RELATIONSHIP MARKETING – 
THE NEW TANTRA FOR LIFE INSURANCE SECTOR
D. Ramkumar

Introduction

In today’s impersonal marketplace, customer satisfaction, retention and loyalty are rapidly become the thing of the past. Relationship Marketing brings them back to the forefront, providing easy-to-apply solutions and strategies for establishing meaningful bonds with customers and turning them into reliable, life-long partners.

Relationship Marketing can be defined as the process to ”identify and establish, maintain and enhance and, when necessary, terminate relationships with customers and other stakeholders at a profit so that the objectives of all parties involved are met; and this is done by mutual exchange and fulfilment of promises” (Grönroos)

The important objectives of relationship marketing are to acquire new customers, maintain and enhance existing relationships with existing customers, reactivation of ex-customers, and handling of customer terminations. The key objective of relatioship marketing is to establish a one to one relationship with all the customers. This may sound like a daydream few years ago; but thanks to the technological breakthrough and technological solutions providers it is very much of reality.

Traditional Marketing Vs. Relationship Marketing

Relationship marketing is carried out by communication and interaction with the customer, building loyalty and developing long term relationships with the customers. Relationship Marketing is not old wine in new bottle; it is a new philosophy which goes beyond customer satisfaction. The ultimate aim of relationship marketing is to have one to one relationship with every customer and it goes beyond customer satisfaction in a particular transaction.

Best Relationship Marketing practices

The following is list of best relationship marketing practices or we can say the ten commandments of relationship marketing

 1. Develop a clear, holistic vision of all stakeholder relationships.

 2. Understand the relative importance of their customers and allocate resources accordingly.
 3. Centrally coordinate the relationship marketing strategy and customise the strategy locally.
 4. Deploy relationship marketing in stages, yet possess and are guided by a comprehensive vision.
 5. Employ a successful relationship marketing strategy that is tightly integrated with numerous functional areas.
 6. Initiate effective change management processes that involve all employees in an internal partnership for 
     relationship marketing.
 7. Provide a consistent customer experience through multiple contact points.
 8. Align the relationship marketing strategy with the brand.
 9. Build better relationships through data-based insights.

 10. Achieve relationship marketing accountability.

Source: Improving Growth and Profits through Relationship Marketing, Carlson Marketing Group and American Productivity & Quality Centre.

Life Insurance Sector in India

“Insurance is like marriage you pay, pay, pay and you never get anything back”, that is the mindset of an average person. Life insurance business in India today is spearheaded by Life Insurance Corporation of India, which was nationalized in 1956. Now LIC of India now has a network of 7 zones, 100 divisions and over 2000 branches across the country with over 550,000 agents. This statistics sounds very impressive, still LIC of India have covered 100 million lives in India, which is only 22% of Indian Insurable Population.

In 1999, the Insurance Regulatory Development Act was passed in the Indian Parliament and the door was opened for private companies with foreign equity. So far twelve private players have been granted license to conduct life insurance business in India. The Market share of new business statistics of all life insurance companies for the period April 2002 – March 2003 is given in the following table.

Market share of new business of all life insurance companies

Table - 1

Source : Muhavar Samachar, August 2003 Coimbatore Divisional Council of Council of Life Insurance Agents,
 2^nd Street, TADABAD, P.B. No.2931 Page 10

LIC is still on top with a lion’s share of the market, but LIC customers had turbulent times through the years. They have government organisation was the king on top, the place traditionally reserved for the customer. Though, LIC had a variety of insurance plans to cater to all categories of people and to their diverse needs, quality and quick customer service were absent throughout due to customer unfriendly attitude.

Absence of marketing acumen, some agents without proper training and absence of quality service made the Indian government to infuse new blood into the market, the private players. The monopoly of LIC, made insurance an underdeveloped sector, with a vast majority of the Indian population uninsured or under insured.

The equation in the market is changing quickly as private insurance players like HDFC and ICICI Prudential are offering real service for Indian life insurance customers with well trained agents (these IRDA certified agents are designated as Life insurance advisors).

It appears as if LIC’s position is at stake. But it is not so in near future. The main reasons are

• It will take time for private players to establish a wide distribution network

• Brand equity of LIC a period

• Long gestation period for private players

Importance of Relationship Marketing For Life Insurance Sector

Services Marketing is a different ball game when you compare it with marketing objects. The fact that the most of the services ranging from haircut to management consultancy are provided on an on going process that paves way for Relationship Marketing. It is the high time for service industry to adopt relationship marketing. Both the company and the customers will benefit from Relationship Marketing. Technological advancement in IT field makes Relationship Marketing affordable, feasible and powerful. In this backdrop to survive and excel in a competitive market, companies should go far beyond the traditional marketing techniques.

One promising technique available at their disposal is RELATIONSHIP MARKETING. Relationship Marketing concentrates on the long-term, ongoing relational exchange so vital to service firms today and represents a paradigm shift in Marketing.

Conclusion

Life Insurance Agents and Development Officers and other employees at LIC of India and Private Insurance Companies should apply and appreciate the concept of Relationship Marketing to survive and excel in a competitive industry.

Author :
D.Ramkumar, M.B.A., M.Phil.,
Lecturer, Department Of Management Studies,
N.M.S.S.Vellaichamy Nadar College,
Nagamalai, Madurai - 625 019.
Email: ramkumar_madurai@yahoo.com

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