1

STUDY OF CUSTOMER RETENTION IN IDBI FEDERAL LIFE

INSURANCE CORPORATION LIMITED

A Project Report

submitted in partial fulfillment of the requirements for

the award of the degree of Masters of Business Administration

by

U.SINDHU 11MBA0108

Under the Guidance of

Prof. Sudipto Battacharya PhD

JULY 2012

VIT Business School

fostering innovation

2

CERTIFICATE

This is to certify that Institutional Training Report submitted by Ms.U.sindhu, Reg. No.

11MBA0108 to VIT Business School, VIT University, Vellore in partial fulfillment of the

requirements for the degree of Master of Business Administration is a bonafide record of work

carried out by her under my supervision. The contents of this report, in full or in parts have not

been submitted in any form to any other institute or university for the award of any degree or

diploma

Faculty Guide Programme Manager

Internal Examiner External Examiner

3

Declaration

I, Sindhu.U (11MBA0108), a Bonafide student of the VIT Business School, VIT University,

Vellore, hereby declare that the Institutional Training Report submitted in partial fulfillment of

the requirements of the Degree of Master of Business Administration of the VIT University, is my

original work.

.

Date:

Place: Vellore

Sindhu.U

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ACKNOWLEDGEMENT

I express my sincere thanks to the Chancellor, Dr. G. Vishwanathan for providing me with

adequate infrastructure and a congenial academic environment.

I wish to express my thanks to the Vice Chancellor, Dr. V. Raju, for his patronage.

I am grateful to the Programme Manager of VIT Business School, Dr. Bhanu Sree Reddy, for

encouraging and providing me with the necessary assistance in accomplishing the project.

I am also thankful to my guides, Dr. Sudipto Bhattacharya PhD, VIT Business School and

Mrs.Shanthi Yagyanath , IDBI Federal Life Insurance Corporation Limited, whose timely

guidance and persistent encouragement helped me in completing the project successfully and

making it a wonderful learning experience.

I convey my sincere thanks to all the teaching and non-teaching staff of the business school for

their support and co-operation during the project.

Finally I thank my parents and colleagues who have helped me in the successful completion of

the project.

(SINDHU.U)

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CONTENTS

S.NO TITLE PAGE NO

List of Tables and Charts 2

1 Introduction 4

2 Review of Literature 8

3 Company Profile 17

4 Research Methodology 27

5 Analysis and Interpretation 29

6 Findings 51

7 Recommendation 53

8 Conclusion 55

9 Appendix 57

10 Bibliography 62

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LIST OF TABLES AND CHARTS

S.NO TITLE PAGE NO

1 Decision Criteria for Univariate Analysis 30

2 Age Distribution 31

3 Gender 32

4 Marital Status 33

5 Education Qualification 34

6 Occupation 35

7 Income 36

8 Service Satisfaction 37

9 Concern Solvation 38

10 Benefit Satisfaction 39

11 Courteous Service 40

12 Quick Call 41

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13 Knowledge Representative 42

14 Highest Benefits 43

15 Policy & Procedure Understanding 44

16 Easy Payment Mode 45

17 Long Relationship 46

18 Recommend IDBI 47

19 Friends Insisted 48

20 Another Policy in IDBI 49

21 Overall Mean & Stranded Deviation Value 50

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1. INTRODUCTION

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IMPORTANCE OF THE STUDY

Customer satisfaction and customer retention are two of the most important factors

regarding the long term success of a company. These factors are known to be a huge influencing

factor in relation to the economic success of a company.

Customer retention is one of the most important factors of profit growth. It's so important

because it costs so much to influence customers to buy and so little to induce a repurchase. These

are the benefits of customer retention:

i. New customers cost more than keeping existing ones. Help executives make the most

of existing relationships by helping their customers make repeat purchases. Existing

customers have made an emotional commitment that required a large investment of time

to earn.

ii. Company already knows how to do business with existing customer. An executive

doesn't have to invest additional resources training to do business with the existing

customer. This saves time and allows them to serve existing customers faster.

iii. Satisfied customers are already convinced of value. They have already proven they

can serve the customer, and have provided proof. Executives don't have to invest the

resources necessary to start from scratch again.

iv. Strengthening of the unique selling proposition

STATEMENT OF PROBLEM

IDBI Federal life insurance co ltd is a joint venture company between three financial

companies IDBI Bank, federal Bank and European Insurer Ageas. With effective utilization of

digital marketing tools IDBI federal life insurance are able to reach potential customers. IDBI in-

house technology for customer inquiries and query resolution are deeply entrenched in terms of

processes and call to action with respective customer.

Though such technologies for the customer retention are prevailed there are some

drawbacks in it. Premium collection of the insurance company fell down by 34% during April –

December 2011.I wanted to know the relinquishment level of IDBI federal life insurance

corporation limited and the ways that could make the customer retain.

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OBJECTIVES OF THE PROJECT

1. To identify the present situation of IDBI Federal Life Insurance

2. To identify the ways to retain the customer

SCOPE OF THE PROJECT

Successful companies are constantly working in the field of customer retention, because

without customer retention it isn’t and wasn’t possible to be successful in the long term.

Currently many companies are facing an aggressive battle regarding customer retention. This

study will help IDBI to know the relinquishment level and how to retain the customers.

PERIOD OF THE STUDY

The Period of Study is 6 weeks.

COLLECTION OF DATA

Two types of data are collected: Primary and secondary data

Primary data

The data are collected by the questionnaire method. The questionnaire consists of a

number of questions interviewed to the customers for their response.

Interview: Telephonic Interview

Secondary data

Secondary data is the data that have been already collected by and readily available from

other source. The secondary data for this study are already available in the firm's enrolled

feedback, journals, books, newspapers and other related report - policy book, Magazine

SAMPLE DESIGN

The research will be carried out among the customers of IDBI federal life insurance. And

sample will be around 100.

