Improving customer retention at a selected medical fund through internal service quality and customer relationship management

In today’s competitive arena, organisations need strategically to shift their focus from primarily concentrating on new customer acquisitions and rather to realise the importance of improving customer defections, thus looking at strategically retaining the existing customer base. Customer retention to all intents and purposes reflects the core of any service offering organisation and drives the competitiveness and viability of the business. Customer retention is a concern for all sector organisations including the medical aid schemes industry. It has been proven that retaining customers is less costly than attracting new ones and through a satisfied customer a business can elevate its competitiveness in the market. The significance of the study hinges on the importance of each business having comprehensive knowledge of why customers remain loyal patrons or why they choose to defect. It is important to note that the financial resources and time the business expends on improving service to the customer become futile if not matched by the high performance of the internal business units’ strategies. Having an understanding of customer movement will assist the organisation in properly addressing such issues and employing strategic processes that will enable the business to improve its retention strategies and curb defections. The primary objective of the current study was to investigate the impact internal service quality and customer relationship management have on customer retention. The study employed the SERVQUAL model as a measuring tool in establishing the relationship. The study investigated how customer retention (the dependent variable) is influenced by the different elements of internal service quality, namely assurance, empathy, service reliability, responsiveness, tangibles and relationship management, which represented the independent variables. The sample comprised eighty-one (81) out of a possible 130 AA Medical Scheme participants through the organisation’s four national offices. The empirical results showed that of all the variables relationship management, responsiveness and the tangibles have a positive impact on customer retention in medical aid schemes