A asks about the demographic characteristics of the respondents while Section B elicits responses on CRM and organisational performance. The respondents were asked to rate the extent to which their organisations use the identified CRM strategies in their organisation. The responses on the opinion of staff in contrast to that of customers are as follows: 91.4% of insurance companies staff in contrast to 64.2% customers claim that their organisations use customer focused services to a large or very large extent 91.4% of insurance companies staff in contrast to 88% of customers claim that their organisations use information and communication technology to a large or very large extent 79.1% of insurance companies staff in contrast to 85% of customers claim that their organisations use complaint management to a large or very large extent
330 F.F. Olowokudejo and A.O. Fagbemi 92.8% of staff in contrast to 83.5%of customers claim that their organisations use delivery of high quality service to a large or very large extent 89.4% of staff in contrast to 86.5% of customers claim that their organisations use timeliness in service delivery to a large or very large extent 87.8% of staff in contrast to78.9% of customers claim that their organisations use friendliness of the employees to a large or very large extent 67.6% of staff in contrast to 71% of customers claim that their organisations use competitive charges on services to a large or very large extent 84.2% of insurance companies staff in contrast to 78.1% of the customers claim that their organisations use ease of taking policies to a large or very large extent. The respondents were also asked to state any other CRM strategy that is used in their organisation but which is not listed by the researcher. The staff listed the following: Advice to customers on the best and suitable type of policy, Use of dispatch,,agent to client relationship, direct marketing strategy, goodwill messages, handbills, interface with every customer of the bank, educating the customers on how premium rates are generated, visiting the customer and giving PR to the customer while the customers listed Advice to customers on the best and suitable type of policy, Use of dispatch, home service, persistence, goodwill wishes, visiting the customer and giving PR to the customer. The descriptive statistics of the mean, standard deviations, percentages and frequencies were employed in examining each of the variables in the study. As the scale of the instrument used in this research is ordinal, the appropriate statistics for the data generated are the non-parametric statistics (Schindler and Cooper, 2001). Three hypotheses were tested. H1 There is no relationship between CRM strategies and organisational performance in insurance companies. H2 Organisational characteristics do not intervene in the relationship between CRM and organisational performance in insurance companies. H3 There is no difference in the perception of CRM strategies by employees and customers of Nigerian insurance companies. Hypothesis 1 is tested using the Spearman s correlation coefficient. The Spearman s correlation coefficient (ρ) is given by: 2 6 d i ρ = 1 ( 2 n n 1) where d i = r i r 2 the difference between the ranks of corresponding values of r i and r 2 n the number of pairs of values in each dataset (same for both sets). Hypothesis 2 is tested using partial correlation and Hypothesis 3 is tested using the Mann-Whitney U-test.
CRM as a correlate of organisational performance 331 Table 1 Staff responses on the extent to which organisations use the CRM strategies focused services Information and communication technology Complaints management Quality of services A (n = 139) B (n = 149) A (n = 139) Very large extent (5) 57.6% 32.4% 50.4% 43.0% 37.4% 41.5% 58.3% 30.1% Large extent (4) 33.8% 31.8% 41% 45.0% 41.7% 43.5% 34.5% 53.4% Undecided (3) 2.9% 23.0% 2.9% 10.1% 11.5% 7.5% 2.2% 11.0% Small extent (2) 2.2% 6.1% 2.9% 2.0% 5.8% 5.4% 2.2% 5.5% Very small extent (1) 2.2% 6.8% 0.7% 0.7% 2.0% 0.7% Timeliness in service delivery Friendliness of employees Charges on services Ease of taking policies A (n = 139) B (n = 149) A (n = 139) Very large extent (5) 59% 39.9% 54% 29.9% 26.6% 40.7% 43.2% 35.6% Large extent (4) 32.4% 46.6% 33.8% 49.0% 41.0% 30.3% 41% 42.5% Undecided (3) 3.6% 10.1% 7.9% 11.6% 13.7% 14.5% 7.2% 19.2% Small extent (2) 2.2% 2.7% 1.4% 6.8% 7.9% 11% 0.7% 2.1% Very small extent (1) 0.7% 0.7% 1.4% 2.7% 1.4% 3.4% 1.4% 0.7% B (n = 149) B (n = 149) A (n = 139) A (n = 139) B (n = 149) B (n = 149) A (n = 139) A (n = 139) B (n = 149) B (n = 149) Notes: A = staff and B = customers.
