THE EFFECTS OF CUSTOMER RELATIONSHIP MANAGEMENT ON CUSTOMER RETENTION IN THE INSURANCE INDUSTRY OF KUALA LUMPUR, MALAYSIA

Abstract

Insurance is the service sector where competition is stiff to attract new or retain the current customers among insurance organizations. Customer relationship management (CRM) is the strategy what the insurance organizations enable to adopt to be competitive in the insurance industry. CRM helps the insurance organizations to retain the customers through the CRM practice to concentrate on the need of individual customers in the long-term period and contributes a lot to customer satisfaction, loyalty, and retention. This research objective was to examine the effects of customer relationship management on customer retention in the insurance industry of Kuala Lumpur, Malaysia. The researcher adopted the CRM dimensions which are customer orientation, knowledge management, CRM organization and CRM technology as independent variables to examine its effects on customer retention. The researcher was utilised the descriptive and explanatory research design to meet the research objectives. The researcher was adopted convenient sampling method to obtain the representative sample from the populations. The researcher collected data from 14 licensed insurance companies in life business only in Kuala Lumpur through structured questionnaire to evaluate customers’ level of agreement relating to the CRM practice in their respective insurance organizations. A total of 230 questionnaires were distributed to collect data and out of the total 200 questionnaires were returned. The researcher used Statistical Package for Social Science (SPSS 24.0) software to analyse the collected data. The researcher adopted the descriptive statistics and inferential statistics to described demographic facts, to test hypothesis and to answer research questions. The statistical result demonstrated that CRM which is represented by four CRM dimensions has a positive and significant effects on customer retention. The researcher suggested that insurance organizations have to concentrate to the CRM dimensions because it has highest influence on customer retention.