Customer Selection
Investigating a tool for XY Insurance Company
- Art: Diplomarbeit
- Autor: Oliver Lonicer
- Abgabedatum: Dezember 1999
- Umfang: 171 Seiten
- Dateigröße: 8,1 MB
- Note: 1,5
- Institution / Hochschule: Fachhochschule Osnabrück Deutschland
- ISBN (eBook): 978-3-8324-4891-2
-
ISBN (Paperback) :
978-3-8324-4891-2 P - ISBN (CD) :978-3-8324-4891-2 CD
- Sprache: Englisch
- Prämierung:
- Arbeit zitieren: Lonicer, Oliver Dezember 1999: Customer Selection, Hamburg: Diplomica Verlag
- Schlagworte: Customer Selection, Customer Relationship, Management, Kundenselektion, Kundenselektionswerkzeug
In den Warenkorb
38,00 €
Diplomarbeit von Oliver Lonicer
Abstract:
“In the real world, all customers are not created equal.“ This allusion to the Declaration of Independence captures a recent realisation of many companies - different customers represent different values to a company. In fact, many companies are discovering that a large percentage of their customers are generating losses.
XY Insurance is among those companies that recently discovered a considerable portion of unprofitable customers in their current book of business. This was identified as a major problem, especially considering the fact that the company is converting to a publicly traded stock company. Given the necessity to produce shareholder value, senior management realised that it would be indispensable to ensure the profitability of its accounts.
One of the factors underlying this problem at XY is the lack of a screening process to ensure the selection of customers with whom a profitable relationship can be built. To address this need, XY's senior management decided that it would be necessary to develop a tool that enables the sales staff to evaluate customers, and ultimately, to select customers based an this assessment.
The objective of this study is the development of a screening tool which can be used as a basis for the selection of XY's customers in the company's arge case segment. The development of the tool is limited to one of the company's segments because the customers as well as the products differ greatiy by segment. The tool should enable the company to assess their clients individually and classify each of them as 'attractive' or 'unattractive' so that proper strategies can be applied.
The strategy development lies outside of the confines of this study and is therefore not discussed in this paper. I will however, indicate starting-points and some important issues when designing these strategies. In addition, considerations in conjunction with the implementation and introduction process, as well as avenues for further research are addressed where appropriate.
White the initial idea behind the development of the screening tool was to design a mechanism that would allow for the assessment of all of XY's customers, existing and prospective, it became apparent that this would not be feasible. Separate tools for both stages are needed.
As a result it was decided that a model outlining the needed criteria would be developed, and based an this a screening tool for prospective clients, would be built. The design of the assessment tool for existing clients will follow at a later stage. The conceptual framework established in this thesis has to encompass the requirements of both intended uses.
As a result, the first objective of this study is to generate a sound model for client selection at XY, which establishes the general requirements for client selection and thus builds the foundation for the tools. The second objective of this study is the development of the client selection tool for prospective clients. The development of both tools is not feasible within the scope of this study.
The second chapter provides an introduction to the group insurance business and to XY Insurance. The first section of this chapter was included because group insurance does not exist in Germany and as a result, most Germans are not familiar with the concept. The second part of this chapter provides an introduction to XY Insurance for those not acquainted with the company. The chapter also addresses the Canadian group insurance market and its characteristics.
Chapter three discusses the theory of customer selection and its significance in today's business practice. The chapter is divided into two parts: section 3.1 outlines the context in which the topic falls, while section 3.2 contains a detailed discussion of customer selection in theory.
Chapter four describes the methodology, implementation, and results of this study. Section 4.1 examines the relevance of customer selection at XY and the activities undertaken to this point, section 4.2 discusses the methodology of the study and the development process of the model and tool, section 4.3 presents the XY client selection model, section 4.4 presents the selection tool for prospective clients, and section 4.5 contains an assessment of the model and tool.
In the last chapter, a course of action for implementation is recommended and comments concerning the use of the tool and further development are presented.
