The Effect of Customer Relationship Marketing Practices on Customer Retention: The Case of United Insurance Company, Addis Ababa Branch

Abstract

Relationship marketing began to dominate the marketing field in the 21st century. At that time relationship marketing became a major issue in marketing and managing business. Relationship marketing strategy plays a decisive role in interacting and retaining customers, especially in service industries because of the intangible nature of service and high level of interaction with customers. Customer relationship management is an integration of people, process and technology and these elements play a great role on creating and developing effective relationship with customers. The general objective of the study was to assess the effect of Customer Relationship Marketing practices on Customer Retention in the case of United Insurance Company, Addis Ababa branch. To this end, pertinent data were gathered from primary and secondary sources. Quantitative data were gathered through questionnaire from 350 customers, whereas qualitative data collected via interview and observation. Regression analysis was used to test the effect of Customer Relationship Marketing practices on Customer Retention. Moreover, thematic analysis was used to analyze qualitative data gathered via interview. The study concluded that trust, commitment, communication and responsiveness dimensions of Customer Relationship Marketing have caused a statistically significant positive effect on customer retention. However, and empathy had positive but statistically insignificant effect on customer retention. Therefore, the organization is recommended to strengthen its Customer Relationship Marketing practices in order to retain its customers.