An integrated communication approach to client retention in the short-term insurance industry

Abstract

The short-term insurance industry in South Africa is extremely competitive and it is a challenge to retain clients in order to remain profitable. In light of this the intention of this study was to investigate suggestions from the academic fields of marketing management and communication management towards the retention of clients specifically pertaining to the short-term insurance industry. Each of the academic fields includes relating approaches and theories which are pertinent to the retention of clients. Marketing management deems relationship marketing as most appropriate and likewise, relationship management in the stakeholder theory from communication management was selected. The two concepts that logically followed from this are therefore customer relationship management (CRM) from marketing management and public relations (PR) from communication management. The purpose of this study was to compare and contrast the suggestions made by marketing and communication management as academic fields towards client retention, in order to investigate the validity of these client retention methods and the possibility of combining their suggested methods. CRM and PR was thus investigated and validated as a possible integrated approach to client retention in the short-term insurance industry in South Africa. The problem addressed in this study relates to the competitive and challenging nature of the short-term insurance industry and insurance organisations’ continuous struggle to keep clients in order to survive. Swart (1998) addressed the issue of high policy lapse ratios and the resulting tremendous strain on the life insurance industry and confirmed that the quality of services and the quality of client relationships determines the retention of clients. No in-depth study could be found on whether Swart’s (1998) confirmation that the quality of relationships determines client retention also applies to the short-term insurance industry. The main purpose of this research was to suggest an integrated approach from the fields of marketing (CRM) and communication management (PR) and test this integrated approach among short-term insurance clients and short-term insurance organisations in order to get perspectives from both groups of respondents. The integrated approach was tested among these respondents by means of qualitative in-depth interviews with the aim to determine the effectiveness and relevance of such an integrated approach from the two academic disciplines to retain clients in the extremely competitive and challenging short-term insurance industry. The findings from the two groups of respondents, namely the short-term insurance clients and short-term insurance organisations, yielded interesting results. On the one hand both groups suggested new concepts as possible client retention tools. It could be argued that this adds to the relevance of the validity of these concepts. On the other hand it was also established that certain concepts, as identified throughout marketing and communication management literature, might not be as relevant to client retention efforts in the short-term insurance industry. Furthermore the findings also indicated that certain gaps existed between what short-term organisations regard as essential to retain clients and what clients regard necessary for them to stay in the relationship with the organisation. Clear inconsistencies were evident and may explain why so many client retention strategies are unsuccessful. Based on these findings a conceptual integrated framework for the implementation of client retention strategies relevant to the short-term insurance industry was presented. The study intends to contribute in three ways. Firstly, by contributing to the theoretical body of knowledge through the development of an integrated framework towards client retention in the short-term insurance industry. Secondly, from a practical perspective where findings can assist marketing and PR practitioners to retain clients more effectively. Finally, it is anticipated that the study has added to the theoretical knowledge by presenting a qualitative dimension by means of in-depth interviews whereby possible new concepts (not included in current marketing and communication management literature) relating to the retention of clients are identified. These possible new concepts may not only assist organisations to increase the success of retention efforts but also enrich the theoretical body of knowledge. Copyright