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LIMITATIONS OF THE STUDY

Although there were very few limitations to enlist but every research work carried out has

to face some limitations.

i. It is planned to collect 200 responses from the company .Due to some restrictions only

100 responses are collected.

ii. The survey conducted was more objective and completely based on the views of the

respondent.

iii. Survey was conducted among customers of Coimbatore branch only so the result may not

be accurate.

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2. REVIEW OF LITERATURE

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INTRODUCTION

A literature review discusses published information in a particular subject area, and

sometimes information in a particular subject area within a certain time period. A literature

review can be just a simple summary of the sources, but it usually has an organizational

pattern and combines both summary and synthesis. A summary is a recap of the

important information of the source, but a synthesis is a re-organization, or a reshuffling, of that

information. It might give a new interpretation of old material or combine new with old

interpretations. Or it might trace the intellectual progression of the field, including major debates.

And depending on the situation; the literature view may evaluate the sources and advice the

reader on the pertinent or relevant. This chapter began with retention, measuring retention,

importance of customer retention, advantage of customer retention, benefits of customer

retention.

CUSTOMER RETENTION

In today’s challenging economy and competitive business world, retaining their customer

base is critical to organization success. If the company doesn’t give their customer some good

reason to stay, organization’s competitors will give the customer a reason to leave. Customer

retention and customer satisfaction drive profits. It’s far less expensive to cultivate organization

existing customer base and sell more service to the customer than it to seek new, single-

transaction customers. Most surveys across industries shows that keeping one existing customer

is five to seven times more profitable than attracting one new customer. A customer-focused

approach among its employees is still not present. In this era of intense competition .it is very

important for any service company to understand that merely acquiring customer is not sufficient

because there is a direct link between customer retention over time and profitability & growth.

Customer retention to a great extent depends on service quality and customer

satisfaction. Complaints are natural part of any service activity as mistakes are an unavoidable

feature of all human endeavor and thus also of service recovery. Service recovery is the process

of putting things right after something goes wrong in the service delivery. Customer retention is

the maintenance of continuous trading relationships with customers over the long term.

Customer retention is the mirror image of customer defection or chum.

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High retention is equivalent to low defection. In an industry where there are a multiple

purchases over the years, organization’s entire team should be very focused on retaining those

customers:

i. Delivering service that’s consistent with your value proposition and brand

ii. Cross-selling, up-selling and asking for referrals from existing customers

iii. Developing programs to increase customer loyalty and decrease turnover

iv. Prioritizing retention as a major focus in your annual marketing plan.

v. Knowing the lifetime value for different segments and using that data to improve the

marketing.

Studies say it costs ten times more to generate a new customer than to maintain an

existing one. If organization has a small number of customers, losing a few could cripple

company. Even if there are a large number of customers, a small increase in the rate should

dramatically increase profits.

The maintenance of the patronage of people who have purchased a company’s goods or

services once and the gaining of repeat purchases. Customer retention occurs when a customer is

loyal to a company, brand, or to a specific product or service, expressing long-term commitment

and refusing to purchase from competitors. Of critical importance to such strategies are the wider

concepts of customer service, customer relations, and relationship marketing. Companies can

build loyalty and retention through the use of a number of techniques, including database

marketing, the issue of loyalty cards, redeemable against a variety of goods or service,

preferential discounts, free gifts, special promotions, newsletters or magazines, members’ clubs

or customized products in limited editions. It has been argued that customer retention is linked to

employee loyalty, since loyal employees build up long-term relationships with customers.

Customer retention has always been an important topic for the marketing. For sure, the

advantages of loyal clients are obvious. Often CRM is only implementing new systems for data

mining and client segmentation or operational system like a complaint management. But the

thing is: data mining system or client clubs are not the basis. They are the cherry of the cake

called client retention. A key principle of relationship marketing is the retention of customers

through varying means and practices to ensure repeated trade from preexisting customers by

satisfying requirements above those of competing companies through a mutually beneficial

relationship.

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This techniques is now used as a means of counter balancing new customer and

opportunities with current and existing customers as a means of maximizing profit and

counteracting the “leaky bucket theory of business” in which new customer gained in order

direct marketing oriented businesses were at the expense of or coincided with the loss of older

customers. This process of "churning" is less economically viable than retaining all or the

majority of customers using both direct and relationship management as lead generation

via new customers requires more investment.

Many companies in competing markets will redirect or allocate large amounts of resources

or attention towards customer retention as in markets with increasing competition it may cost 5

times more to attract new customers than it would to retain current customers, as direct or

"offensive" marketing requires much more extensive resources to cause defection from

competitors. However, it is suggested that because of the extensive classic marketing theories

center on means of attracting customer and creating transactions rather than maintaining them,

the majority usage of direct marketing used in the past is now gradually being used more

alongside relationship marketing as its importance becomes more recognizable. According to

Buchanan and Gilles the increased profitability associated with customer retention efforts occurs

because of several factors that occur once a relationship has been established with a

customer.

i. The cost of acquisition occurs only at the beginning of the relationship, so the longer the

relationship, the lower the amortized cost.

ii. Account maintenance costs decline as a percentage of total costs or as a percentage of

revenue.

iii. Long-term customers tend to be less inclined to switch, and also tend to be fewer prices

sensitive. This can result in stable unit sales volume and increase in dollar-sales volume.

iv. Long-term customer may initiate free word of mouth promotions and referrals.

v. Long-term customers are more likely to purchase ancillary products and high margin

supplemental products.

vi. Customer that stay with company tend to be satisfied with the relationship and are less

likely to switch to competitors, making it difficult for competitors to enter the market or

gain market share.