Table of Contents:
| Foreword | I | |
| Table of Contents | II | |
| Table Figures | VII | |
| Table of Equations | VIII | |
| Abbreviations | IX | |
| 1. | Introduction to the Topic | 2 |
| 1.1 | Statement of the Problem | 2 |
| 1.2 | Objective and Confines of the Thesis | 2 |
| 1.3 | Structure of the Paper | 3 |
| 2. | Group Insurance and Company Overview | 5 |
| 2.1 | Group Insurance | 5 |
| 2.1.1 | Definition of Group Insurance | 5 |
| 2.1.2 | Industry Characteristics | 6 |
| 2.1.3 | The Canadian Group Insurance Market | 6 |
| 2.2 | Company Overview: XY Insurance Company | 7 |
| 2.2.1 | The Corporate Level | 7 |
| 2.2.2 | The Canadian Operation | 7 |
| 2.2.3 | Demutualization | 7 |
| 3. | Marketing and Customer Selection | 8 |
| 3.1 | Marketing Evolution | 8 |
| 3.1.1 | From Mass Marketing to Relationship Marketing | 8 |
| 3.1.2 | Marketing as a Strategic Concept | 9 |
| 3.1.3 | Development of Market Segmentation | 9 |
| 3.1.4 | Contemporary Marketing Approaches | 11 |
| 3.1.4.1 | Relationship Marketing | 12 |
| 3.1.4.2 | Loyalty-Based Management | 12 |
| 3.1.4.2.1 | Definition of Loyalty | 13 |
| 3.1.4.2.2 | Economic Benefits of Loyalty | 13 |
| 3.1.4.3 | One-to-One Marketing | 15 |
| 3.1.5 | Drivers of Strategy Change | 16 |
| 3.1.5.1 | Technological Change | 16 |
| 3.1.5.2 | Findings of Recent Research | 17 |
| 3.1.5.3 | New Performance Measures | 18 |
| 3.1.5.4 | Other Drivers | 19 |
| 3.1.6 | Summary Marketing Strategies | 20 |
| 3.2 | Customer Selection | 21 |
| 3.2.1 | Definition of Customer Selection | 21 |
| 3.2.2 | Significance of Customer Selection | 22 |
| 3.2.2.1 | Customer Selection as Basis for Relationship Marketing | 22 |
| 3.2.2.2 | Customer Selection as Means to Improve Profitability | 23 |
| 3.2.2.3 | Evaluation of Customer Selection's Significance Today | 24 |
| 3.2.3 | Approaches to Customer Selection | 25 |
| 3.2.3.1 | Activity-Based-Costing-Approach | 25 |
| 3.2.3.2 | Customer Lifetime Value | 27 |
| 3.2.3.2.1 | Calculation of Customer Lifetime Value | 27 |
| 3.2.3.2.2 | Criticism of Customer Lifetime Value | 28 |
| 3.2.3.3 | Customer Valuation | 29 |
| 3.2.3.4 | Matrix Approaches | 29 |
| 3.2.3.4.1 | Modified BCG-Matrix Approach | 30 |
| 3.2.3.4.2 | Customer-Portfolio-Matrix | 30 |
| 3.2.3.4.3 | Sibson's Customer Evaluation Matrix | 31 |
| 3.2.3.5 | Other Customer Evaluation Methods | 32 |
| 3.2.3.5.1 | Strategic-Renewal Process | 32 |
| 3.2.3.5.2 | Hope's Evaluation Approach | 34 |
| 3.2.4 | Issues Pertaining to Customer Selection | 35 |
| 3.2.4.1 | Possible Adverse Effects | 35 |
| 3.2.4.2 | Practicality | 36 |
| 3.2.4.3 | Objectivity and Reliability | 36 |
| 3.2.4.4 | Need to Develop Strategies | 37 |
| 3.2.4.5 | Implementation Plan | 37 |
| 3.2.4.6 | Ethical Compatibility | 38 |
| 3.2.5 | Summary of Customer Selection | 39 |
| 4. | Application of Customer Selection at XY | 40 |
| 4.1 | Customer Selection at XY | 40 |
| 4.1.1 | Relevance of Customer Selection in the Group Insurance Industry | 40 |
| 4.1.2 | Relevance of Customer Selection at XY | 42 |
| 4.1.3 | Activities Undertaken by XY | 44 |
| 4.2 | Development of the Client Selection Model and Tool | 45 |
| 4.2.1 | Methodology | 45 |
| 4.2.2 | Research Process | 46 |
| 4.2.3 | The Main Steps of the Study | 47 |
| 4.2.3.1 | Step 1: Literature Review, Interviews, and Criteria Selection | 48 |
| 4.2.3.2 | Appraisal of Practical Experiences as a Starting-Point | 49 |
| 4.2.3.3 | Step 2: Expert Panel | 49 |
| 4.2.3.3.1 | The Use of Expert Panels in General | 50 |
| 4.2.3.3.2 | Objectives and Rationale of the Expert Panel in this Study | 51 |
| 4.2.3.3.3 | Selection and Composition of the Panel | 52 |
