Designing and evaluating insurance customer loyalty programs for different customer groups based on their lifetime value

Abolghasem Ebrahimi (), Kazem Askarifar () and Amin Nikbakht ()
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Abolghasem Ebrahimi: Shiraz University Campus
Kazem Askarifar: Shiraz University Campus
Amin Nikbakht: Shiraz University Campus

Journal of Financial Services Marketing, 2024, vol. 29, issue 3, No 8, 808-825

Abstract: Abstract The insurance industry is one of the largest financial areas that due to its service nature, customers can create different values, and the marketing efforts of insurance companies in attracting and retaining different groups of customers have led them to implement various loyalty programs, in which one of the criteria for grouping customers is the customer lifetime value (CLV). In this regard, this research has been conducted with the aim of designing and evaluating the loyalty program of insurance industry customers based on their lifetime value as an applied mixed exploratory, and cross-sectional research. The statistical population of the classification stage was 800 customers registered in the database of Shiraz insurance branches in 2018, and the statistical sample for prioritizing loyalty programs was 40 customers who were randomly selected using the Morgan table and based on access and willingness to participate in the study, the sample was completed. In the first stage, through systematic review, 28 loyalty programs were identified, and 15 valid programs were extracted using the content validity ratio (CVR), and these programs were categorized, and the Kappa index was used to assess categorization reliability. Therefore, in the second stage, the weights of LRFM indexes were determined with the analytic hierarchy process (AHP) and then the customers were classified into four groups of keys, intermittent, prodigal, and uncertain clusters customers using their data in insurance branches databank. Finally, the customers’ priority of identified programs in each group was determined using the fuzzy best–worst method (FBWM). The findings show that from the perspective of customers, intangible and long-term programs are more attractive to key customers, while for intermittent customers, long-term tangible loyalty programs, for uncertain customers, immediate loyalty programs, and for prodigal customers, intangible loyalty programs are more attractive. The results of this study can be used in the formulation of loyalty programs in the insurance industry, in such a way that suitable loyalty programs are considered for each group of customers depending on the customers’ CLV. Such as in designing loyalty programs, the tangibility and time horizon must be considered. Also, each group of programs must be suitable to customers’ CLV.

Keywords: Customer relationship management (CRM); Loyalty programs; Customer lifetime value (CLV); Insurance (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1057/s41264-023-00242-8

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