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IMPORTANCE OF CUSTOMER RETENTION

There are a number of reasons for this. To begin with, to acquire a customer a company

incurs promotional costs like advertising, sales promotion etc. It is said that it costs five times

more to attract a new customer than retaining one. The operating cost decrease when a customer

stays. Service being rich in experience and credence qualities, it takes some time for customers

to get accustomed to it and once they are used to the service and are satisfied with the service

provider, they tend to purchase more over a period of time. As they remain satisfied with a

service provider, they spread a positive word of mouth, which is very effective in case of service

for attracting new customers. Longer the customer stays with an organization, more the

organization knows about him, which enables it to offer a customized service which makes it

difficult for the customer to defect. This may even provide opportunities to the organization to

charge price premium by offering individualized service which may be difficult for the

competitors to offer. Considering the importance of retaining customers in service business,

Reichheld & Sasser coined a term ‘Zero Defection’. They highlighted that companies can boost

profits by almost 100% by retaining just 5% more of their customers. Further, it is also very

important to understand the life time value of a customer. Further, if by a positive word of

mouth, he brings just one more customer to the organization, his value to the organization

doubles. Therefore, it is important for all the employees in the organization to understand the life

time value of their customers.

ADVANTAGES OF CUSTOMER RETENTION

POSSIBILITY OF REPEAT BUSINESS

This is probably the most obvious advantage of customer retention. Effective services

that lead to customer satisfaction will make customer coming back to again, thus giving repeat

business. Repeat business is a win-win proposition for the business or service and the customer.

The business reduces the cost of customer acquisition, while the customer reduces the cost of

finding a reliable vendor and thus also saves on costs associated with switching vendors.

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REDUCED COSTS FOR CUSTOMER ACQUISITION

Acquiring a customer has certain associated costs. These include the costs associated

with advertising, following up, sales demos, travel and meeting cost etc. having a repeat

customer means that the customer means that the customer is already aware of your processes

and can predict certain quality of output, thus minimizing the cost involved in new customer

acquisition. Having a repeat customer also has the potential to open up another channel to

advertise your business – word of mouth. Word of mouth advertising / recommendations are

perhaps the most important outcome of having a satisfied customer.

FOSTERING GREATER INTERACTION BETWEEN BUSINESS

AND CUSTOMER

Today’s markets are increasingly moving away from mass produced standard products

and service, towards a more customized market, where products and service are tailored to meet

customers’ specific requirements. Having a repeat customer is an opportunity for you to build a

more focused relationship based on your customers’ specific needs and requirements. Being

ensured of having a customer who comes back, you have more confidence to suggest

improvements, provide an insight to better understand their needs and consequently design

products and services that are relevant. Having a repeat business also provides an opportunity for

the buyer and the seller to co-create products and services.

HAVING MORE DELIGHTED CUSTOMERS

Effective customer retention strategies allow you to move from the zone of

customer satisfaction to customer delight. Studies have shown that customer delight is achieved

only when there is a perfect synergy between the buyer needs and the buyer understands what the

seller can deliver exactly what the customer need. If you are able to deliver your customers, you

have better chance of them coming back to you, since they now know why you are different from

the rest of competition.

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CUSTOMER RETENTION: STATISTICS

i. Acquiring new customer can cost five times more than satisfying and retaining current

customers. (Source: http://www.parature.com/tag/customer-service-statistics-2012)

ii. 2% increase in customer retention has same effect on profits as cutting costs by 10%.

(Source: http://www.bautomation.com/resources/articles/startling-statistics-on-customer-

retention-acquisition/489/)

iii. The average company losses 10% of its customer each year.(Source:

http:/www.dbmarketing.com/index.html)

iv. 5% reduction in the customer defection rate can increase profits by 25-125%, depending

on the industries. (Source: http://www.parature.com/tag/customer-service-statistics-2012)

v. The customer profitability rate tends to increase over the life of a retained

customer.(Source: http:/www.dbmarketing.com/index.html)

vi. Companies can boost profits anywhere from 25 to 125% by retaining merely5% more

existing customers. (Source: http://www.parature.com/tag/customer-service-statistics-

2012)

vii. Only one out of 25 dissatisfied customers will express dissatisfaction. (Source:

http://www.bautomation.com/resources/articles/startling-statistics-on-customer-retention-

acquisition/489/)

viii. Happy customer tells 4 to 5 others of their positive experience. Dissatisfied customers tell

9 to 12 how bad it was. ( Source: http://www.parature.com/tag/customer-service-

statistics-2012)

ix. Two-thirds of customers do not feel valued by those serving them. (Source:

http://www.dbmarketing.com/article/Art232.htm)

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MEASURING CUSTOMER RETENTION

Retention rate is normally calculated as the number of customers who have been lost over

a period of time, usually calculated over a quarterly or annual period. The key is to calculate the

percentage versus existing customers, and not underestimate the loss rate by tallying new

customer acquisitions into the mix. The customer retention rate refers to the number of customer

lost over a period of time. It is normally calculated by the percentage of lost customer versus

existing customers over a quarterly or annual period, without tallying new customer acquisitions.

While there are obvious benefits to keeping customers loyal and maintaining retention rates, it

can be extremely challenging for management to keep retention rates up.

Some companies can measure retention rate using their CRM system, since any of the

vendors with solid sales modules should offer this capability. Customer service expert Lori

Bocklund recommends that companies look for this functionality when evaluating CRM

solutions, even though it is unlikely to be the differentiating factor. Companies like witness,

Performix, AIM, and Merced offer these types of tools. To measure this, some companies

combines data from the CRM system and data from other systems, such as your systems, such as

your quality monitoring system, ACD or CTI solution handling contact routing and reporting.

There are no hard and fast rules on calculating customer defection and customer retention,

according to Lowenstein. It can depend on the industries or the type of business, since companies

have long-term arrangements with customers.

However, several consulting and database management companies have succeeded in

creating them. However, the appropriate interval over which retention rate should be measured is

not always one year. Rather, it depends on the customer repurchase cycle. Car insurance and

magazine subscriptions are bought on an annual basis. Carpet tiles and hi-fis are not. If the

normal hi-fi replacement cycle is four years, then retention rate is more meaningful if it is

measured over four years instead of twelve months. Additional complexity is added when

companies a sell a range of products and services, each with different repurchase cycles.

