A Project Report OnCustomer Relationship Management in IDBI Federal Life Insurance

Submitted in partial fulfilment of the requirements forSummer Internship

Submitted by

ANKIT PANDEY

Under the Guidance of

Mrs. Shaanthi YagyanathIDBI Federal Life Insurance Co. Ltd.

Xavier Institute of ManagementBhubaneswar,Odisha

ACKNOWLEDGEMENT As I look back after the completion of my project I feel it would not have been possible without the guidance. I am very grateful to all the people who have lent their precious time and advice for rendering this project successful. I take this opportunity to thank them all.Firstly, I am grateful to IDBI FEDERAL LIFE INSURANCE COMPANY LTD, for giving me an opportunity to undertake this project in their organization.I sincerely express my thanks to my company project guide Mrs Shaanthi Yagyanath for her strong support and inspiration during my project period.I am thankful to Mr. Gireesh, Mr. Sachin Garg, Ms. Jaya and all the executives of the company for their valuable guidance and for sharing their experience in completing this project successfully,I also express thanks to my parents, my family members, and all my friends for their valuable support in completion of this project successfully.Last but not least I am thankful to all those people who helped us directly and indirectly.

DECLARATIONI hereby declare that the project entitled CUSTOMER RELATIONSHIP MANAGEMENT undertaken at IDBI FEDERAL LIFE INSURANCE COMPANY LTD. submitted in partial fulfilment of the requirement for the completion of summer internship. It is my original work and is not submitted for the award of any other degree or diploma.

Place: LUCKNOW Date: 30/06/2014 ANKIT PANDEY

Table of ContentsINTRODUCTION5COMPANY PROFILE9CUSTOMER RELATIONSHIP MANAGEMENT14CUSTOMER RETENTION21RESEARCH METHODOLOGY27DATA COLLECTION, ANALYSIS & INTERPRETATION28EXPECTED CONTRIBUTION FROM THE STUDY45FINDINGS46CONCLUSION47

INTRODUCTIONWherever there is uncertainty there is risk. We do not have any control over uncertainties which involves financial losses. The risks may be certain events like death, pension, retirement or uncertain events like theft, fire, accident, etc.Insurance is a financial service for collecting the savings of the public and providing them with risk coverage. The main function of Insurance is to provide protection against the possible chances of generating losses. It eliminates worries and miseries of losses by destruction of property and death. It also provides capital to the society as the funds accumulated are invested in productive heads.Types of Insurance:1. Life Insurance - Insurance guaranteeing a specific sum of money to a designated beneficiary upon the death of the insured, or to the insured if he or she lives beyond a certain age.2. Health Insurance - Insurance against expenses incurred through illness of the insured.3. Liability Insurance - This insures property such as automobiles, property and professional/business mishaps.Challenges faced by Insurance Industry Threat of New Entrants: The insurance industry has been budding with new entrants every other day. Therefore the companies should carve out niche areas such that the threat of new entrants might not be a hindrance. There is also a chance that the big players might squeeze the small new entrants. Power of Suppliers: Those who are supplying the capital are not that big a threat. For instance, if someone as a very talented insurance underwriter is presently working for a small insurance company, there exists a chance that any big player willing to enter the insurance industry might entice that person off. Power of Buyers: No individual is a big threat to the insurance industry and big corporate houses have a lot more negotiating capability with the insurance companies. Big corporate clients like airlines and pharmaceutical companies pay millions of dollars every year in premiums. Availability of Substitutes: There exist a lot of substitutes in the insurance industry. Majorly, the large insurance companies provide similar kinds of services be it auto, home, commercial, health or life insurance. Present scenario of Insurance industryThe brief outlook about the regulatory changes done by the Indian Government over the years is given below:-

