Impact of Relationship Marketing Dimensions on Word-of-Mouth Communications in the Insurance Industry in Nigeria

Abstract: Insurance plays a prominent backbone in a country’s economic growth through its financial intermediary role. Although previous researchers have examined the different factors that influence customers’ satisfaction and patronage of insurance such as corporate image, fair premium, prompt settlement of claims, etc., not much has been achieved as demand for insurance still remains at a low ebb. Thus, insurance industry in Nigeria has achieved below its potential in its one century years of existence. This paper examines the impact of relationship marketing on word of mouth (WOM) communication in the insurance industry in Nigeria. Population of study comprises all insurance consumers in Lagos metropolis. Data was collected through the completion of questionnaire distributed to a sample of 400 policy holders selected via convenience sampling technique. Correlation and regression analyses were applied on the data collected using SPSS version 20 software. Findings indicated that relationship marketing components were positively correlated with WOM communication. The R-squared statistic revealed that 67.5% variance in the dependent variable was explained by variances in the independent variables collectively. The paper therefore recommends that insurance firms in Nigeria should adopt relationship marketing strategy to earn customer satisfaction whose consequences are both customers’ positive WOM communication and loyalty.

Keywords: relationship marketing; WOM communication; customer loyalty; insurance industry; Nigeria

Man as a gregarious animal has been with word of mouth (WOM) communication since existence. WOM communication is face to face communication between two or more people which enables sharing and talking about issues everywhere and anytime (Naz, 2014). It facilitates interaction between people. Within the marketing sphere, WOM communication is defined as informal consumer to consumer communication which is not commercially induced but enables the sender to share his/her experience about a product, service or company (Arndt, 1967). It is also defined as positive or negative information shared with regards to a customer’s experience of a product, service or supplier to a large number of people using internet facilities (Naz, 2014). Thus WOM communication is no longer limited to face to face communication, rather with respect to internet facilities consumers have access to information through social media or electronic word of mouth (E-WOM). WOM communication is of immense importance to marketers in this 21^st century, as Gurcu and Korkmaz (2018) found that 68.1% of their respondents obtained recommendation on health care provider through WOM communication. Addditionally, WOM behavior is a function of functional and relationship quality in the service sector (Ng, David & Dagger, 2011).

In most of developed economies of the world, insurance is seen as the traditional backbone of a country’s risk management. Moreover, insurance is also perceived as a major player in the financial market as she helps to accumulate and channel funds to infrastructural and entrepreneurial projects which serve as stimulus to economic growth and development. However, insurance industry in Nigeria contrary to all expectations has achieved below her potential in her one century years of existence. Only few people purchase genuine insurance policies in Nigeria (Chukwudeh, 2016). The contention is that insurance industry in Nigeria lack customer satisfaction whose determinants are policyholders’ education and awareness, employee responsiveness and operational efficiency (Abaidoo, 2015). Relationship marketing stresses on a long-term interactive and collaborative relationship between the provider (supplier) and the customer for long term profitability (Gummersson, 1994). It aims at establishing, nurturing and enhancing interactive relationship between customers and providers that are mutually beneficial (Akbari, Kazemi & Haddadi, 2016). Relationship marketing has dimensions, which if effectively applied, effectively contribute to WOM communications particularly in financial services industry whose service products are intangible, homogeneous and therefore termed high risk, because they cannot be trialed before purchase (Anabila, Narteh & Tweneboah-Kodnah, 2012; Mazzol, Sweeney, & Soutar 2007). Records disclosed that insurance is the least purchased financial service product in Nigeria financial market as only about 10% of Nigerians have insurance policy of any sort (Ebitu, Ibok & Mbum, 2012: Chukwudeh, 2016) while insurance market penetration is still below 1% in Nigeria (Okonkwo & Eche, 2019). It is against this background that this current research seeks to explore the effect of relationship marketing on WOM communication which is a consequence of customers satisfactory purchase experience (Wijewardene, 2017). Thus, this research draws on social exchange theory to understand the influence of relationship marketing dimensions on WOM communication in Nigeria.

Despite Nigeria having the largest population among all nations in the continent of Africa, she trails behind South Africa, Morocco, Kenya, Egypt and Algeria (sigma No 3/2017); in African insurance premium ranking. Presently, her market penetration rate is 0.3% (Cenfri, 2018). Low insurance patronage has not only affected the industry but has also withheld the growth and development of the Nigerian economy (Chukwudeh, 2016). Literature reviewed revealed that studies have established the influence of relationship marketing (Parsa Sadeghi, 2015; Akbari, Kazemi & Haddadi, 2016; Ntale, Ngoma & Muslime, 2013; Anabila, Narteh & Tweneboah-Koduah, 2012) on WOM communications, however these studies were domiciled outside Nigeria. Hence there is a literature gap in Nigeria, regarding the impact of relationship marketing on WOM communication. Thus the purpose of this present study is to empirically examine the impact of relationship marketing on WOM communication surveying insurance consumers as participants in the study. The remaining parts of this paper is structured as follows: section two the following section, provides the theoretical and empirical studies review of the research constructs, while section three addresses the research methods adopted. Furthermore, the findings of the research, conclusions and recommendations were presented in sections four and five respectively.

