Investigating the Effect of Loyalty Plans on the Loyalty of Asia Insurance Customers Using the Salomon Four-Party Plan

Document Type : Research Paper

Authors

1 shiraz universityProf., Department of Management, Faculty of Economics, Management and Social Sciences, University of Shiraz, Shiraz, Iran.

2 , PhD Candidate, Department of System Management, Faculty of Economics, Management and Social Sciences, University of Shiraz, Shiraz, Iran

3 MSc, Department of Business Management, Faculty of Management, University of Shahid Beheshti, Tehran, Iran

Abstract

Objective
In general, loyalty and the effects of various customer loyalty programs have always been an important issue for the insurance industry, especially in the present economic condition which is full of recession and inflation in recent years in Iran. Considering the very small contribution of the insurance industry to the GDP of Iran and the ability to increase this amount by improving the customers’ loyalty and development of insurance services, identifying those programs that can lead to more loyalty of current customers of the insurance industry and, on the other hand, attract new customers are of high importance. In this research, the basic issue is the examination of various loyalty programs ranging from immediate to long-term, hard to soft within a multifaceted combination and their impact on customer loyalty.
 
Methodology
The present research is applied in terms of purpose and in terms of the method is considered experimental (Salomon four-group design), which is followed by a survey approach. The population under study consists of all the clients of the Ambirkabir Branch of Asia Insurance Company in Shiraz by the end of December 2014 (412 people). Using Cochran formula, 200 individuals were were randomly selected as the sample. Two independent questionnaires were used to collect the data. Research questionnaires were collected before and after recieving financial rewards (granting of discounts, providing free insurance and giving out gifts based on their purchase) and non-financial rewards (contact with the client in person and on the phone for the provision of insurance consulting services and placing the customer within the special customer group and introducing them to the social networks of the company's customers), and also before and after the granting of instant and long-term rewards. Paired t-test and dependent t-test were used to analyze the data.
Findings
The findings indicate the impact of instantaneous program on customer loyalty. This is associated with the analysis where friendly and cooperative relationships with the company has led to continuous and consistent customer relationship with the company. On the other hand, a better understanding of the needs and expectations of the customer and maintaining a positive relationship with him, influencing the positive emotions and feelings of the client in using the insurance services and building an emotional value to the insurance company have all been effective. Besides, running an instant messenger program gives customers a sense of belonging and specificity. The economic conditions of the Iranian society have been falling dramatically over the past years and it is natural that provision of financial rewards, discounts coupons and free gifts can increase their loyalty to a particular insurance company. Other findings indicated that the instantaneous programs were not effective on customer loyalty. In fact, since the customers may consider such a positive attitude in his first encounter up until the last deal with the insurance company as their right, one should not expect the implementation of long-term programs to have a significant effect on their loyalty. Eventually, hard programs have been effective, to some extent, on customer loyalty.
 
Conclusion
In order to design loyalty programs, it is recommended that, in addition to forming a customer club and designing a loyalty card, virtual interaction with the customers will be developed to identify needs, meet their needs and improve loyalty. It is suggested to use greetings, postcards, booklets, ezines, and etc while implementing soft loyalty programs. On the other hand, the provision of personal services such as insurance consulting services, outsourcing services and personalization of the virtual interactive environment with the client can be placed on the agenda of the company. In implementing hard loyalty programs, you can also share with the customer the profit from applying their corrective comments on the provision of services, discounts, free sidelong insurance, and the gifts and rewards in proportion to the volume of purchases, increased customer loyalty and increased trust in company products and services. It should be noted that according to the results of the research, the implementation of soft instantaneous programs was the priority and postponement of such programs is not desirable for the customers. On the other hand, the company can also pay attention to the hard instantaneous and long-term issues along with these measures.
 

