India, Singapore, Turkey, China, and Chile have high growth prospects ... with insurance companies. ... â¢36% of these policies are non-life insurance products.
BANCASSURANCE, “THE BUSINESS IMPERATIVE”. Dr. Geraldine Gina Abaidoo (DBA, MBA, NQF/7, MCIM, ACII, CHARTERED INSURER)
Customer Satisfaction Factors in Bancassurance Growth – A Research
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Outline of Presentation • Introduction • Purpose of My Research • Problem Statement • Bancassurance Global Performance • Bancassurance performance in Ghana • Why Customer Satisfaction • Customer Experience – research findings • Benefits of customer satisfaction • Value proposition • Recommendation 2
Purpose of Research
purpose
• The of my research was to explore customer satisfaction factors to grow insurance in Ghana. • This research is relevant to understanding why insurance penetration is still below 2% of GDP.
To enact social change and business sustainability through customer satisfaction strategies in life insurance. 3
Background to Research • Insurance growth in Ghana is low – below 2% of GDP. • The ability to implement customer satisfaction strategies for business retention and growth is a measure of bancassurance performance success.
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Background to Research • Less than 1% of life contingencies have insurance cover in Ghana.
• The lack of insurance among the populace puts financial and human resource burden on the government and society.
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Problem Statement • Lack of customer satisfaction strategies to grow insurance in Ghana. Researchers have identified the connection in the process of developing meaningful links between customer satisfaction and insurance growth and sustainability,
and Bancassurance is one such element of ensuring satisfaction in insurance offering. 6
Problem Statement -
• Stakeholders in bancassurance need to give customer satisfaction strategic importance to increase the insurance growth rate in Ghana. • How can this be done? The need to identify satisfaction factors in Bancassurance growth.
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Bancassurance Global Performance Contribution
Africa
Asia Pacific
Europe
Americas
0% Contribution
10% Americas 60%
20%
30% Europe 47%
40% Asia Pacific 47%
50%
60% Africa 19%
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Bancassurance Global Performance • South Korea has the largest market share in Asia Pacific • Portugal and Spain are the largest markets in terms of market share for bancassurance. • India, Singapore, Turkey, China, and Chile have high growth prospects from 2008 to 2017. • 10 African countries have developed banking systems that are well-positioned to generate significant revenue for bancassurance from 2015-2020. • 89% of banks in these 10 African countries already sell insurance in one form or another and 41% promote policies that can be bought on a stand-alone basis. 9
Bancassurance Performance in Ghana • Bancassurance have up to 5% market share of insurance performance in Ghana.
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• Over banks in Ghana have bancassurance partnership with insurance companies. • There are over
60 stand-alone bancassurance products on the Ghana market.
• 36% of these policies are non-life insurance products. • It is crucial for banks and insurers to understand the structure and regulatory environment of the bancassurance markets in order not to miss out on the great potential of bancassurance in the Ghana.
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So how do we grow Bancassurance ?
• Research findings indicated Customer Satisfaction Strategies as a growth determinant.
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What is Customer Satisfaction • Michael De Boeug an American business author stated… “A satisfied customer is the best business strategy of
STRATEGY
all”
Unless you have 100% customer satisfaction, every business must improve (Horst Schulz, African Adventures designer)
OPERATIONAL EFFICIENCY 12
Customer Satisfaction • The feeling or perception of receiving Acceptable service; • Customer Service is either:
Transactional or
Cumulative (relational) 13
Customer Satisfaction • Transactional A post-choice evaluative judgment of a specific purchase occasion May provide specific diagnostic information about a particular product or service encounter
It is not the one big WOW to one customer that wins the day 14
Customer Satisfaction It is the Little WOWs delivered consistently to every customer
• Cumulative or Relational focus on the relationship between customer satisfaction and economic returns an overall evaluation based on the total purchase and consumption experience with a good or service over time a more fundamental indicator of the past, current, and future performance. motivates a firm's investment in customer satisfaction
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Determinants of Customer Satisfaction The research findings indicated the following 4 determinants of customer satisfaction • operational efficiency • quality service delivery
• public education on the function and benefits of insurance • customer perception of insurance offerings that affect customer satisfaction. Implementation of these elements may translate into Bancassurance business growth in Ghana. 16
Facts About Customer Satisfaction • Strategic importance to customer satisfaction may influence the quality of bancassurance delivery. • 68% of customers leave because they are unhappy with the service they receive.
