A Psychological Study on Strategic Relationship between Customer’s Satisfaction and Customer’s Churn in Insurance Industry: TISM Approach

Abstract

Financial service providers, especially insurance industry put maximum attention to the customer retention while formulating any strategy or plan, while competitors are always looking at other companies’ customers. So, the top most priority of most of the strategies is to minimize the customers’ churn by strategizing the customers’ psychological properties. In this context, the main purpose of this research-work is to investigate the hierarchical relationship among customers’ satisfaction, components (cognition, feeling, intention) of attitude, decision biases, and customers’ churn in the insurance industry. So that marketers of insurance products can identify the important drivers of customers’ churn and their strength, which will enable them to minimize the churn rate of their customers and build the loyalty. This study employed a qualitative research technique, the TISM that produced a digraph and TISM-model through extensive literature review and expert-opinion. Unproven or weakly established relationships are adequately interpreted in the above said model. This study found that customers’ satisfaction drives the components of attitude, and customers’ biases that are ultimately driving customers’ churn. Strength of every element and the interpretations of the links in the hierarchical relationship explores the strategic ideas for marketers of insurance products to minimize the customers’ churn. Industrial implications of this study refer that customers’ satisfaction should be realised by the insurance companies as the strategic base, not the end itself. So, customers’ satisfaction must be used as the core strategic component for developing customers’ favourable attitude towards the insurance-products of concerned, which reduces negative effects of decision-biases of customers. Over the time period, by the effective implementation of said strategy can minimize the customers’ churn. Social implications are the development of customers’ relevant knowledge (cognition) by the insurance companies through desired satisfaction level, which will protect the customers from exploitations by any service marketers.