Keywords

Main Subjects

References

References
Allaway, A., W., Gooner, R. M., Berkowitz, D., & Davis, L. (2005). Deriving and exploring behavior segments within a retail loyalty card program. European Journal of Marketing, 40 (11/12), 1317-1339.
Barlow, R. G. (1992). Relationship Marketing - The Ultimate in Customer Services. Retail Control, 60 (3), 29-37.
Bazargan, A., Karray, S., & Zolfaghari, S. (2016). Modeling Reward Expiry for Loyalty Programs in a Competitive Market. Available at SSRN: https://ssrn.com/abstract= 2911099.
Berman, B. (2006). Developing an Effective Customer Loyalty Program, California Management Review, 49 (1), 123-148.
Berry, J. (2015). The 2015 Colloquy loyalty census: Big numbers, big hurdles. Colloquy Loyalty Talks. Retrieved August 1, from https://www.petrosoftinc.com/wp-content/uploads/ 2018/03/2015-loyalty-census.pdf.
Bose, S., & Rao, V. G. (2011). Perceived benefits of customer loyalty programs: validating the scale in the Indian context. Management & Marketing, 6 (4), 543-560.
Brashear-Alejandro, T., Kang, J., & Groza, M. D. (2016). Leveraging loyalty programs to build customer–company identification. Journal of Business Research, 69 (3), 1190–1198.
Bridson, K., Evans, J., & Hickman, M. (2008). Assessing the relationship between loyalty program attributes, store satisfaction and store loyalty. Journal of Retailing and Consumer Services, 15 (5), 364–374.
Cap Gemini, (2015). Fixing the Cracks: Reinventing Loyalty Programs for the Digital Age. Retrieved December 20, 2015. https://www.capgemini-consulting.com/reinventing-loyalty-programs.
Drèze, X., & Nunes, J. C. (2011). Recurring Goals and Learning: The Impact of Successful Reward Attainment on Purchase Behavior. Journal of Marketing Research, 48 (2), 268-281.
Ebrahimpour Azbari, M., Akbari, M., & Rafiei Rasht Abadi, F. (2016). The effect of experiential marketing on brand commitment with the mediating role of trust and loyalty. Journal of business management, 7 (4), 783-804. (in Persian)
Egblopeali, A. Y., & Aimin, W. (2011). Reoseurly on Effects of Corporate Image, Customer Satisfaction and Switching Cost on Customer Loyalty in Togolese Telecommunication Companies. Proceedings of the 7th International Conference on Innovation & Management.
Foo, M-H., Douglas, G., & Jack, M. A. (2008). Incentive Schemes in the Financial Services Sector. International Journal of Bank Marketing, 26 (2), 99-118.
Gee, R., Coates, G., & Nicholson, M. (2008). Understanding and Profitably Managing Customer Loyalty. Marketing Intelligence & Planning, 26 (4), 59-374.
Ghaffari Ashtiani, P., & Eskandari Mehrabadi, A. (2011). Evaluation of the relationship between loyalty program features, store satisfaction and store loyalty (case study: Arak store). Marketing Management, 6 (10), 27-45. (in Persian)
Gharehche, M., & Dabooeian, M. (2011). Interaction of Employee Loyalty and Customer Loyalty in the Service Industry. New Marketing Research, 1 (3), 27-46. (in Persian)
Gomez, B. G., Arranz, A. G., & Cillan, J. G. (2006). The role of loyalty programs in behavioral and affective loyalty. Journal of Consumer Marketing, 23 (7), 387–396.
Haghighi Kafash, M., Dehghanan, H., & Jalali, M. (2017). Identification and prioritization of the incentives for the unification of banks and insurers in the formation of "Bank-Insurance". Insurance research, 32 (3), 1-20. (in Persian)
Harris, E. (2000). Recognize, Reward, Reap the Benefits. Sales and Marketing Management, 152 (9), 109.
Heidarzadeh Hanzaee, K., & Esmaeilpour, F. (2017) Effect of restaurant reward programs on customers’ loyalty: evidence from Iran. Journal of Islamic Marketing, 8 (1), 140-155.
Ho, R., Huang, L., Huang, S., Lee, T., Rosten, A., & Tang, Ch. S. (2009). An approach to develop effective customer loyalty programs: The VIP program at T&T Supermarkets Inc. Managing Service Quality: An International Journal, 19 (6), 702-720.