• 14% are unhappy with the product or service. • 9% decide to use a competitor 17
Facts About Customer Satisfaction • It is a leading indicator of consumer repurchase intentions and loyalty • It is a point of business differentiation • It reduces customer churn/turnover • It increases customer lifetime value • It reduces negative word of mouth • It is cheaper to retain customers than acquire new ones 18
Customer Experience 15 Statistics You Cannot Ignore 1.
Price is not the main reason for customer churn, it is actually due to the overall poor quality of customer service.
2.
A customer is 4 times more likely to defect to a competitor if the problem is service-related than price or product-related.
3.
The probability of selling to an existing customer is 60–70%. The probability of selling to a new prospect is 5–20%.
4.
For every 1 customer complaint there are 26 other unhappy customers who have remained silent.
5.
A 2% increase in customer retention has the same effect as decreasing costs by 10%.
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Customer Experience 15 Statistics You Cannot Ignore 6.
96% of unhappy customers do not complain, however, 91% will
7.
A dissatisfied customer will tell between 9–15 people about their experience. Around 13% of dissatisfied customers tell more than 20 people.
8.
Happy customers who get their issue resolved tell about about their experience.
simply leave and never come back.
4–6 people
9.
70% of buying experiences are based on how the customer feels
10.
55% of customers would pay extra to guarantee a better service.
they are being treated.
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Customer Experience 15 Statistics You Cannot Ignore 11.
Customers who rate you 5 on a scale from 1 to 5 are six times more likely to buy from you again, compared to “only” giving you a score of 4.8.
12.
It takes 12 positive experiences to make up for 1 unresolved negative experience.
13.
A 5% reduction in the customer defection rate can increase profits by 5
14.
It costs 6–7 times more to acquire a new customer than retain an existing one
15.
Commerce spending for a new customers is on average $24.50, compared to $52.50 for repeat customers.
95%
–
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Thoughts on Customer Satisfaction • Quality in service and product is not what you PUT IN IT. It is what the customer GETS OUT OF IT (Peter Drucker) • Your most unhappy customers are your greatest source of learning (Bill Gates) • The purpose of any business is to create satisfied customers to create more customers.
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Benefits – Customer Satisfaction System Enhanced Firm Reputation
Reduced Failed Cost
Customer Retention
Customer Loyalty
Customer Satisfaction
Customer Insulation from competition
Customer Long-term Value
Revenue generation and Future Growth
Customer asset and sustainability
Wellbeing of society
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Implications Insight into customer satisfaction in life insurance growth
customer experience customer loyalty
Sustainable economic growth
customer satisfaction customer value
Bancassurance growth
Organizational performance
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Implications • Identification of relevant growth determinants such as operational efficiency and knowledge management could improve the growth rate of insurance in Ghana.
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Bancassurance Value Proposition
Bancassurance stakeholders need to grow the insurance business and improve profitability
Make insurance products and benefits accessible and available to the 95% uninsured Ghanaian population.
Understand public perception to develop workable strategies for public education and awareness creation to increase the penetration rate of insurance in Ghana.
Customer – increase in net worth of households, peace of mind and financial security. For insurance companies – increase market share
• Customer lifetime value is a beneficiary of high customer satisfaction and good customer retention.
For the banks – enhanced brand reputation and product diversification Other stakeholders – mobilization of long-term funds for development 26
Recommendations for Action • Service quality • Customers remain loyal to the life insurance business when service delivery aligns with customer expectation and receive feedback and prompt service delivery
• Operational efficiency • Mis-selling and customer dissatisfaction are contributory factors of high operational expense that translate into a high rate of inefficiency.
• Build trust and confidence • Stakeholders to build public confidence in insurance through rigorous and effective educational campaigns and awareness creation both for employees and the public to mitigate insurance mistrust
• Regulation and Compliance • Regulatory framework to create the environment for bancassurance growth. 27
Recommendations for Action • Recommendations • • • •
Develop service quality measures Operational efficiency Build trust and confidence in insurance Regulatory Framework
• Beneficiaries of study • • • • •
Life insurance company leaders The Insurance Regulator Academicians Financial investors Trade associations
• Dissemination process • • • •
Proquest Seminars Training workshops Road shows 28
Thank You
Customer Satisfaction Factors in Life Insurance Growth in Ghana. Abaidoo, G. (2015)