Automobile dealers might sell cars, parts, fuel and service to a single customer. These products

have different repurchase cycles which make it very difficult for the dealer to have a whole of

customer perspective on retention. Sometimes companies are not clear about whether an

individual customer has defected. This is because of the location of customer related data, which

might be retained in product silos, channel silos or functional silos.

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TYPE OF CUSTOMER RETENTION RATE

RAW CUSTOMER RETENTION RATE

This is the number of customer doing business with a firm at the end of a trading period,

expressed as percentage of those who were active customer at the beginning of the period.

SALES-ADJUSTED RETENTION RATE:

This is the value of sales achieved from the retained customers, expressed as a percentage

of the sales achieved from all customers who were active at the beginning of the period.

PROFIT-ADJUSTED RETENTION RATE:

This is the profit earned from the retained customers, expressed as a percentage of the

profit earned from all customers who were active at the beginning of the period.

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3. COMPANY PROFILE

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THE INSURANCE INDUSTRY:

The insurance sector has gone through a number of phases and changes. Insurance in

India used to be tightly regulated and monopolized by state-run insurers. Following the move

towards economic reform in the early 1990s, various plans to revamp the sector finally resulted

in the passage of the Insurance Regulatory and Development Authority (IRDA) Act of 1999.

Significantly, the insurance business was opened on two fronts. Firstly, domestic private-sector

companies were permitted to enter both life and non-life insurance business. Secondly, foreign

companies were allowed to participate, albeit with a cap on shareholding at 26%. With the

introduction of the 1999 IRDA Act, the insurance sector joined a set of other economic sectors

on the growth march.

During the 2003 financial year, life insurance premiums increased by an estimated 12.3%

in real terms to INR 650 billion (USD 14 billion) while non-life insurance premiums rose 12.2%

to INR 178 billion (USD 3.8 billion). Growth in insurance premiums has been averaging at

11.3% in real terms over the last decade. There are strong arguments in favor of sustained rapid

insurance business growth in the coming years, including India’s robust economic growth

prospects and the nation’s high savings rates.

COMPANY PROFILE

IDBI FEDERAL LIFE INSURANCE CO. LTD.:

IDBI Fortis Life Insurance Co. Ltd., is a joint venture between three financial

companies–Development and Commercial Bank, IDBI Bank, India’s private sector

Bank, Federal Bank and European insurer Ageas (formerly Fortis).

IDBI Fortis Life Insurance Co. Ltd. was formed on March 2008. In this venture, IDBI

Bank owns 48% equity while Federal Bank and Ageas own 26% equity each. The Headquarters

is located in Mumbai, India.

IDBI Bank Ltd. continues to be, since its inception, India’s premier industrial

development bank. Created in 1956 to support India’s industrial backbone, IDBI Bank has since

evolved into a powerhouse of industrial and retail finance.

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Today, it is amongst India’s foremost commercial banks, with a wide range of innovative

products and services, serving retail and corporate customers in all corners of the country from

720 branches and 1228 ATMs.

The Bank offers its customers an extensive range of diversified services including project

financing, term lending, working capital facilities, lease finance, venture capital, loan

syndication, corporate advisory services and legal and technical advisory services to its corporate

clients as well as mortgages and personal loans to its retail clients.

As part of its development activities, IDBI Bank has been instrumental in sponsoring the

development of key institutions involved in India’s financial sector – such as the Securities and

Exchange Board of India (SEBI), National Stock Exchange of India Limited (NSE) and National

Securities Depository Ltd.

Federal Bank is one of India’s leading private sector banks, with a dominant presence in

the state of Kerala. It has a strong network of 708 branches and 749 ATMs spread across India.

The bank provides over four million retail customers with a wide variety of financial products.

Federal Bank is one of the first large Indian banks to have an entirely automated and

interconnected branch network.

In addition to interconnected branches and ATMs, the Bank has a wide range of services

like Internet Banking, Mobile Banking, Tele Banking, and Any Where Banking, debit cards,

online bill payment and call center facilities to offer round the clock banking convenience to its

customers. The Bank has been a pioneer in providing innovative technological solutions to its

customers and the Bank has won several awards and recommendations.

Fortis is an international insurance group composed of AG Insurance, the overall market

leader in life and non-life insurance in Belgium, distributing its insurance products through the

network of BNP Paribas Fortis Bank and independent insurance brokers, and Fortis Insurance

International with subsidiaries in the UK, France, Hong Kong, Luxembourg (Non-life),

Germany, Turkey, Russia and Ukraine, and joint ventures in Luxembourg (Life), Portugal,

China, Malaysia, Thailand and India.

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VISION AND VALUES

VISION

To be the leading provider of wealth management, protection and retirement solutions

that meets the needs of our customers and adds value to their lives.

MISSION

To continually strive to enhance customer experience through innovative product

offerings, dedicated relationship management and superior service delivery while striving to

interact with our customers in the most convenient and cost effective manner. To be transparent

in the way we deal with our customers and to act with integrity. To invest in and build quality

human capital in order to achieve our mission.

VALUES

Transparency: Crystal Clear communication to our partners and Stakeholders.

Value to Customers: A product and service offering in which customers perceive value.

Rock Solid and Delivery on Promise: This translates into being financially strong,

operationally robust and having clarity in claims.

Customer-friendly: Advice and support in working with customers and partners.

Profit to Stakeholders: Balance the interests of customers, partners, employees, shareholders

and the community at large.

EXCELLENCE

"In every aspect of work ranging from the in-house training institute to the detailed

Personal Insurance Plan. IDBI Fortis is focused on achieving the highest standards of quality in

every aspect of their business".

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HONESTY

"Is the heart of the Life Insurance business? IDBI Fortis believes that above all, Life

Insurance is based on trust. Transparency, Dependability and Integrity will form the cornerstones

of the IDBI Fortis experience."

