Managing Customer Loyalty through Direct Marketing : A Case Study of the Relationship between Länsförsäkringar Kalmar Län And Their Beneficiary Customers

Abstract: Background: LF is active in three markets: Property & casualty insurance, pension and banking. The main objective for such a strategy is to differentiate by offering all the services to the customer who can enjoy the benefits of having their whole personal economy at one place. LF’s market requires great customer loyalty as the high fixed costs of acquiring a new customer does not make the customer profitable until several years later. If the company then can achieve excellent customer loyalty, there are great reasons to invest in this field. Direct marketing is a method known to be focusing on long term aspects by establishing a relationship which increases the customer loyalty. Purpose: The purpose of this thesis is to study Länsförsäkringar Kalmar Län and analyse how they can use direct marketing to increase customer loyalty while operating in different service markets. Method: This thesis is using a case study on the relationship between Länsförsäkringar Kalmar Län and their beneficiary customers. The data has been collected through interviews with key personnel at the company and through a survey with participants from a key segment of the company’s beneficiary customers. The empirical findings were then analysed qualitatively. Conclusion: To successfully use direct marketing to increase customer loyalty the company needs to go through a four step process: Firstly, the company needs to know their customer by gathering data through CRM systems. Secondly, the company needs to understand their customer by interpreting the collected data. Thirdly, the company needs to inform their customer through customised direct marketing. At last, the company earns customer loyalty as the behaviour of the customer changes. The company now needs to gather new information and the process goes on in a continuous cycle.