THE EFFECT OF CUSTOMER SERVICE STRATEGIES ON CUSTOMER LOYALTY: EVIDENCE FROM CIC INSURANCE GROUP- NAKURU COUNTY

Abstract

The aim of this study was to investigate the effect of customer service strategies on customer loyalty of insurance firms. The study specifically sought to establish the extent to which quality service, service bay ambience and technology support strategies affect loyalty of CIC insurance Group customers in Nakuru County. In order achieve the study objective, 15,487 customers in Nakuru and Naivasha branches formed the target population upon which a sample size of 222 respondents was drawn for the study using Nassiuma‟s formula. Data was collected by use of a pre tested structured questionnaire containing both open and close ended questions. Descriptive statistics (frequencies, percentages) and Chi-square test as well as inferential statistics (Pearson‟s Correlation and regression analysis) were used to analyze data. The findings of the study were presented using tables. The theories upon which this study was anchored include; relationship commitment model, conversion model and service quality model (SERVDUAL). The study revealed that when all the independent variables (Quality service strategy, Service bay ambience strategy and Technology support strategy) are combined; only explain 21.7% of the variations in customer loyalty in the insurance industry could be explained by the results of the study findings. The findings also revealed that quality service strategy had an insignificant effect on customer loyalty at 5% level of significance (β1=0.042; p=0.741). However, service bay ambience strategy (β2=0.253; p=0.019) and technology support strategy (β3=0.534; p=0.000) respectively significantly influenced the loyalty of customers in the insurance industry. From the findings, it can be concluded that technology support strategy had a greater influence on customer loyalty followed by service bay ambience strategy and the least being quality service strategy. The study recommends that the insurance firms should incorporate more of technology support strategy amongst their customer service strategies more so in this information and communication technology era. Further research needs also to be carried out on firms in other industries so as to find out whether these variables will hold true.