KNOWLEDGE

"Is what makes experts. IDBI Fortis is focused on the Life Insurance business. Perfectly

combining global expertise with local knowledge, IDBI Fortis is the Indian Life Insurance

specialist."

CARING

"For the customer IDBI Fortis is redefining the Life Insurance paradigm to focus on the

needs of the customers. The IDBI Fortis service process is responsive, personalized, humane and

empathetic."

CULTURE

Our "in house culture recipe" has some of the finest ingredients going into its making.

Some of the more prominent aspects of our culture are stated below:

i. Customer comes first

ii. Do it right the first time

iii. Bias for result oriented action

iv. Financial strength and discipline

v. Clarity of purpose

vi. International quality standards

vii. Inclusive Meritocracy

viii. learning opportunities

ix. Fun at work

x. Commitment to published value system

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TECHNOLOGY

To monitor and manage its network equipment across 34 sites, IDBI Fortis uses Tulip

Proactive Managed CE solution. The solution includes device management, proactive

troubleshooting and notification support. With the implementation of the solution, IDBI has

reported improvement of network performance and availability, with a faster, more effective

change and configuration management.

PRODUCTS

IDBI Fortis launched its first set of products across India in March 2008, after receiving

the requisite approvals from the Insurance Regulatory and Development Authority (IRDA). IDBI

Fortis offers services through a nationwide network across the branches of IDBI Bank and

Federal Bank in addition to a network of advisors and partners. IDBI Fortis has 35 branches

across the country.

SPONSORSHIPS, AWARDS

IDBI Fortis Life Insurance Company was selected as the title sponsor for the India-Sri

Lanka Cricket Series. This was followed by the IDBI Fortis Wealthsurance Twenty20.

‘Wealthsurance Made Easy’ (WME), a knowledge aid by IDBI Fortis for its sales force, won

The Bronze Dragon in the category for ‘Best Dealer/Sales Force activity’ at the Promotion

Marketing Awards of Asia (PMAA).

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ORGANIZATIONAL STRUCTURE

SALES ORGANIZATIONAL STRUCTURE

MURLIIYER (country

Head sales)

North

Zonal Head

Bank

assurance

head

Area

agency

head

South

Zonal Head

East

Zonal Head

West

Zonal Head

Area

agency

head

Area

agency

head

Area

agency

head

Bank

assurance

head

Bank

assurance

head

Bank

assurance

head

Manager

distribution

deputy

chief senior

Manager

distribution

deputy

chief senior

Manager

distribution

deputy

chief senior

Manager

distribution

deputy

chief senior

Distributer

& trainees

& agencies

Corporate

head Corporate

head

Corporate

head

Corporate

head

Distributer

& trainees

& agencies

Distributer

& trainees

& agencies

Distributer

& trainees

& agencies

G.V NAGESHVAR

RAO (MD & CEO)

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HUMAN RESOURCE ORGANIZATIONAL STRUCTURE

There are no Zonal Heads in the Human Resource Department the area Human Resource

executive only acts as the Human Resource Manager and reports all the activities to the Head

Office that is in MUMBAI.

G.V NAGESHVAR RAO

(MD &CEO)

MURLIYER (Country

Head Sales)

MALLIKA

SARASWATH (Human

Resource Head)

Pay Roll Service Department Recruitment

Senior Manager Chief Manager

Assistant

Manager

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OPERATIONS ORGANIZATIONAL STRUCTURE

The Zonal Managers are supported by Branch Support Executives and the Operations

department is present only in the Head Office which is in MUMBAI.

G.V NAGESHVAR

RAO (MD &CEO)

PRODUCT

DEPARTMENT

FINIANCE

DEPARTMENT

ANIL SHRIVATSAV

UNDERWRITING

DEPARTMENT

South Zonal

Support Manager

North Zonal

Support Manager

West Zonal

Support Manager

East Zonal

Support Manager

MARKET &

PROMOTION

DEPARTMENT

MURLIYER

(Country Head

Sales)

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PRODUCT PROFILE:

WEALTHSURANCE: The Wealthsurance Milestone Plan enables the policyholder to save and

build wealth to meet their financial goals. This Plan comes with a wide range of 13 investment

options and 7 insurance benefits - all packaged with a low charge structure and unmatched

flexibility.

HOMESURANCE: IDBI Federal Homesurance Protection Plan provides full insurance cover

for properties even under construction, thus ensuring that the beneficiary gets the full sanctioned

amount in case of any unfortunate event. It also has an innovative fixed period cover for those

who would aim to prepay their loans early.

BONDSURANCE: Bondsurance is designed for customers looking for guaranteed returns which

will not get affected by financial market conditions. It offers guaranteed return on investment

along with life insurance cover.

MICROSURANCE: IDBI Federal Microsurance Plan is a one of its kind insurance plan which

can be very useful for various Micro Financial Institutions and NGOs, wherein not only the

members but even the member’s family gets an insurance cover.

TERMSURANCE: IDBI Federal Termsurance Protection Plan offers the unique Increasing

Cover option that automatically increases the cover every year without increasing the premium.

INCOMESURANCE: Knowing the customer helped us to combine the Endowment & Money

Back plans into a single plan. It linked the returns to the G-Sec rates, transparently declared by

the government. Also, the Guaranteed Annual Payout and other benefits upon death are tax-free

under Sec 10(10D).

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4. RESEARCH METHODOLOGY

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INTRODUCTION

The system of collecting data for research projects is known as research methodology.

The data may be collected for either theoretical or practical research for example management

research may be strategically conceptualized along with operational planning methods and

change management. Research methodology is to describe how to gather information (method)

this can be survey interview, litterateur review etc. And then explain each method what are they,

what are the method. Some important factors in research methodology of measure most of your

work is finished by the time you finish the analysis of data. Formulation of research questions

along with sampling weather probable or non-probable is followed by measurement that includes

surveys and scaling. This is followed by research design, which may be either experimental or

quasi-experimental. Methodology includes a philosophically coherent collection of theories,

concepts or ideas as they relate to a particular discipline or field of inquiry.