Hsee, C., Yu, K., Zhang, J., & Zhang, Y. (2003). Medium maximization. Journal of Consumer Research, 30 (1), 1-14.
Hu, H., Huang, C., & Chen, P. (2010). Do reward programs truly build loyalty for lodging industry? International Journal of Hospitality Management, 29 (1), 128-135.
Ismail Pour, M., & Azargoon, H. (2013). Identification and categorization of customer loyalty programs in the banking system, International Conference on Business Excellence. Tehran: Institute of Managers of Idea Posper, Vieira Capital. (in Persian)
Jang, D., Mattila, A. S. (2005). An examination of restaurant loyalty programs: what kinds of rewards do customers prefer? International Journal of Contemporary Hospitality Management, 17 (5), 402-408.
Kandampully, J., & Suhartanto, D. (2003). The Role of Customer Satisfaction and Image in Gaining Customer Loyalty in the Hotel Industry. Journal of Hospitality & Leisure Marketing, 10 (1-2), 3-25.
Keh, H. T., & Lee, Y. H. (2006). Do reward programs build loyalty for services? The moderating effect of satisfaction on type and timing of rewards. Journal of Retailing, 82, 127-136.
Kendrick, A. (1998). Promotional products vs price promotion in fostering customer loyalty: A report of two controlled field experiments. Journal of Services Marketing, 12 (4), 312–326.
Kivetz, R., Simonson, I., (2002). Earning the right to indulge: effort as a determinant of customer preferences toward frequency program rewards. Journal of Marketing Research, 39 (2), 155–170.
Lee, J. S., Tsang, N., & Pan, S. (2015). Examining the differential effects of social and economic rewards in a hotel loyalty program. International Journal of Hospitality Management, 49, 17–27.
Lewis, M. (2004). The Influence of Loyalty Programs and Short-Term Promotions on Customer Retention. Journal of Marketing Research, 41 (3), 281-292.
Liu, Y. (2007). The Long-Term Impact of Loyalty Programs on Consumer Purchase Behavior and Loyalty. Journal of Marketing, 71 (4), 19-35.
Liu, Y., & Yang, R. (2009). Competing loyalty programs: impact of market saturation, market share, and category expandability. Journal of Marketing, 73 (1), 93-108.
Meyer-Waarden, L., (2015). Effects of loyalty program rewards on store loyalty. Journal of Retailing and Consumer Services, 24 (2), 22–32.
Moradi, M. (2010). Designing and explaining a customer loyalty model in insurance industry (Case of study: Karafarin Insurance Company). Industrial Management journal, 5 (14), 130-121. (in Persian)
Morais, D. B., Dorsch, M. J., & Backman, S. J. (2004). Can tourism providers buy their customers’ loyalty? Examining the influence of customer-provider investments on loyalty. Journal of Travel Research, 42, 235–243.
Motahari Nejad, F. (2012). Investigate the relationship between perception of the pricing strategy and the willingness of consumers to buy insurance industry (car insurance). Master's Thesis, Ilam University. (in Persian)
Mulhern, T., & Duffy, D. (2004). Building loyalty at Things Remembered. Journal of Consumer Marketing, 21 (1), 62-66.
Noble, S. M., Esmark, C. L., & Noble, C. H. (2014). Accumulation versus instant loyalty programs: The influence of controlling policies on customers' commitments. Journal of Business Research, 67, 361–368.
Ocean, G., & Smith, G. (1993). Social reward, conflict, and commitment: A theoretical model of gambling behavior. Journal of Gambling Studies, 9 (4), 321-339.
Oshaghi, F., & Zakeri, M. (2018). Investigating the Factors Affecting Customer Loyalty in Electronic Insurance Services (Case of study: Sarmad Insurance). Business Management, 10 (37), 79-99. (in Persian)
Ou, W. M., Shih, Ch. M., Chen, Ch. Y. & Wang, K. Ch. (2011). Relationships among customer loyalty programs, service quality, relationship quality and loyalty: An empirical study. Chinese Management Studies, 5 (2), 194-206.
Palmatier, R. W., Gopalakrishna, S., & Houston, M. B. (2006). Returns on Business-to-Business Relationship Marketing Investments: Strategies for Leveraging Profits. Marketing Science, 25 (5), 477-493.