332 F.F. Olowokudejo and A.O. Fagbemi 4.1 Relationship between CRM strategies and organisational performance in the insurance industry Hypothesis 1 is used to test if there is any relationship between any of the CRM variables and any organisational performance variable. The hypothesis, H1 is stated below: H1 There is no relationship between CRM strategies and organisational performance in insurance companies. This hypothesis was conducted separately for staff and customers and the spearman rank correlation coefficient was used to test this hypothesis. The result from the analysis is presented in Table 2. Table 2 Spearman rank correlation for the relationship between CRM strategies and organisational performance using the responses of staff Spearman s Rho focused service Information and communication technology retention satisfaction Increase in profit Increase in customer Correlation.212*.207* 0.552* 0.951* P-value 0.015 0.018 0.016 0 Correlation.343*.465* 0.574* 0.702* P-value 0 0 0 0.005 Complaints Correlation.175*.317* 0.246* 0.039* management P-value 0.045 0 0.032 0.011 High quality service Correlation.433*.536* 0.644* 0.096* P-value 0 0 0.027 0.007 Timeliness in Correlation.441*.550* 0.594* 0.175* service delivery P-value 0 0 0.008 0.017 Friendliness of Correlation.386*.327* 0.78* 0.352* employees P-value 0 0 0.01 0 Competitive Correlation.313*.320* 0.334* 1.214* charges on services P-value 0 0 0.046 0 Ease of taking Correlation.411*.330* 1.614* 0.812* policies P-value 0 0 0 0 Note: *Correlation is significant at 0.05 level. There is a correlation between all the CRM strategies and the four variables of organisational performance; therefore the hypothesis that there is no relationship between CRM strategies and organisational performance in banks is rejected for all the variables using the responses of insurance companies staff. Similarly, the spearman rank correlation coefficient was used to test the hypothesis of no relationship between CRM strategies and organisational performance in Nigerian insurance companies using the responses of customers. The result from the analysis is reported in Table 3.
CRM as a correlate of organisational performance 333 Table 3 Spearman s Rho Spearman rank correlation for the relationship between CRM strategies and organisational performance using the responses of customers focused service Information and communication technology Complaint management High quality service Timeliness in service delivery Friendliness of employees retention satisfaction Increase in profit Increase in customer Correlation.292*.232* 0.742 0.254 P-value 0 0.005 0.026 0.001 Correlation.289*.274* 0.294 0.688 P-value 0 0.001 0.01 0 Correlation.349*.416* 0.312 0.363 P-value 0 0 0.003 0.013 Correlation.187*.367* 0.602 0.191 P-value 0.024 0 0.04 0 Correlation.226*.184* 0.213 0.408 P-value 0.007 0.028 0.026 0 Correlation.238*.354* 0.941 0.446 P-value 0.004 0 0.01 0.021 Competitive Correlation.422*.400* 0.967 0.176 charges on services P-value 0 0 0.03 0.005 Ease of taking policies Note: *Correlation is significant at 0.05 level. Correlation.395*.202* 0.685 0.37 P-value 0 0.015 0 0.032 A strong positive correlation was found between all CRM variables and all organisational performance variables. Therefore, the hypothesis that there is no relationship between CRM strategies and organisational performance in insurance companies is rejected using the responses of insurance companies customers. 4.2 A comparison of the perception of CRM strategies by employees and customers Hypothesis 2 was used to test for the difference in the perception of CRM strategies by employees and customers of Nigerian insurance companies. The hypothesis, H2 is stated below: H2 There is no difference in the perception of CRM strategies by employees and customers of Nigerian insurance companies. The Man-Whitney U-test was also conducted to test for the hypothesis of no difference in the perception of CRM strategies by employees and customers of Nigerian insurance companies. The analysis is reported in Table 4.