METHOD OF DATA PRESENTATION

Any research finally leads to a result, which would be analyzed, from the data that have

been received by the researcher. Data analysis is meant to be the most sensitive part of any

research work. On achieving this various methods can be adopted there are three different

methods using for data analysis such as univariate statistic.

The univariate analysis consist of mean, standard deviation, percentage etc. although the

mean most commonly seen representation of central tendency and the stranded deviation takes

into account each observation’s distance from the mean. The obtained data were presented

through table based on the percentage of the respondents and were analysis through spread sheet

under the univariate measures such as mean, standard deviation.

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5. ANALYSIS & INTERPRETATION

34

METHOD OF DATA EVALUATION

After the data analysis, it must be evaluate to get the decision. Here the decision rule will

be applied that is univariate measure calculated to the decision. The liker’s scale is given 1-3 to

each statement in the questionnaires.

Based on the value indicated in the questionnaire, the average value for each factor is considered.

The mean value lies between 1-3 which follows.

1) Agree

2) Neutral

3) Disagree

1 2 3

Further three types of degree of consideration that can be derived regarding differentiation

variables are show in the following table

Decision Criteria for Univariate Analysis

Range Decision Attribute

1<X=2.5 Low Level Relinquishment

2.5<X=3.5 Moderate Level Relinquishment

3.5<X<=5.0 High Level Relinquishment

PERSONAL INFORMATION

The research is to identify the customer retention in IDBI federal insurance Co limited in

Coimbatore branch. Retaining the customer is based on the customer satisfaction. Age, sex, civil

status, education level, occupation, income also decide the satisfaction.

35

AGE DISTRIBUTION

Age distribution pattern of the customer in Coimbatore branch it’s represented by the

sample 100. Age distribution class was categories in to three classes.63% of customer

represented the age categories of 18-35 years. 5% of customer represented the age categories of

36-50 years. 32% of customer represented the age categories of over 50 years.

Age Distribution Frequency Percentage

18-35 Years 63 63%

36-50years 5 5%

Over 50 Years 32 32%

Total 100 100%

0

10

20

30

40

50

60

70

18 - 35 36 - 50 above 50

Age Distribution

36

GENDER

In this research the factor of gender represent 76% of sample male & 24% of samples

female.

Gender Frequency Percentage

Male 76 76%

Female 24 24%

Total 100 100%

0

10

20

30

40

50

60

70

80

Male Female

Gender

37

MARITAL STATUS

Out of 100 samples, 77% samples were unmarried and 23% of samples were married.

Marital status Frequency Percentage

Unmarried 77 77%

Married 23 23%

Total 100 100%

0

10

20

30

40

50

60

70

80

90

Unmarried Married

Marital status

38

EDUCATION QUALIFICATION

33% of samples were found in the category of UG degree holder. 58% of samples were

found in the category of PG degree holder. 19% of samples were found in the category of other

or none.

Education Qualification Frequency Percentage

UG degree holder 33 33%

PG degree holder 58 58%

Other or none 19 19%

Total 100 100%

0

10

20

30

40

50

60

70

UG Degree Holder PG Degree Holder Other or None

Education Qualification

39

OCCUPATION

64% of samples were found in the category of professional. 10% of samples were found

in the category of clerical. 26% of samples were found in the category of unskilled workers.

Occupation Frequency Percentage

Professional 64 64%

Teacher 0 0%

Clerical 10 10%

Unskilled workers 26 26%

Total 100 100%

0

10

20

30

40

50

60

70

Professional Teacher Clerical Unskilled workers

Occupation

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INCOME

Income was categories in to four classes. 5% customer represents the income Rs 10000-

20000.12% customer represents the income Rs 20000-30000. 83% customer represents the

income above Rs 300000.

Income range (per month) Frequency Percentage

Rs 10000-20000 5 5%

Rs 20001-30000 12 12%

Above Rs 300000 83 83%

Total 100 100%

0

2

4

6

8

10

12

14

10000 - 20000 20001 - 30000 Above 30000

Income

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RESEARCH INFORMATION

The data collected from 100 customers who were statement in order to evaluate. The

mean and standard deviation are calculated to evaluate the research details.

Mean = Σfx / Σf

Standard deviation = (Σfx^2 / Σf)-(Σfx / Σf) ^2

EVALUATED RESEARCH DATA

7. In thinking about the recent experience with IDBI Federal life insurance, rate the satisfaction

with the customer service received by you?

Frequency Percentage

Agree 78 78%

Neutral 0 0%

Disagree 22 22%

Total 100 100%

X f fx x^2 fx^2

Agree 1 78 78 1 78

Neutral 2 0 0 4 0

Disagree 3 22 66 9 198

100 144 276

Mean = 1.44

Standard deviation = 0.69

0

20

40

60

80

100

Agree Neutral Disagree

Service Satisfaction

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8. The process for getting your concerns resolved is fast?

Frequency Percentage

Agree 83 83%

Neutral 0 0%

Disagree 17 17%

Total 100 100%

X f fx x^2 fx^2

Agree 1 83 83 1 83

Neutral 2 0 0 4 0

Disagree 3 17 51 9 153

100 134 236

Mean = 1.34

Standard deviation = 0.56

0

10

20

30

40

50

60

70

80

90

Agree Neutral Disagree

Concern Solvation

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9. Please think about the features and the benefits of the insurance you took. Are you satisfied

with the insurance?