In this study, social exchange theory (SET) was used to underpinned the research titled the “impact of relationship marketing on WOM communications among insurance service consumers in Nigeria. “SET is built on the norm of reciprocity (Gouldner, 1960) and seen as action that is contingent on the rewarding reaction from another (Blau, 1964). SET has a broad suitability in management, organizational behavior, social psychology and anthropology (Cropanzano, Anthony, Daniels & Hall, 2017). Thus viewed through the lens of SET, societal wealth is exchanged through reciprocal system in which one party repays another party for the good or bad actions. SET predicts that a person’s reaction to a positive initiating action is likely to be a positive reciprocating response (Cropanzano et al, 2017). As applied to this study if insurance companies in Nigeria become more market oriented by supplying positive initiating services such as individually adjusted services to meet customer needs, enhancing integrity, building trust-based relationship, offering more customer-oriented mindset, and enhancing their ability to meet customers’ ever changing needs (Alinvi & Babri, 2007), the industry would achieve positive marketing, financial and organizational performance (Mokhtaran & Komeilian, 2016), through customers positive reciprocating responses such as customer loyalty and positive WOM communication as reactions to the positive initiating actions (Cropanzano et al, 2017). The application of relationship marketing through the implementation of relationship marketing constructs such as customer focused strategy (empathy), trust, commitment, communication and responsiveness, constitutes a new business strategy that focuses on collaborative business relationship, marketing efficiency and effectiveness (Gruen, 1997) thus fulfilling SET postulations. This strategy if well implemented would not only generate relational responses but would also constitute a source of sustainable competitive advantage for the insurance industry (Gruen, 1997). Today many Nigerians do not believe or have confidence in the Nigerian insurance industry, because according to most of them insurance practitioners cheerfully collect premiums at inception of an insurance contract, but default when an incident of claim arises. Complaints as above show lack of market orientation on the part of insurance companies just as Akpan (2005) and Ibok (2006) argued that delay in the settlement of genuine claims is the root cause of low patronage.

With the increase use of WOM communication, i.e., face-to-face connections, and the gamut of social media platforms such as blogs, consumer reviews, forums and networking (Fan & Miao, 2012) coupled with telephone and text messages, internet services for all products and services in the marketplace, marketers’ ability to influence consumers’ purchase behavior positively tends to be a challenge. Therefore the acceptance of traditional marketing information through mass media like radio, television, newspapers for influencing consumers’ purchase decision (Sirma, 2009) is currently, a great concern to marketers. Nowadays, it may be assumed that consumers adjudged the traditional marketing information channels as incredible and has begun to seek for credible personal sources of information which is not commercially biased and company-sponsored. Today, word of mouth, which is one of the oldest form of transmitting information (Dellarocas, 2003) aided by social media, has been found to be a powerful tool to influence consumer behavior and a credible source of information compared to mass media such as print and electronic advertising media (Rusticus, 2007). This is because information received from a person’s social network i.e WOM from a trusted friend, peer group, family member, is adjudged to be more credible, since it is independent of commercial purposes. WOM therefore has been considered a significant marketing tool (Bone, 1995) which has been subject to many theoretical and empirical researches (Arndt, 1967; Cheung & Thadani, 2012; Knoll & Proksch, 2015). Although WOM has been regarded as one of the oldest and powerful means of communication and has always been in existence, however the meaning remains unclear (Sirma, 2009). Oxford English dictionary defined WOM as ‘oral communication’ ‘oral publicity’ and ‘speaking’. In the marketing literature, Arndt (1967) defined WOM as an oral consumer to consumer communication between a receiver and sender in which the receiver receives information about a product or service from a sender. In the same vein, Storey (2008) defined WOM as most commonly recognized interpersonal communication occurring in a situational environment between groups such as product provider, independent experts, family and friends and actual consumer. Sirma (2009) also defined WOM as consumer-to-consumer marketing which result from individuals sharing information with other individuals about a product or service in an offline environment spontaneously. Contemporary marketing researchers Maisam and Mahsa (2016) described WOM as talking about products and services between people apart from companies’ advertisement for products or services. Similarly, Milakovic, Mihic and Wasecko (2017) defined WOM as the process of exchange of information between consumers.