The effect of insurance reforms has been positive on the insurance industry. There has been positive growth in all the segments, with investments flowing in the right direction. Reforms have helped to achieve rapid growth in critical areas and sustain them over a period of time through channelized strategies.Post reforms, the number of players have increased from 4 to 22 players presently registered under IRDA (INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA). Financial viability of insurance companiesHowever, although the insurance industry is a flourishing in world economy today, one needs to keep in mind that financial viability/stability of the insurance company is a major consideration at the time of purchasing insurance contract. The viability factor is important because many a times, an insurance premium paid currently provides coverage for losses in distant future and there are instances where a number of insurance companies have gone insolvent, thus leaving their policyholders with little helpful or no coverage. Therefore, even if the global industry is strengthening more and more, the weak links are also co-existent and blind faith can lead to a severe downfall. There are also independent rating agencies for insurance companies which could be helpful in providing sound information on financial viability of various insurance companies. Marketing in InsuranceInsurance comes under the service sector and while marketing this service, due care is to be taken in quality product and customer satisfaction. While marketing the services, it is also pertinent that they think about the innovative promotional measures. It is not sufficient that you perform well but it is also important that you let others know about the quality of your positive contributions.The creativity in the promotional measures is the need of the hour.The advertisement, public relations, word of mouth communication needs due care and personal selling requires intensive care.There areinsurance marketing strategiesthat can take any insurance agency from mediocre to success when utilized correctly. Hence it is necessary that an insurance company formulize their marketing strategies with lot of thought and diligence to capture the untapped potential in the insurance industry. Through this project we aim to understand the strategies adopted by IDBI Federal and to find out the effectiveness of these promotional strategies through a study on consumer behaviour.

The insurance industryThe 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 Indias robust economic growth prospects and the nations high savings rates.

COMPANY PROFILE

IDBI Federal Life Insurance Co. Ltd.: IDBI Federal Life Insurance Co. Ltd. (formerly known as IDBI Fortis Life Insurance Co. Ltd.), is a joint venture between three financial companiesDevelopment and Commercial Bank, IDBI Bank, Indias private sector Bank, Federal Bank and European insurer Ageas (formerly Fortis). IDBI Federal 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, Indias premier industrial development bank. Created in 1956 to support Indias industrial backbone, IDBI Bank has since evolved into a powerhouse of industrial and retail finance. Today, it is amongst Indias 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 Indias 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 Indias 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 centre 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.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 Federal is focused on achieving the highest standards of quality in every aspect of their business". Honesty: "Is the heart of the Life Insurance business? IDBI Federal 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 Federal is focused on the Life Insurance business. Perfectly combining global expertise with local knowledge, IDBI Federal is the Indian Life Insurance specialist." Caring: "For the customer IDBI Federal is redefining the Life Insurance paradigm to focus on the needs of the customers. The IDBI Federal 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: 1. Customer comes first.2. Do it right the first time.3. Bias for result oriented action.4. Financial strength and discipline.5. Clarity of purpose.6. International quality standards.7. Inclusive Meritocracy.8. Learning opportunities.9. Fun at work.10. Commitment to published value system Technology: To monitor and manage its network equipment across 34 sites, IDBI Federal 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 Federal 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 Federal has 35 branches across the country.Sponsorships, Awards IDBI Federal Life Insurance Company was selected as the title sponsor for the India-Sri Lanka Cricket Series. This was followed by the IDBI Federal Wealthsurance Twenty20. Wealthsurance Made Easy (WME), a knowledge aid by IDBI Federal 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).Milestones

March 2008IDBI Federal starts operations with two products Homesurance & Wealthsurance.

August 2008IDBI Federal becomes one of the fastest growing new life insurers to collect premiums worth Rs 100 crores.

October 2008IDBI Federal launches Bondsurance

January 2009IDBI Wealthsurance Cup 2009 India v/s Sri Lanka held in Sri Lanka.