334 F.F. Olowokudejo and A.O. Fagbemi Table 4 Man-Whitney U-test to compare the perception of CRM strategies by employees and customers Mann-Whitney U P-value focused service 7,102.000* 0.000 Information and communication technology 10,022.500 0.553 Complaint management 9,951.500 0.856 High quality service 10,031.500 0.863 Timeliness in service delivery 7,662.500* 0.000 Friendliness of employee 9,153.000* 0.050 Competitive charges on service 8,694.500* 0.014 Ease of opening account 8,760.500* 0.032 Note: *Correlation is significant at the 0.05 level. focused services, timeliness in service delivery, friendliness of employees, competitive charges on services and ease of opening account have p values of 0.000, 0.000, 0.050, 0.014, and 0.032 respectively. These p values are less than 0.05 indicating a significant difference in the use of these strategies. use of information and communication technology, complaint management, high quality services, have p values of 0.553, 0.856 and 0.863 respectively indicating no significant difference in the perception of these variables. This suggests that there is a significant difference between the perception of customer focused services, timeliness in service delivery, friendliness of employees, competitive charges on services and ease of opening account by employees and customers of Nigerian insurance companies at 95% confidence interval and the hypothesis is rejected. However there is no significant difference between the perception of use of information and communication technology, complaint management and high quality services by employees and customers of Nigerian insurance companies at 95% confidence interval and the hypothesis is accepted. 4.3 Intervention of organisational characteristics between CRM and organisational performance relationship in insurance companies Hypothesis 3 was used to test whether organisational characteristics intervene in the relationship between CRM and organisational performance in insurance companies. The Hypothesis, H3 is stated below: H3 Organisational characteristics do not intervene in the relationship between CRM and organisational performance in insurance companies. This hypothesis was conducted separately for staff and customers. The partial correlation (spearman rank) was used to test this hypothesis. Two variables of organisational characteristics were selected by the researcher. These variables are branch network and companies image. Using each of these variables as the control variable, the results from the analysis are presented in Tables 5, 6, 7 and 8:
Table 5 Control variables Companies image CRM as a correlate of organisational performance 335 Partial correlation to test the intervention of companies image between CRM and organisational performance relationship using the responses of insurance staff retention satisfaction Increase in profit Increase in customer focused Correlation 0.210* 0.257* 0.216* 0.341* service P-value 0.018 0.003 0.014 0.011 Information and Correlation 0.251* 0.404* 0.421* 0.522* communication technology P-value 0.004 0 0 0.03 Complaints Correlation 0.107 0.270* 0.314* 0.617* management P-value 0.231 0.002 0 0.013 High quality service Correlation 0.364* 0.450* 0.62* 0.61* P-value 0 0 0.001 0 Timeliness in service Correlation 0.285* 0.443* 0.716* 0.205* delivery P-value 0.001 0 0.02 0.014 Friendliness of Correlation 0.173 0.205* 0.251* 0.394* employees P-value 0.052 0.021 0.002 0.008 Competitive charges Correlation 0.009 0.104 0.127* 0.182* on services P-value 0.919 0.243 0.01 0 Ease of taking policies Correlation 0.149 0.112 0.303 0.197 P-value 0.095 0.209.061 0.08 Note: *Correlation is significant at the 0.05 level. Table 6 Control variables Branch network Partial correlation to test the intervention of branch network between CRM and organisational performance relationship using the responses of insurance staff retention satisfaction Increase in profit Increase in customer focused Correlation 0.255* 0.338* 0.315* 0.212* service P-value 0.004 0 0 0.001 Information and Correlation 0.310* 0.451* 0.208* 0.397* communication technology P-value 0 0 0 0.043 Complaints management Correlation 0.210* 0.333* 0.411* 0.42* P-value 0.017 0 0.05 0.05 High quality service Correlation 0.468* 0.568* 0.62* 0.3* P-value 0 0 0.014 0 Timeliness in service Correlation 0.408* 0.543* 0.521* 0.624* delivery P-value 0 0 0.016 0.007 Friendliness of Correlation 0.321* 0.349* 0.108* 0.225* employees P-value 0 0 0.02 0 Competitive charges Correlation 0.240* 0.296* 0.344* 0.301* on services P-value 0.006 0.001 0.045 0.005 Ease of taking policies Correlation 0.337 0.293* 0.146 0.209 P-value 0.077 0.061 0.102 0.125 Note: *Correlation is significant at the 0.05 level.
