This thesis is entitled “Correlation between marketing cost and the number of agents and the increase in the number of new customers and the acquisition cost of PT. I declare that this thesis entitled "Correlation between the cost of marketing and the number of agents and the increase in the number of new customers and the acquisition cost of PT.
- Background of Study
- Company Profile
- Problems Identified
- Statement of the Problem
- Research Objectives
- Significance of the Study
- Scope and Limitations of the Study
- Theoretical Framework
Determine the contribution of marketing costs and the number of agents to the increase in the number of new customers and acquisition costs. The increased number of new policyholders (INPH) and acquisition costs will represent the dependent variables.
Financial Institution
- Depository Institutions
- Nondepository Institutions
From this it can be seen how financial institutions have been affected by the global economy. Commercial banks, savings institutions and credit unions are three major financial institutions that form part of depository institutions.
Insurance Industry
As people know, the insurance industry covers three main products, life, health and non-life insurance. It is called non-life insurance as it does not cover people personally, but it covers property owned by people.
Insurance Terms
The premium amount will be based on the estimate of the overall risk calculated by the insurance company. Claim – a claim made by the policyholder or the insured about the damaged, lost or payment of benefits as provided by the policy (Ambest, 2011). Policy, policyholder, insured – policy is the written contract drawn up by insurance company between the insured and the company (Ambest, 2011).
Policyholder can also be counted as the insured, but not the entire insured policy is the policyholder. Philip Kotler, based on his Principle of Marketing textbook, describes that customer lifetime value is "the value of the entire stream of purchases that the customer would make over a lifetime of patronage" (Kotler, Marketing management: the millennium edition, 2000). The important part to worry about these costs is the different channel used by the company to run the program.
Both the acquisition of new customers and the retention of existing customers will be further explained in the next point.
Customer Acquisition
Due to customer switching habits, it can be more expensive to acquire new customers for the company than others since theirs. Acquiring new customers is one of the insurance companies' strategies that have effectively increased not only the number of insured but also its profitability. Several strategies have been implemented by insurance companies to attract new customers, such as offering new products expected to satisfy customer needs, offering new promotional events or advertising to attract their attention, etc.
However, based on marketers around the world, acquiring new customers still takes most of the importance. However, new customers are the most expensive and difficult to get as the company has to spend more time, money and energy to attract them through the company's agents. However, companies are expected to avoid common mistakes when trying to attract new customers.
The biggest common mistake is lowering the sales price just to get customers' attention, but they don't realize that this is forcing them into business failure (Tinney).
Customer Retention
It may not be beneficial to maintain relationships with all customers; some may be too expensive to service, others may be strategic switchers who are constantly looking for a better deal.
Acquisition Cost
Acquisition cost = purchase consideration + costs directly attributable to acquisition; with purchase consideration consists of assets exchanged, liabilities assumed, shares issued and costs directly consisting of accounting costs, consulting fees, legal costs, valuations (stu). Here is one example of a case study of acquisition costs: within one company, there are website development costs (1), website life expectancy (2), monthly promotion costs (3) and monthly maintenance costs (4), so calculating acquisition costs per the customer will be New customers………..(1) If the result of the cost of acquisition is too high, then Panalysis, an expert in web analytics and marketing optimization, proposes to reduce the total cost of marketing by improving the conversion rate, increasing the value of customers by analyzing the lifetime value of customers, determine , where the company loses sales advantages (Panalysis, 2011). Based on the accounting report of the insurance company (2011), the purchase price consists of four parts, expenses for commissions in the first year, expenses for commissions in the rest of the year, prevailing expenses and other expenses.
But in some cases, marketing, general and administrative expenses are also included in acquisition costs, as these costs are sometimes necessary to acquire a new customer. Typically, the first and second year commissions will be the same amount, but the rest will be paid at a lower percentage than the first two years. Meanwhile, the first year's commission costs will not include the second year's commission costs in the accounting report, even though they have the same amount.