Frequency Percentage

Agree 32 32%

Neutral 45 45%

Disagree 23 23%

Total 100 100%

X f fx x^2 fx^2

Agree 1 32 32 1 32

Neutral 2 45 90 4 180

Disagree 3 23 69 9 207

100 191 419

Mean = 1.91

Standard deviation = 0.54

0

5

10

15

20

25

30

35

40

45

50

Agree Neutral Disagree

Benefit Satisfaction

44

10. a. The customer service representative was very courteous

Frequency Percentage

Agree 53 53%

Neutral 17 17%

Disagree 30 30%

Total 100 100%

X f fx x^2 fx^2

Agree 1 53 53 1 53

Neutral 2 17 34 4 68

Disagree 3 30 90 9 270

100 177 391

Mean = 1.77

Standard deviation = 0.78

0

10

20

30

40

50

60

Agree Neutral Disagree

Courteous Service

45

b. The customer service representative handled your call quickly

Frequency Percentage

Agree 56 56%

Neutral 5 5%

Disagree 39 39%

Total 100 100%

X f fx x^2 fx^2

Agree 1 56 56 1 56

Neutral 2 5 10 4 20

Disagree 3 39 117 9 315

100 183 391

Mean = 1.83

Standard deviation = 0.56

0

10

20

30

40

50

60

Agree Neutral Disagree

Quick Call

46

c. The customer service representative was knowledgeable

Frequency Percentage

Agree 68 68%

Neutral 12 12%

Disagree 20 20%

Total 100 100%

X f fx x^2 fx^2

Agree 1 68 68 1 68

Neutral 2 12 24 4 48

Disagree 3 20 60 9 180

100 152 296

Mean = 1.52

Standard deviation = 0.65

0

10

20

30

40

50

60

70

80

Agree Neutral Disagree

Knowledge Representative

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11. The policy plans of IDBI Federal Company provide highest benefits for you?

Frequency Percentage

Agree 80 80%

Neutral 15 15%

Disagree 5 5%

Total 100 100%

X f fx x^2 fx^2

Agree 1 80 80 1 80

Neutral 2 15 30 4 60

Disagree 3 5 15 9 45

100 125 185

Mean = 1.25

Standard deviation = 0.25

0

10

20

30

40

50

60

70

80

90

Agree Neutral Disagree

Highest Benifits

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12. The insurance plans policy and procedure of IDBI insurance company are understandable

easily?

Frequency Percentage

Agree 100 100%

Neutral 0 0%

Disagree 0 0%

Total 100 100%

X f fx x^2 fx^2

Agree 1 100 100 1 100

Neutral 2 0 0 4 0

Disagree 3 0 0 9 0

100 100 100

Mean = 1

Standard deviation = 0

0

20

40

60

80

100

120

Agree Neutral Disagree

Policy & Procedures Understandability

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13. Is the premium payment mode of IDBI federal insurance is easy?

Frequency Percentage

Agree 100 100%

Neutral 0 0%

Disagree 0 0%

Total 100 100%

X f fx x^2 fx^2

Agree 1 100 100 1 100

Neutral 2 0 0 4 0

Disagree 3 0 0 9 0

100 100 100

Mean = 1

Standard deviation = 0

0

20

40

60

80

100

120

Agree Neutral Disagree

Easy Payment Mode

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14. Do you like to have a long term relation with IDBI insurance company?

Frequency Percentage

Agree 34 34%

Neutral 24 24%

Disagree 42 42%

Total 100 100%

X f fx x^2 fx^2

Agree 1 34 34 1 34

Neutral 2 24 48 4 96

Disagree 3 42 126 9 378

100 208 508

Mean = 2.08

Standard deviation = 0.73

0

5

10

15

20

25

30

35

40

45

Agree Neutral Disagree

Long Relationship

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15. Do you recommend IDBI Insurance Company to your friends?

Frequency Percentage

Agree 43 43%

Neutral 52 52%

Disagree 31 31%

Total 100 100%

X f fx x^2 fx^2

Agree 1 43 43 1 43

Neutral 2 26 52 4 104

Disagree 3 31 93 9 279

100 188 426

Mean = 1.88

Standard deviation = 0.73

0

10

20

30

40

50

60

Agree Neutral Disagree

Recommend IDBI

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16. You insure in IDBI because friends insisted?

Frequency Percentage

Agree 68 68%

Neutral 10 10%

Disagree 22 22%

Total 100 100%

X f fx x^2 fx^2

Agree 1 68 68 1 68

Neutral 2 10 20 4 40

Disagree 3 22 66 9 198

100 154 306

Mean = 1.54

Standard deviation = 0.69

0

10

20

30

40

50

60

70

80

Agree Neutral Disagree

Friends Insisted

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17. Would you like to have another insurance policy in IDBI in future?

Frequency Percentage

Agree 32 32%

Neutral 23 23%

Disagree 45 45%

Total 100 100%

X f fx x^2 fx^2

Agree 1 32 32 1 32

Neutral 2 23 46 4 92

Disagree 3 45 135 9 405

100 213 529

Mean = 2.13

Standard deviation = 0.75

0

5

10

15

20

25

30

35

40

45

50

Agree Neutal Disagree

Another Policy In IDBI

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OVERALL MEANS & STANDARD DEVIATION VALUE

Statement Agree Neutral Disagree Mean Std.Dev

In thinking about the recent experience

with IDBI Federal life insurance, rate

the satisfaction with the customer

service received by you?

78 0 22 1.44 0.69

The process for getting your concerns

resolved is fast?

83 0 17 1.34 0.56

Please think about the features and the

benefits of the insurance you took. Are

you satisfied with the insurance

32 45 23 1.91 0.54

The customer service representative was

very courteous

53 17 30 1.77 0.78

The customer service representative

handled your call quickly

56 5 39 1.83 0.56

The customer service representative was

knowledgeable

68 12 20 1.52 0.65

The policy plans of IDBI Federal

company provide highest benefits for

you?

80 15 5 1.25 0.25

The insurance plans policy and

procedure of IDBI insurance company

are understandable easily?

100 0 0 1 0

Is the premium payment mode of IDBI

federal insurance is easy?