March 2009Collected premium of over 328 corers and 87,000 policies and a Sum assured of Rs 2825 crores since inception

November 2009IDBI Federal launches Incomesurance

CUSTOMER RELATIONSHIP MANAGEMENTCustomer Relationship Management focuses on acquiring, developing and creating satisfied loyal customer; achieving profitable growth; and creating economic value in companys brand.Customer Relationship Management strives to improve the customers experience of how they interact with the company and produce high customer equity .the more loyal customer, the higher are the customer equity.Recently CRM has taken a center stage in the business world with businesses concentrating on saving money and increasing profits by redefining internal processes and procedures. It costs a company dramatically less to retain and grow an existing client, than it does to court new ones. It is said that It is seven times more expensive to acquire a new customer than to keep an existing one, therefore the value of customer information and management should never be underestimated.Customer equity comprises of three drives Value equity Brand equity Relationship equity

CRM (Customer Relationship Management) is something that is not restricted to any country or culture. Wherever customers are there, business cannot afford to keep them unhappy; and that is where CRM comes in as a strong requirement.In India, the trend is positive. When compared to about twenty years ago , people have more choice and every company knows it cant take customer for granted .May be the movement is slow ,but we see a steady progress towards an increased focus on the customer rather than merely on the products and price . Todays era is of service because customers are ultimate base line for any business to sustain in this competitive world For example: Banks started providing gold, silver cards to its valued customer, depending on their needs the customer get faster services. The concept of CRM is relatively simple and familiar to insurers. The two points of the concept are: Understand your customers' unique requirements. Offer them the services and products over their lifetime that will maintain or increase their profitability and retain them as your customers.These are the some supporting strategies that implement these concepts to yield significantly greater results and a true competitive advantage.These supporting strategies generally fall into three groupings: analytical, marketing and operational. The analytical path focuses on mining the data you have on your existing customers, and marrying that data with external data when possible to develop a scoring index. This index can then be reliably applied to individual customers to indicate their level of profitability, tendency to remain a customer, and propensity to acquire other products and services. While the CRM market in India is still nascent, bigger players such as ICICI Prudential Life Insurance Company are adopting it in a big way. The company was earlier using Gold Mines (a sales and marketing tool) and HEAT (an operational CRM solution) from Front Range Solutions. Last year it took a decision to invest in CM3 from Tera data and SASs statistical tool for BI. Head-IT at ICICI Prudential Life Insurance Company says, As a forward looking company, we see CRM playing a significant role in acquiring new customers. CRM lets us obtain granular details about our customers, helping us to design better products, improve service levels and reduce operational costs. CRM has helped ICICI Prudential Life capture five lack customers through effective event-based marketing and lead tracking to cross- and up-sell products.Business drivers for CRMA couple of years ago, LIC dominated the insurance market with the help of its sales force and channels and margins were reasonably high. Today, there are close to 20 companies offering both life and general insurance products. All of them have equally strong international and local partners; all are focusing upon similar geographies and target audiences. The new firms selling life insurance and non-life insurance [pensions, insurance as saving, etc] have failed to emulate the LIC model because margins are getting squeezed. There are several pain areas that new insurance firms faceacquiring new customers, retaining them, cross-selling products and controlling rising costs while providing comprehensive support. Insurers have added a variety of products and services to their kitty. These range from insurance as an investment option to pension plans. They target the younger generation in the 20 to 30 years age group. The convergence of four factors protection, saving (investment option), loans and pension has compelled insurance companies to align with banks in reaching out to a larger audience, says Head IT. This trend has led to another insurance companies are joining hands with banks by becoming channel partners for insurance. Tata AIG has a marketing alliance with HSBC, Birla Sun Life has one with Citibank and IDBI and LIC ally with Corporation Bank, while Kotak Life Insurance has an arrangement with Kotak Bank. This strategy helps insurance firms increase their footprint to