Influence of Customer Retention Strategies on Performance of Insurance Companies in Nairobi, Kenya

Abstract

This study aimed to determine the influence of customer retention strategies on performance of insurance companies in Nairobi, Kenya. The study was a cross- sectional descriptive survey design which used quantitative methods. The target population for this study consisted of 48 registered insurance companies with headquarters in Nairobi. Following the small size of the population of the study, a census was carried out. The study aimed to collect both primary and secondary data; primary data was collected using a semi- structured questionnaire while secondary data was obtained from annual reports. Descriptive statistics of mean, frequency and percentages were used to analyze demographic characteristics of the respondents. Regression analysis was used to measure and predict the relationship between the customer retention strategies and performance. The analyzed findings were then presented inform of frequency tables. The study found that a unit increase in monitoring customer relationships will increase market share by 0.223, loyalty programs will increase market share by- 0.148, customer clubs will increase market share by 0.044, effective recovery systems will increase market share by 0.251, sales promotions will increase market share by 0.145, creating customer bonds will increase market share by 0.317, building commitment will increase market share by 0.29, market intelligence will increase market share by 0.247, and lastly extraordinary customer service will increase market share by 0.331. When testing the relationship between retention strategies and gross profit, the study revealed that; a unit increase in monitoring customer retention strategies will result to increase in gross profit by 0.268, loyalty programs by an increase of 0.101, customer clubs will result to an increase in profits by- 0.268, effective recovery systems with an increase in 0.052, sales promotions by an increase of 0.58, cr eating customer bonds by an increase of 0.01, building commitment by an increase of 0.15, market intelligence by an increase of 0.433 and lastly extraordinary customer service will result to an increase by- 0.327. When testing the relationship between retention strategies and sales volumes, the study revealed that; a unit increase in monitoring customer relationships will result to increase in sales volumes by 0.12, loyalty programs by an increase of- 0.116, customer clubs will result to an increase of- 0.4 53, effective recovery systems with an increase in 0.307, sales promotions by an increase of 0 .16, creating customer bonds by increase of 0.409, building commitment by increase of 0.267, market intelligence by increase of 0.25 and lastly extraordinary customer service by an increase of 0.203. Based on research findings and conclusions, the researcher recommended that companies should strengthen their customer bonds to increase customer retention, increase market share as well as grow their sales volumes. Organizations should also provide extraordinary customer service, allocate budgets to building customer clubs and expand their strategies to incorporate customer clubs in order to gain more understanding of their customers. The researcher also recommends that companies should strengthen their market intelligence so as to identify new trends in markets as well as competition. This enables counter measures thus minimizing investment risks by detecting threats and trends early.