Instead, the second year will be included in the continuation-year commission expenses along with the third, fourth and fifth years.
Marketing Cost
It is better if the ad content gives a clear explanation of the products the company is trying to offer. Although, the clear explanation here does not mean that it should explain everything about the products, but not less than the first important points that the company thinks the customers should know about the products. Of course, the cost that the insurance company spends on marketing programs would be called marketing cost.
These costs consist of marketing and sales campaigns, including any advertising made for the marketing programs. The amount of marketing expenses cannot ensure that it will help the company to add its number of new customers, but it can contribute significantly to it. The marketing costs themselves are included in variable costs, the costs directly linked to the company's production.
This means that the larger marketing programs run by the insurance company, so that the marketing costs will also be greater.
Insurance Agents
X has about 10 thousand agents, but only 13% - at most 23% of their agents are considered active agents. Active agents simply mean agents who are actively selling a product over a period of time and are able to achieve the target set by the company. The commission amount will be different depending on the premium amount of the product.
In most cases with life insurance, the commission will be paid for a five-year period, as the length of the product is generally the same. However, the insurance company generally provides agents with more basic training to prepare them before they meet with customers. The company's vision and mission, all product information, behavior and attitude are usually the basic foundations of becoming an agent.
- Research Method
- Quantitative Method
- Canonical correlation
- Research Instruments
- Variables Involved
- Data Processing and Analysis
Meanwhile, marketing cost and number of agents (NoA) will be independent variables in this research. Furthermore, marketing costs and the number of agents apparently become independent variables as they affect both dependent variables. Is there any correlation between the cost of marketing and the increase in the number of new customers (INPH) and the cost of acquisition.
Is there any correlation between the number of agents (NoA) and the increase in number of new customers (INPH) and acquisition costs. Furthermore, marketing costs successfully prove that they do influence the increase in the number of policyholders and acquisition costs. There is correlation between marketing costs and increase in number of new customers (INPH) and acquisition beds and.
There is no significant correlation between the number of agents and the increase in the number of new customers (INPH) and acquisition costs.
Analysis of Data
- Canonical Correlations Result
- Interpretation of Canonical Variates
In this particular part, we will discuss the result of the analysis using primary data based on the calculation in the previous chapter. Two canonical functions as a result of dependent and independent variables are illustrated in part NO. Two canonical functions as a result of dependent and independent variables are illustrated in ROOT NO and Canon Cor; the root itself means a linear combination.
The result of the possible canonical function to be processed has emerged in the previous point, namely canonical correlation function 1. Both methods will provide the result of dependent and independent variables to determine the correlation and the coefficient or contribution to the variables. Based on the result of canonical weights, both INPH and acquisition cost a larger coefficient than the limiting number, which is 0.5.
There is another way to interpret the result of the function, which is through canonical loading.
Interpretation of Result
The steady growth shown by NoA may mean that its correlation with dependent variables is quite low. Theoretically, the correlation between them should be higher than since new customers come from the agents and the agents' commission is the acquisition price variable. However, as previously explained, the low correlation figure possibly arises due to stable growth of NoA during the research period.
To summarize, based on the statistical result it can be concluded that there is correlation between the marketing cost and the increase in the number of new policies and the acquisition cost, but there is no correlation between the number of agents and the increase in the number of policies and the acquisition cost. .
Conclusion
Meanwhile, although the correlation between the number of agents and the increase in the number of new customers and acquisition cost does not exist significantly, it cannot be separated from the two.
Recommendation for Research Object
In other words, prioritizing which costs should be spent to bring more benefit to the company would be another idea to be taken. There is one recommendation that the researcher would like to give, which is to find out more about specific dominant marketing cost variable that really affects the increase in the number of new customers. The researcher did not analyze specifically about it, but marketing cost as total, so it will be better if the company finds out more about the detailed variable.
Recommendation for Further Research