cover a larger part of the customer base in the 20-30 years demographic. CRM helps connect a banks high net worth customers with insurance firms.Where to beginoperational CRM or analytical CRM?The choice between operational and analytical CRM as a starting point depends upon the insurers needs. Gartner says that insurance companies with multiple financial products and a big customer base, such as integrated insurance solution providers, will leverage their customer base to cross- and up-sell different financial products, including insurance. Such providers will benefit from adopting analytical CRM. Market segmentation, campaign management and data mining applications will benefit them in many ways. Call centre text mining: This tool can help improve the customer experience by resolving complaints rapidly. Insurers are using these tools to mine text from call centre transcripts to identify issues faced by customers. Text mining tools also help detect and capture other useful pieces of information around a customers life stage, financial needs and product interests. These can be used to generate leads and trigger cross-selling. However, to be fully effective, customer service representatives must be trained to probe for information that will help in cross selling during the text-mining phase. Text mining tools are leading edge today, but are predicted to take off quickly. Event-triggering and profiling: Insurers can use event triggers to generate leads that can be acted upon quickly, usually within 24 hours, says Head IT. Event-triggering tools monitor incoming transaction and contact data in near-real-time to recognize changes in a customers behaviour or profile to trigger actions or alerts. Lead management gets sophisticated: Often the ability of an insurer to generate leads by means of event-triggering, re-engineered touch points and cross line-of-business referral can outstrip their ability to manage said leads. In such a situation, though the number of leads generated rises, the conversion rate does not. It may even drop. CRM can help provide sales representatives with a mechanism to prioritize and manage leads.Changing customer behaviour in insurance buyingIn insurance buying, most customers would probably describe their level of understanding of insurance contracts in the above manner. Customers know generally what a policy covers; they also know that there are several fine prints in insurance contracts, which they do not know, or perhaps care to know, at the time of buying. And they also seem to generally conclude that when it comes to making a claim under an insurance policy, there could be several issues of which they are just unaware at the time of buying the policy in the first place.Changing expectationsA remarkable trend in the insurance industry in the last three years is the rapid change in the knowledge level as well as expectations of the customers. A study conducted last year by Forte, a collaborative effort between FICCI and ING Vysya Insurance Co. about the consumer behaviour in the pre and post liberalization days of the industry had revealed stunning changes in consumer expectations.It looks as though the docile, uninformed, insurance consumer has suddenly been transformed into an aggressive and highly demanding species. While the fresh air of competition in every sector of the economy brings in major changes in consumer expectations (witness the sea change in the attitude of automobile buyers in India in the last five years), the insurance industry has witnessed a few unique aspects, such as regulation-inspired efforts to educate insurance buyers, and a vast change in the skills and capabilities of the intermediaries involved in distribution.Motivating factorsIn respect of life insurance, potential buyers are driven to buying a policy for one or more of three major reasons: security of the money invested, saving for one or more specific purposes, and the availability of tax benefit. Customers are increasingly known to place less reliance on the tax benefit factor, and stress more on the security aspect and the end-use objective. The challenge of the insurance companies is to address the motivating factors imaginatively and come up with genuine solutions. Take for example, the consumers objective of taking a policy to save money for higher education of a child. This has been a driving force in the sale of new insurance contracts in several other countries too, notably in Asia.A potential buyer primarily expects that the saving should be a painless process and that the money saved should be absolutely safe. The challenge is to provide not only convenient payment options, but also mechanisms that could offer some measure of protection and relief to the customer if he is forced to disrupt the payment arrangement for unforeseen reasons.On the issue of the consumers perception of security of the money invested, there are two important aspects. One is how the features of the insurance contract are put across to the buyer (whether it is a unit-linked policy or endowment oriented). The second is how to address more effectively the question about the dependability of the new generation companies that