Pandit, A., & Vilches-Montero, S. (2016). Are reward cards just a business deal? The role of calculative versus emotional card commitment in driving store loyalty. Journal of Retailing and Consumer Services, 31 (3), 335–360.
Park, S. B., Chung, N. & Woo, S. C. (2013). Do Reward Programs Build Loyalty to Restaurants the Moderating Effect of Long-Term Orientation On the Timing and Types of Rewards. Managing Service Quality, 23 (3), 225-244.
Pezhman, R., & Kazemi Mahyari, H. (2016). Proposing and Analyzing a Model for the Influence of Ethical Sales Behavior on Customers Loyalty with a Case Study in Parsian Insurance Company. Marketing management, 10 (29), 21-39. (in Persian)
Rezaee Kelidbari, H. R., Taleghani, M., & Alavi Foumani, S. F. (2017). A Comparative Study of Self-congruity and Brand Personality on Customer Loyalty (Case study: Comparing Iranian Mobile Phone Brands and Chinese Mobile Phone Brands). Journal of business management, 9 (2), 317-336. (in Persian)
Rezvani, M., Davari, A., Afrasiabi, R. (2018). Design of customer club business model with an emphasis on innovation and customer blocks. ORMR, 8 (1), 89-112. (in Persian)
Rootman, C., Tait, M., & Sharp, G. (2011). Customer retention in British and Canadian retail banks: Lessons for South Africa. Southern African Business Review, 15 (3), 184-206.
Rothschild, M. L., & Gaidis, W. C. (1981). Behavioral Learning Theory: Its Relevance to Marketing and Promotions. Journal of Marketing, 45, 70-78.
Saili, T., Mingli, Z., & Zhichao, C. (2012). The effects of loyalty programs on customer loyalty: The mediating role of customer value and the moderating role of relationship benefits. African Journal of Business Management, 6 (11), 4295-4309.
Samadi, S., Motahari Nejad, F., Poursharf, Y., & Tolabi, Z. (2014). Designing a loyalty model for car insurance emphasizing the role of relationship marketing links. Insurance research journal, 114, 67-88. (in Persian)
Saxe, R., & Haushofer, J. (2008). For love or money: a common neural currency for social and monetary reward. Neuron, 58 (2), 164-165.
Sehat, S., Nourbakhsh, S. K., & Rezaei HajiDadi, L. (2014). Improving Customer Loyalty Using Strategic Relationship Marketing Approach (Case Study: Bank Affiliated insurance Companies). Insurance research journal, 29 (3), 153-175. (in Persian)
Shafiei, S., Ibrahimi Imam, S., & Fathi, A. A. (2016). Investigating the Effect of Loyalty Programs on the Attraction and Maintenance of Insurers (Customers of Online Sales Campaigns of the Insurance Club of Parsian Insurance Company). Available at: http://www.marketingarticles.ir/relation/1372. (in Persian)
Sharma, D., & Verma, V. (2014). Psychological and economic considerations of rewards programs. Journal of Retailing and Consumer Services, 21 (6), 924-932.
Srikataniryoo, N., & Gnoth, J. (2005). Quality dimension in international tertiary education: A Tahi prospective students. Quality Management Journal, 12 (1), 30-40.
Turner, J. J., & Wilson, K. (2006). Grocery loyalty: Tesco Clubcard and its impact on loyalty. British Food Journal, 108 (11), 958-964.
Uncles, M. D., Dowling, G. R., & Hammond, K. (2003). Customer loyalty and customer loyalty programs. Journal of Consumer Marketing, 20 (4), 294–316.
Verhoef, P. C. (2003). Understanding the effect of relationship management efforts on customer retention and customer share development. Journal of Marketing, 67 (4), 30–45.
Watson, A., Viney, H., & Schomaker, P. (2002). Consumer attitudes to utility products: a consumer behavior perspective. Marketing Intelligence & Planning, 20 (7), 394-404.
Yi, Y., & Jeon, H. (2003). Effects of loyalty programs on value perception, program loyalty, and brand loyalty. Journal of the Academy of Marketing Science, 31 (3), 229-240.
Journal of Business Management
Volume 11, Issue 2
2019
Pages 259-276

Files

Share

How to cite

Statistics