100 0 0 1 0

Do you like to have a long term relation

with IDBI insurance company?

34 24 42 2.08 0.75

Do you recommend IDBI Insurance

company to your friends?

43 26 31 1.88 0.73

You insure in IDBI because friends

insisted?

68 10 22 1.54 0.69

Would you like to have another insure

policy in IDBI in future?

32 23 45 2.13 0.75

No of Response

Mean Std deviation

100

20.69 6.95

The above table shows that IDBI federal insurance is having a high level of customer

relinquishment.

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6. FINDINGS

56

CUSTOMER RELINQUISHMENT

IDBI federal insurance is having a high level of customer relinquishment.

WAYS TO RETAIN THE CUSTOMER

The IDBI federal insurance company in Coimbatore branch has to take some action to have

customers for long time.

i. Free some amount of premium on continuous purchase.

ii. Give some gifts which must satisfy the needs of the customers.

iii. Establish membership cards and membership programs

iv. Frequent buyer programs which permit customers to build up fair play

v. Databases that keep track of customer’s purchases, preferences, complements and

complaints, which are used to carry out loyalty building services and dialogs.

vi. Integrated marketing programs where the advertising, direct communications, customer

service, database marketing and sales programs are all orchestrated together and designed

to build loyalty.

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7. RECOMMENDATION

58

RECOMMENDATIONS

The unmarried people are actually not interested to take insurance. They wanted to invest

their money in other fields like buying a house, bike, buildings, and real-estate etc. They are even

ready to take risk for more earnings.

The married peoples are interested in insurance for the benefit of their partner as well as their

children and medical expenses. Generally educated people understand easily so most of graduate

clearly understand the benefits of insurance policies.

So IDBI Federal Life Insurance Corporation Limited can develop a new policy by targeting

the unmarried people.

IDBI have to increase their promotional activities in such a way that even unskilled persons

understand the importance of their Insurance add value to their customer.

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8. CONCLUSION

60

CONCLUSIONS

The data were collected from the customer’s response of the IDBI Federal Life Insurance

Corporation Limited Coimbatore branch. Based on the percentage of the customers 100 sample

size was collected. The age, gender, marital statuses, educational qualification, occupation,

monthly income, were analyzed as personal information in the questionnaire. According to the

collected personal information, most of the sample customers were young age, single, educated,

higher income customers who got insurance. According to the research the IDBI Federal Life

Insurance Corporation Limited Coimbatore have high customer relinquishment because most of

the customers did not insure out of their own interest. Parents, Friends who are working or doing

their project or internship in IDBI Federal Life Insurance wanted them to have a policy. This is

the reason why customers move out of IDBI Federal.

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9. APPENDIX

62

QUESTIONNAIRE

Good morning is this Mr./Ms.…………

I am Sindhu from IDBI federal one of the leading wealthsurance solution provider in India.

Do you have a moment to talk?

I work extensively in the area of proving future financial planning solution to people. My

expertise includes planning for your family’s financial security, your children’s education,

marriage or your personal retirement.

The reason why I called you today is to get your idea and feedback about IDBI federal can I

continue?

PART A: PERSONAL DETAILS

1. Is your age

a) 18-36 years

b) 36-45 years

c) Over 50 years

2. Gender

a) Male

b) Female

3. Marital status

a) Single

b) Married

4. Education qualification

a) UG degree holder

b) PG degree holder

c) Other or none

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5. Occupation

a) Professional

b) Teacher

c) Clerical

d) Unskilled workers

6. Monthly income

a) Rs 10000-20000

b) Rs 20000-30000

c) Above Rs 300000

PART B: RESEARCH DETAILS

Evaluate the statement on the basis of the point given below

1. Agree

2. Neutral

3. Disagree

7. In thinking about the recent experience with IDBI Federal life insurance, rate the satisfaction

with the customer service received by you?

1 2 3

8. The process for getting your concerns resolved is fast?

1 2 3

9. Please think about the features and the benefits of the insurance you took. Are you satisfied

with the insurance?

1 2 3

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10. Customer service Representative

Pertain to the customer service representative you spoke with most recently please indicate

whether you agree or disagree or none to the following statements

1 2 3

The customer service

Representative was O O O

Very courteous

The customer service

Representative handled O O O

your call quickly

The customer service

Representative was O O O

Knowledgeable

11. The policy plans of IDBI Federal Company provide highest benefits for you?

1 2 3

12. The insurance plans policy and procedure of IDBI insurance company are understandable

easily?

1 2 3

13. Is the premium payment mode of IDBI federal insurance is easy?

1 2 3

65

14. Do you like work or held the relationship between you and IDBI insurance company at long

time?

1 2 3

15. Do you recommend IDBI Insurance Company to your friends?

1 2 3

16. You insure in IDBI because friends insisted?

1 2 3

17. Would you like to have another insure policy in IDBI in future?

1 2 3

Thanks a lot for your response

Have a nice day

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10. BIBLIOGRAPHY

67

Books

1. Research Method for Business Students-Pearson Education-Mark Saunders, Philip Lewis,

and Adrian Thorn hill.

2. Questioner design-Ian Brace

3. Developing a Questionnaire (Real World Research) by Bill Gill ham

4. Questionnaire Design by A.N. Oppenheim

5. Analysis of Questionnaire Data with R by Bruno Falissard

6. Kothari C.R. (1990) Research Methodology: Method and Techniques, WishvaParkashan,

New Delhi. PP115-117

7. Bodie. Z, Kane. A & Marcus. J: Essentials of Investments PP242-243

Websites

1. http://www.economywatch.com/indianeconomy/indian-insurance-sector.html

2. http://www.indianmba.com/Occasional_Papers/OP85/op85.html

3. http://www.banknetindia.com/finance/insure2011.htm

4. Student Insurance: www.ingletravel.com

5. Vehicle Insurance OffersApnaPaisa.com/Vehicle-Insurance