potential new insurance buyers raise during sales calls especially outside metros and in small towns (referred to in publicity jargon as buyers in the SEC B and C categories). Both insurance companies and the Regulator need to address this behavioural challenge more actively.Consumers experienceThere has been a vast change in the approach of the insurance agent from the pre-liberalization days. While the agent in the past established informal contacts with potential buyers and often depended on referrals from friends and family members, the new age companies insist on a professional, and often aggressive stance on the part of the sales staff. Customer expectations in this regard revolve around two key aspects: first, whether the customer is getting truthful advice from the agent, or if he is pushing a product that yields him the highest commission rate. Invariably, the customers today expect the insurance agent (and other intermediaries such as the banc assurance sales staff) to provide a ready comparison of competitors products and how the product the agent is suggesting is superior to the others. How far is the need-based analysis of insurance requirement, that the new age sales staff are trained to offer, found to be relevant and useful to potential insurance buyers? The answer varies from the metro cities and small towns. However outside metro cities, customers tend to take a clear view that saving-oriented policies are more needed. There is also marked reluctance to disclose the true personal financial status and the corresponding insurance needs to insurance salespersons.The second aspect of customers perception about the new generation of insurance agents is the level of continuing commitment of the agent to arrange post-sale service. Potential insurance buyers are unsure that they would continue to deal with the same agent who sold the policy throughout the term. They would tend to place more reliance on the companys general promises of service and commitment. This is an important message for the insurance companies. As insurance customers increasingly make arrangements to pay periodical premiums directly through the electronic medium, or though automatic transfers from their bank accounts, thereby bypassing the need for regular post-sale service by the agents, customers would tend to place more reliance on the direct standard of service from the company concerned. Instances of customers requiring agents to arrange for loans against their policies, or change nominations etc. are rare. Therefore companies need to gear themselves to provide high service standards directly.Premium shoppingIs pricing or the premium rate for a policy, a deciding factor for buying insurance? It is indeed so in a price sensitive market such as ours. In several forums, customers have voiced the general feeling that as insurance products become more complex, and they get bundled with several riders, it is becoming impossible to make price comparisons between different companies.An increasingly larger segment of customers now questions why the premium rate should be the same for a policy if bought direct from the company over Internet, or through a channel considered simpler, such as the banc assurance channel. There is logic in the insurance companies passing on the cost saving to customers in such cases.It is time the Regulator seriously considered the customer expectations of differential premium rates for the same policy bought through different channels and allowed the practice. It should therefore be conceivable to offer premium rebate to insurance buyers who consciously decide to approach the company directly for buying a policy (after presumably taking the trouble of educating themselves about the product features and other aspects), and choose to deal with the company directly for future servicing needs.High expectationsOne aspect of customer service from new age insurance companies that a remains to be tested widely is the claim payment record. While consumers seem to be satisfied that the survival benefits under a life insurance policy would get paid rather promptly from the tech-savvy new companies, obviating the need for interlocution by the insurance agent, insurance buyers are not yet convinced about hassle-free payment in the event of a claim, whether under a life policy or a general insurance policy. This is especially so in respect of rider benefits such as critical illness or hospitalization benefits.The level of consumer skepticism on claim payment is markedly high in respect of non-life insurance products, such as Householders Package or Medicaid policies. There is considerable work to be done to boost the level of confidence both by insurance companies and the Regulator. By the time a company completes the development of a strategy and makes investments to pursue the strategy, the opportunity often ceases to exist. It is therefore important that the new age insurance companies become kinetic enterprises, which can take advantage of unpredictable customer demands and unexpected market events immediately. This is vastly relevant for the Indian market where the insurance consumers are rapidly coming of age.