336 F.F. Olowokudejo and A.O. Fagbemi Table 7 Control variables Partial correlation to test the intervention of companies image between CRM and organisational performance relationship using the responses of insurance customers retention satisfaction Increase in profit Increase in customer Companies focused Correlation 0.301* 0.281* 0.421* 0.392* image service P-value 0 0.001 0 0 Information and Correlation 0.124 0.216* 0.162* 0.211* communication technology P-value 0.145 0.011 0.002 0.005 Complaint management Correlation 0.252* 0.37* 0.54* 0.614* P-value 0.003 0 0.01 0 High quality service Correlation 0.165* 0.309* 0.634* 0.81* P-value 0.052 0 0.022 0 Timeliness in Correlation 0.157* 0.147 0.557 0.315 service delivery P-value 0.064 0.85 0.064 0.052 Friendliness of Correlation 0.261* 0.372* 0.372* 0.312* employees P-value 0.002 0 0.007 0.05 Competitive charges Correlation 0.334* 0.278* 0.581* 0.701* on services P-value 0 0.001 0 0.007 Ease of taking policies Correlation 0.234 0.076 0.498 0.165 P-value 0.066 0.372 0.101 0.114 Note: *Correlation is significant at the 0.05 level. Table 8 Partial correlation to test the intervention of branch network between CRM and organisational performance relationship using the responses of insurance customers Control variables Branch network retention satisfaction Increase in profit Increase in customer focused service Correlation 0.366* 0.347* 0.281* 0.181* P-value 0 0 0.003 0.03 Information and Correlation 0.179* 0.264* 0.652* 0.158* communication technology P-value 0.035 0.002 0.008 0.005 Complaint management Correlation 0.317* 0.42* 0.141* 0.342* P-value 0 0 0 0 High quality service Correlation 0.242* 0.372* 0.081* 0.162* P-value 0.004 0 0.017 0.01 Timeliness in service Correlation 0.246* 0.241* 0.342* 0.5* delivery P-value 0.004 0.004 0 0 Friendliness of Correlation 0.301* 0.413* 0.633* 0.74* employees P-value 0 0 0 0.005 Competitive charges on Correlation 0.394* 0.342* 0.536* 0.62* services P-value 0 0 0.002 0 Ease of taking policies Correlation 0.289 0.148 0.179 0.251 P-value 0.051 0.083 0.055 0.122 Note: *Correlation is significant at the 0.05 level.
CRM as a correlate of organisational performance 337 5 Discussions of findings The study set out to examine the effects of CRM on organisational performance in Nigerian insurance industry. For staff, there is a relationship between all CRM variables and all variables of organisational performance. Companies image intervenes in the relationship between customer retention and all CRM variables except complaint management, friendliness of employees, competitive charges on services and ease of taking policies and in the relationship between customer satisfaction and all CRM variables except competitive charges on services and ease of taking policies. Similarly, the organisation s branch network is found to intervene in the relationship between customer retention and customer satisfaction and all the CRM variables except ease of taking policies. Also, companies image and branch network intervene in the relationship between increase in profit and increase in number of customers and all the CRM variables except ease of taking policies. For customers, there is a relationship between all CRM variables and all variables of organisational performance. Companies image intervenes in the relationship between customer retention and all CRM variables except information and communication technology, high quality service and timeliness in service delivery and ease of taking policies and in the relationship between customer satisfaction and all CRM variables except timeliness in service delivery and ease of taking policies. The organisation s branch network is found to intervene in the relationship between customer retention and customer satisfaction and all the CRM variables except ease of taking policies. Also, companies image and branch network intervene in the relationship between increase in profit and increase in number of customers and all the CRM variables except ease of taking policies. 6 Conclusions The main objective of this study is to find out if there is any relationship between CRM and organisational performance in the insurance industry and findings show a positive relationship between CRM and organisational. This agrees with the findings of Brandon and Randall (2007), Zineldin (1995), Schwepker (2003) and Huang and Lin (2005) that a successful implementation of CRM leads to an effective organisational performance. Findings confirm that companies image intervenes in the relationship between all the CRM variables and most of the organisational performance variables in the insurance industry. Branch network intervenes in the relationship between all the CRM variables (except ease of taking