Customer retention through customer relationship management : the exploration of two-way communication and conflict handling

Organisations such as banks and short-term insurance organisations become more aware of the importance of customer relationship management (CRM) and its potential to help them acquire new customers, retain existing ones and maximise their lifetime value. A close relationship with customers will require a strong coordination between information technology (IT) and marketing departments to provide a long-term retention of selected customers. The primary objective of this study is to investigate the influence of selected independent variables, two-way communication and conflict handling on intentional customer loyalty via CRM as the intervening variable at a South African shortterm insurance organisation. Primary data were gathered using a questionnaire, with items referring to CRM, customer loyalty, two-way communication and conflict handling. The sample consisted of 254 customers in four major centres in South Africa. Data were factor-analysed. One independent variable, conflict handling exerted a statistically significant positive influence on the intervening variable (CRM), while two-way communication exerted a statistically significant negative influence on the intervening variable (CRM). The intervening variable (CRM) positively influenced the dependent variable (Customer Loyalty). If short-term insurance organisations communicate timeously and accurately, and are skilled in conflict handling, greater loyalty will be created among customers