CUSTOMER RETENTIONIntroductionA 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.In todays challenging economy and competitive business world, retaining their customer base is critical to organization success. If the company doesnt give their customer some good reason to stay, organizations competitors will give the customer a reason to leave. Customer retention and customer satisfaction drive profits. Its 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 endeavour 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. High retention is equivalent to low defection. In an industry where there are a multiple purchases over the years, organizations entire team should be very focused on retaining those customers: i. Delivering service thats 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 turnoveriv. 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 companys 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 pre-existing customers by satisfying requirements above those of competing companies through a mutually beneficial relationship. 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.

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. 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: Todays 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. Statistics:i. Acquiring new customer can cost five times more than satisfying and retaining current customers.ii. 2% increase in customer retention has same effect on profits as cutting costs by 10%. iii. The average company losses 10% of its customer each year.iv. 5% reduction in the customer defection rate can increase profits by 25-125%, depending on the industries.v. The customer profitability rate tends to increase over the life of a retained customer.vi. Companies can boost profits anywhere from 25 to 125% by retaining merely5% more existing customers.vii. Only one out of 25 dissatisfied customers will express dissatisfaction. 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. 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.

RESEARCH METHODOLOGYIntroduction 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 observations 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.

DATA COLLECTION, ANALYSIS & INTERPRETATIONSampling Method:The data collection was done from a sample of existing IDBI customers.Population Size = Sample Size = The sample consisted of existing IDBI customers from different locations of India. Thus, stratified sampling method was used. The customers were grouped into separate strata based on their location. Each stratum was then sampled as an independent sub-population, out of which individual elements were randomly selected. This implies that Simple Random Sampling was used for each stratum.Method of Data Collection: After the data analysis, it must be evaluate to get the decision. The likers scale is given 1-3 to each statement in the questionnaires. 1) Agree 2) Neutral 3) Disagree. 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.Questionnaire: Good morning. I am Ankit 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 familys financial security, your childrens 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) 17-35 years b) 35-50 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 5. Monthly income a) Rs 10000-25000 b) Rs 25000-45000 c) Above Rs 50000 Part B: Research Details Evaluate the statement on the basis of the point given below 1. Agree 2. Neutral 3. Disagree 6. In thinking about the recent experience with IDBI Federal life insurance, rate the satisfaction with the customer service received by you? 7. The process for getting your concerns resolved is fast? 8. Please think about the features and the benefits of the insurance you took. Are you satisfied with the insurance? 9. 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 a.) The customer service representative was very courteous b.) The customer service representative handled your call quickly c.) The customer service representative was knowledgeable 10. The policy plans of IDBI Federal Company provide highest benefits for you? 11. The insurance plans policy and procedure of IDBI insurance company are understandable easily? 12. Is the premium payment mode of IDBI federal insurance is easy? 13. Do you like work or held the relationship between you and IDBI insurance company for long time? 14. Do you recommend IDBI Insurance Company to your friends? 15. You insure in IDBI because friends insisted? 16. Would you like to have another insure policy in IDBI in future? Thanks a lot for your response Have a nice day!Analysis:A1. Age Distribution AGE DISTRIBUTIONPERCENTAGE