policies) and most of the organisational performance variables in the insurance industry. Nigerian insurance companies should therefore recognise the importance of the image of their organisations and the spread of their branch network to the survival, growth and enhanced performance of their organisation. A comparison of the perception of employees and customers of the CRM strategies shows a significant difference in the perception of all the CRM strategies except information and communication technology, complaint management and high quality service. While the staffs rate themselves high in the implementation of CRM practices in their organisation, the customers rate the organisations rather low. CRM can only be said to truly exist if and when the customer says there is one (Jayachandran et al., 2005) and
338 F.F. Olowokudejo and A.O. Fagbemi not when the company marketing department suggests that they have one in place. The organisations will be making a mistake, if they believe that their customers perception of their organisations CRM strategies is the same as the staff s perception. The organisation should therefore find ways of educating their customers on their marketing plans and strategies. 7 Recommendations This study has provided evidence that there is a relationship between CRM and organisational performance in agreement with the study of Mithas et al. (2005) and Jayachandran et al. (2005). A major objective of any business concern is the profit maximisation objective and an effective and efficient performance of the organisation. Hence, the insurance industry should continue to invest in the practice of CRM strategies. Though, the existence of CRM strategies has been established, the industry should improve on the CRM strategies they have already adopted. The insurance companies need to go back to the drawing board to look at the CRM variables of this study with a view to reinforcing them where they are weak and introduce them where they are non-existent. It is however important to emphasise the need to concentrate more on customer focused services, complaint management, friendliness of employees, competitive charges on services, information and communication technology, high quality service, friendliness of employees and other CRM variables of the study as findings have shown that commitment to the use of these variables lead to customer satisfaction, customer retention, increase in profit and increase in number of customers for the organisation. The perception of staff is different from the perception of customers. This could be as a result of inadequate communication between the organisation and their customers. Therefore, organisations should regularly organise stakeholders forum where they will enlighten their customers and other stakeholders on issues of common interest such as the development and implementation of new marketing strategies. This will also afford them the opportunity to have input from these stakeholders and synchronise all the opinions expressed, so that perceptions of the organisation tallies with that of their customers. Both companies image and branch network are found to intervene in the relationship between CRM and organisational performance but findings show that companies image is more important. Hence, they should concentrate more on improving the companies image than in the proliferation of branches. Findings show that the computers breakdown is a major concern to customers, management should strive to achieve a state of 100% efficiency of their on line services by reducing the frequency of computer breakdown and reduce the length of computer down time. Many customers are undecided about whether their organisations offer customer focused services. Thus, insurance companies need to look into the services offered by them with a view to making them more customer focused so that they can meet their customers needs more efficiently. The relationship between ease of taking policies and organisational performance is not significant for any of the four organisational performance variables. Since ease of taking policies is not considered important either by staff or customers; insurance