| 4.2.3.3.4 | The Expert Panel Survey | 53 |
| 4.2.3.3.4.1 | Format of the Questionnaire | 53 |
| 4.2.3.3.4.2 | Survey Implementation | 55 |
| 4.2.3.3.4.3 | Expert Panel Survey Analysis | 56 |
| 4.2.3.4 | Step 3: Model and Tool Development | 56 |
| 4.3 | The Client Selection Model | 57 |
| 4.3.1 | Major Classification Criteria | 58 |
| 4.3.1.1 | Profitability | 58 |
| 4.3.1.2 | Loyalty | 60 |
| 4.3.1.3 | Strategic Fit | 61 |
| 4.3.1.4 | Evaluation of Other Potential Criteria | 63 |
| 4.3.1.4.1 | Appraisal of Significance as Evaluation Criterion | 63 |
| 4.3.1.4.2 | Appraisal of the Customer Profile as Evaluation Criterion | 63 |
| 4.3.2 | Subcategories | 65 |
| 4.3.2.1 | Profitability Subcategories | 67 |
| 4.3.2.1.1 | Current Performance | 68 |
| 4.3.2.1.1.1 | Underwriting Gain | 68 |
| 4.3.2.1.1.2 | Expense Allocation | 70 |
| 4.3.2.1.2 | Expected Development | 71 |
| 4.3.2.1.2.1 | General Pricing Attitude | 72 |
| 4.3.2.1.2.2 | Propensity to Pay for „Value-Added“ | 73 |
| 4.3.2.1.2.3 | Type of Plan and Financial Arrangement | 73 |
| 4.3.2.2 | Loyalty Subcategories | 74 |
| 4.3.2.2.1 | Satisfaction | 75 |
| 4.3.2.2.2 | Likeliness to Renew the Contract | 76 |
| 4.3.2.2.3 | Likeliness to Buy Other Products | 76 |
| 4.3.2.2.4 | Likeliness to Recommend XY | 77 |
| 4.3.2.2.5 | The Client's Switching Costs | 77 |
| 4.3.2.2.6 | Past Switching Behaviour | 78 |
| 4.3.2.2.7 | The Intermediary's Impact on Loyalty | 78 |
| 4.3.2.3 | Strategic Fit Subcategories | 79 |
| 4.3.2.3.1 | Desirability of the Client's Segment | 79 |
| 4.3.2.3.2 | The Client's Industry and Business Prospects | 79 |
| 4.3.2.3.3 | Competitive Situation | 80 |
| 4.3.2.3.4 | Business Expansion Opportunities | 80 |
| 4.3.2.3.5 | Intermediary's Impact on the Relationship | 81 |
| 4.3.2.3.6 | Other Factors | 82 |
| 4.3.3 | Determination of the Relative Importance of the Selection Criteria | 82 |
| 4.3.3.1 | Assumptions Underlying the Analysis | 83 |
| 4.3.3.2 | Statistics Used for Analysis | 84 |
| 4.3.3.3 | Analysis of the Expert Panel Findings | 85 |
| 4.3.3.4 | Implications and Use of the Findings | 87 |
| 4.3.4 | The XY Selection Tool for Prospective Clients | 88 |
| 4.4.1 | Adjustments to the Structure of the Tool | 88 |
| 4.4.1.1 | Effects on the Profitability Category | 89 |
| 4.4.1.2 | Effects on the Loyalty Category | 89 |
| 4.4.1.3 | Effects on the Strategy Category | 89 |
| 4.4.2 | Utilisation of the Tool | 90 |
| 4.4.3 | Format of the Tool | 91 |
| 4.4.3.1 | Method of Client Classification | 91 |
| 4.4.3.2 | Question Format | 93 |
| 4.4.3.3 | Program Sequence | 94 |
| 4.4.3.4 | Client Classification Example | 97 |
| 4.5 | Critical Assessment of the Model and Tool | 99 |
| 4.5.1 | Appraisal of the Method | 99 |
| 4.5.2 | Appraisal of the Tool | 100 |
| 4.5.2.1 | Reliability of the Tool's Evaluation Results | 100 |
| 4.5.2.2 | Practicality of the Tool | 102 |
| 5. | Summary and Recommendations | 104 |
| 5.1 | Field Test | 104 |
| 5.2 | Communication and Promotion | 104 |
| 5.3 | Compensation | 105 |
| 5.4 | Monitoring and Continuous Development of the Tool | 106 |
| 5.5 | Integration in Framework | 106 |
| 5.6 | Strategy Development | 107 |
| 5.7 | Development of a Selection Tool for Existing Clients | 107 |
| 5.8 | Combination of Tool and Manager's Expertise | 108 |
| 5.9 | Assessment of Present Strategy | 108 |
In den Warenkorb
38,00 €
Link zur Arbeit:
http://www.diplom.de/ean/9783832448912
Arbeit zitieren:
Lonicer, Oliver Dezember 1999: Customer Selection, Hamburg: Diplomica Verlag
Schlagworte:
Customer Selection, Customer Relationship, Management, Kundenselektion, Kundenselektionswerkzeug
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