17-35 YEARS73%

35-50 YEARS15%

OVER 50 YEARS12%

A2. GenderGENDERPERCENTAGE

MALE78%

FEMALE22%

A3. Marital statusMARITAL STATUSPERCENTAGE

SINGLE37%

MARRIED63%

A4. Educational QualificationQUALIFICATIONPERCENTAGE

U.G. DEGREE HOLDER29%

P.G. DEGREE HOLDER71%

A5. IncomeINCOME RANGE (PER MONTH)PERCENTAGE

10000-2500024%

25000-4500048%

ABOVE 5000028%

PART B:A6.CUSTOMER SATISFACTIONPERCENTAGE

AGREE40%

NEUTRAL8%

DISAGREE52%

A7.FAST CONCERN RESOLUTIONPERCENTAGE

AGREE45%

NEUTRAL15%

DISAGREE40%

A8.SATISFIED WITH INSURANCE FEATURES AND BENEFITSPERCENTAGE

AGREE30%

NEUTRAL10%

DISAGREE60%

A9(a).CUSTOMER SERVICE REPRESENTATIVE WAS VERY COURTEOUSPERCENTAGE

AGREE82%

NEUTRAL8%

DISAGREE10%

A9(b).CUSTOMER SERVICE REPRESENTATIVE HANDLED YOUR CALL QUICKLYPERCENTAGE

AGREE55%

NEUTRAL5%

DISAGREE40%

A9(c).CUSTOMER SERVICE REPRESENTATIVE WAS KNOWLEDGEABLEPERCENTAGE

AGREE60%

NEUTRAL7%

DISAGREE33%

A10.THE POLICY PLANS OF IDBI FEDERAL COMPANY PROVIDE HIGHEST BENEFITS FOR YOU?PERCENTAGE

AGREE30%

NEUTRAL15%

DISAGREE55%

A11.EASILY UNDERSTANDABLE?PERCENTAGE

AGREE70%

NEUTRAL8%

DISAGREE22%

A12.IS THE PREMIUM PAYMENT MODE OF IDBI FEDERAL INSURANCE IS EASY?PERCENTAGE

AGREE80%

NEUTRAL5%

DISAGREE15%

A13.LONG TIME CUSTOMER RELATIONPERCENTAGE

AGREE26%

NEUTRAL15%

DISAGREE59%

A14.DO YOU RECOMMEND IDBI INSURANCE COMPANY TO YOUR FRIENDS?PERCENTAGE

AGREE45%

NEUTRAL8%

DISAGREE47%

A15.INFLUENCE OF FRIENDS FOR IDBI INSURANCE?PERCENTAGE

AGREE56%

NEUTRAL4%

DISAGREE40%

A16.ANOTHER INSURANCE POLICY IN IDBI IN FUTUREPERCENTAGE

AGREE42%

NEUTRAL9%

DISAGREE49%

Interpretation based on above data:The target group is between 17-35 years of age and from middle income groupProblems/Threats to Customer Retention: Over 50% of the sample of existing customer base is dissatisfied with the IDBI Insurance policies 59% of the sample do not wish to continue long time customer relation with IDBI Federal. This implies that the customer retention ability currently is poor. 47% of the sample does not recommend IDBI Federal Insurance policies to others over competitors policies. This indicates poor word of mouth and customer dissatisfaction. 49% of the sample disagreed to take another insurance policy in future. This is another indication of customer dissatisfaction.

Strengths: Customer Service Representative Good behaviour Knowledgeable Efficient in handling service calls Policy terms and conditions are easily understandable to the customers Easy and convenient premium payment modeWeaknesses: Concern resolution speed is slow 60% of the sample dissatisfied with the insurance policy features and benefits 55% of the sample did not rate IDBI policy to be best in the marketSuggestions for Customer RetentionThe 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 playv. Databases that keep track of customers 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.

EXPECTED CONTRIBUTION FROM THE STUDY As the number of visits made by the advisors to the customers is less, and the relation can be build/maintained by effective communication with the customers by being in constant touch with the customer. As many of the new life insurance companies are entering, IDBI Federal Life Insurance Co. Ltd. has to maintain its relation with the customer, So that it can be able to generate more number of loyal customers. To educate the customers about the new products, the company can use SMS service for reaching its customers. Due to large number of customers, the reach of the entire customers in less time may not be possible from its advisors and sales officers. This can be a less costly medium of taking direct response of the customers. As it does not disturb the customer. To effective closing of any sales call, one should understand the need of the customers in depth. The Advisors can be trained by the sales officers, and training institution. The IDBI Federal Life Insurance Co Ltd. should come up with more number of Products for those customers who are feeling that the product that they purchased does not match their needsThis research has been brought up many facts regarding the Customer relationship Management. IDBI Federal Life insurance has large number of products in its portfolio. But the advisors are unable to find out the need of the customers and they are unable to suggest the right suitable product. By this project, now I can understand the various factors of insurance industry and how the customer relation is maintained in this industry. The potential customers are more in number and they are still not secured their life. Due to distribution channels, to reach every other customer in shortest time is not possible; hence company can adopt some of the suggestions

FINDINGS1. Even though the sales officers and advisors provide sufficient information to customers, while selling the product some of the customers feel that they had not received sufficient information. Information was rather complex, rest of the respondents feel that the information provided was less.2. Found that IDBI Federal Life Insurance has large variety of products in its portfolio, it is observed that many of the customer feel that the product purchased by them and their needs are not matching.3. Most of the advisors do not prepare themselves for the sales call; in turn they may not perform better at the call of the customer. They do not provide adequate help to the customers and they just try to avoid it and refer it to the higher officials.4. Due to lack of the effective training, most of the advisors were not able to handle the customer properly, and may not solve the customers queries

CONCLUSIONThe data were collected from the customers 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.