CRM as a correlate of organisational performance 339 companies should channel their energy towards other CRM variables and pay less attention to ease of taking policies. References Achumba, I.C. (2002) Establishing relationship marketing in insurance organizations, The Nigerian Journal of Risk and Insurance, Vol. 3, No. 1, pp.93 110. Alreck, P. and Settle, R. (1995) The Survey Research Handbook, Irwin Press, New York. Avlonitis, G.J., Papastathopoulou, P.G. and Gounaris, S.P. (2001) An empirically-based typology of product innovativeness for new financial services: success and failure scenarios, Journal of Product Innovation Management, Vol. 18, No. 5, pp.324 342. Bagozzi, R.P. (1980) Causal Methods in Marketing, John Wiley and Sons, New York. Bose, R. (2002) relationship management: key components for IT success, Industrial Management & Data Systems, Vol. 102, No. 2, pp.89 97. Bourne, M., Neely, A., Mills, J. and Platts, K. (2003) Implementing performance measurement systems: a literature review, Int. J. Business Performance Management, Vol. 5, No. 1, pp.1 24. Brandon, M. and Randall, V. (2007) The theory of efficient capital markets: a review of literature, Journal of Business for Entrepreneurs, Vol. 3, No. 4, pp.13 24. Brown, A.S. (2000) Relationship Management: A Strategic Imperative in the World of E-Business, Wiley & Sons, Canada. Chaitanya, K. (2005) Metamorphosis of marketing financial services in India, Journal of Services Research, Vol. 5, No. 1, pp.6 15. Croteau, A.M. and Li, P. (2003) Critical success factors of CRM technological initiatives, Canadian Journal of Administrative Sciences, Vol. 20, No. 1, pp.21 34. Du Plessis, P.I., Jooste, C.J. and Strydom, J.W. (2001) Applied Strategic Marketing, Heinemann, Sandown. Dwyer, F.R., Schurr, P.H. and Oh, S. (1987) Developing buyer-seller relationships, Journal of Marketing, Vol. 51, pp.11 27. Dyche, J.A. (2002) The CRM Handbook: A Business Guide to Relationship Management, Addison-Wesley, USA. Fjermestad, J. and Romano, N.C., Jr. (2003) Electronic customer relationship management. revisiting the general principles of usability and resistance an integrative implementation framework, Business Process Management Journal, Vol. 9, No. 5, pp.572 591. Gan, C., Cohen, D., Clemes, M. and Chong, E. (2006) A survey of customer retention in the New Zealand banking industry, Insurance Companies and Bank System, Vol. 1, No. 4, pp.83 99. Ganesan, S. (1994) Determination of long-term orientation in buyer seller relationships, Journal of Marketing, Vol. 58, pp.1 19. Gounaris, S.P., Papastathopoulou, P.G. and Avlonitis, G.J. (2003) Assessing the importance of the development activities for successful new services: does innovativeness matter?, International Journal of Bank Marketing, Vol. 21, No. 5, pp.266 279. Gronroos, C. (1990) Relationship approach to marketing in service contexts: the marketing and organizational behavior interface, Journal of Business Research, Vol. 20, No. 1, pp.3 11. Gruen, T.W., Summers, J.O. and Acito, F. (2000) Relationship marketing activities, commitment and membership behaviors in professional associations, Journal of Marketing, Vol. 64, No. 3, pp.34 49 Huang, S-L. and Lin, F-R. (2005) Designing intelligent sales-agent for online selling, Proceedings of the 7th International Conference on Electronic Commerce (ICEC), 15 17 August, Xi an, China.
340 F.F. Olowokudejo and A.O. Fagbemi Jackson, B.B. (1985) Winning and Keeping Industrial s: The Dynamics of Relationships, D.C. Heath, Lexington, MA. Jayachandran, S., Sharma, S., Kaufman, P. and Raman, P. (2005) The role of relational information processes and technology use in customer relationship management, Journal of Marketing, Vol. 69, No. 4, pp.177 192. Khandwalla, P.N. (1977) The Design of Organizations, Harcourt Brace Jovanovich, Inc., New York. Mithas, S., Krishnan, M.S. and Fornell, C. (2005) Why do customer relationship management applications affect customer satisfaction?, Journal of Marketing, Vol. 69, No. 4, pp.201 209. Niven, P.R. (2002) Balanced Score Card Step by Step: Maximizing Performance and Maintaining Results, John Wiley & Sons, New York. Olowokudejo, F.F. (2009) Effects of customer relationship management on organizational performance in nigerian financial institutions, An unpublished Doctoral thesis submitted to Lagos State University, Lagos, Nigeria. Peppard, J. (2000) relationship management (CRM) in financial services, European Management Journal, Vol. 18, No. 3, pp.312 327. Schindler, D.R. and Cooper, P.S. (2001) Business Research Methods, 7th ed., McGraw-Hill, New York. Schwepker, C.H. (2003) -oriented selling: a review, extension, and directions for future research, Journal of Personal Selling and Sales Management, Vol. 23, No. 2, pp.151 171. Sheth, J.N. and Sisodia, R.S. (1995) Improving marketing productivity, in Heilbrunn, J. (Ed.): Encyclopedia of Marketing in the Year 2000, American Marketing Association NTC Publishing, Chicago, IL. Venkatraman, N. and Ramanujam, V. (1986) Measurement of business performance in strategy research: a comparison of approaches, Academy of Management Review, Vol. 11, No. 4, pp.801 814. Zineldin, M. (1995) Bank-company interactions and relationships: some empirical evidence, International Journal of Bank Marketing, Vol. 13, No. 2, pp.30 40.