Positive WOM can be transmitted by satisfied consumers which in turn promotes the goods or services. This implies that apart from consumers, WOM could also be beneficial to the marketers as consumers share their positive experiences around, it will yield positive results for the marketers. On the contrary, WOM communication could be harmful to companies when negative comments are spread through it by unsatisfied customers (Sirma, 2009). Since WOM is a private conversation it cannot be controlled, the spread of negative WOM could lead to avoidance of a product or service brand and the company portrayed as unsatisfactory in performance.

The evolution of relationship marketing (RM), in marketing literature can be traced back to Berry (1983) when he presented a paper entitled relationship marketing at the American Marketing Association’s Service marketing conference. It the paper, he articulated RM as alluring, retaining and increasing customer relationship. According to Berry (1983) customer relationship can be best established as a shift from attracting new customers to caring for the current customers through provision of relational benefits (Theron & Terblanche, 2009). Furthermore, Theron and Terblanche (2009) noted that the main goal of RM is to attract new customer by creating customers loyalty among the existing ones through its needs-meeting character (Gupta & Sahu, 2012). RM as a new paradigm in marketing literature is seen as an approach to develop a long term collaborative association with customers. It measures the satisfaction level and develops effective programmes to retain customers (Gupta & Sahu, 2012). In the same vein Nwankwo and Ajemunigbohun (2013) noted that integration of customers’ needs and desires with organisation’s marketing strategy amounts to customers’ relationship management. Thus the focus of RM is to develop and maintain relational exchanges and increase mutual economic value (Gupta & Sahu, 2012). Gronroos (1995) noted that marketing as a discipline, needed a paradigm shift from short term transaction-oriented goal to long term collaborative relationship building, if marketing is to survive as a discipline. He defined RM as a process of identifying, retaining, increasing and even terminating relationship when necessary with customers and other stakeholders profitably. The aim is to ensure that the goals of each party are met, through giving and fulfilling promises. Today, it is generally believed that RM is rooted on the philosophy of long term relationship in caring for the existing customers over attracting new ones, as the saying goes that a bird in hand is worth million in the bush. RM grants competitive advantage to an astute marketer through cross-selling to more receptive customer base (Gupta & Sahu, 2012) and a source of tremendous growth (Claycomb & Martin, 2002) through its caring character, and reduction in customer churn while increasing their satisfaction (Dushyenthan, 2012; Sohail, 2012) and simultaneously meeting organizational objectives (Kotler, 2003).

In Nigeria, few studies have examined the effects of relationship marketing on WOM communications among insurance-consumers, despite the fact that most insurance consumers perceive insurance contract as too technical to comprehend (Yusuf, Ajemunigbohun & Noah, 2017). Thus it is therefore significant to verify the factors that influence the purchase of insurance in our developing economy. A review of literature on marketing of insurance services revealed that most contemporary empirical studies were focused on transaction marketing orientation and customer satisfaction factors such as corporate image, service quality and perceived value (Nguyen, Nguyen, Nguyen & Phan, 2018); core service, promotion and distribution (logistics) (Ogbechi, Okafor & Onifade, 2018); prompt settlement of claims, quality insurance products, fair premium, employee responsiveness to customers complaints, effective communication, education on policy documents and product benefits (Nebo & Okolo, 2016).Others are policyholders’ education, feedback on life policy benefits and operational efficiency of insurance contracts (Abaidoo, 2015).

Given the plethora research findings, it is surprising that Nigerian insurance practitioners are yet to come to terms with the industry sector’s problems. For instance, the industry is yet unable to attract enough underwriting business globally as the industry is still performing below expectation (Nebo & Okolo, 2016).

Nowadays, researchers have proven consumers relied more on personal WOM communication as the most credible source of information i.e consumer to consumer for advice and recommendation than mass media channels, particularly for services, because it is not to commercially biased, (Ntale et al, 2013). Relationship marketing strategy is process of attracting, maintaining and enhancing customer relationships (Berry, 1983). It is an antecedent of WOM communications (Ngoma & Ntale, 2019) and it is likely going to be the sure way to boost insurance performance in Nigeria, since relationship marketing facilitates customer retention, mutual benefits and competitive advantage (Akbari, Kazemi & Haddadi, 2016). Relationship marketing also steers a business organization from transaction marketing orientation to focus on relational marketing for efficiency and effectiveness and customer retention (Gruen, 1997). Accordingly, Anabila, Narteh and Tweneboah-Koduah (2012) observed that relationship marketing has many dimensional constructs, which, if well selected and implemented in line with an industry’s need, not only reduce cost but influence customer loyalty. With respect to this study the following dimensional constructs are applied.

The conceptual framework was developed based on the relationship marketing literature reviewed. This study assumes that there are five constructs or dimensions of relationship marketing that can be applied in marketing insurance service in Nigeria. They are customer focused strategy, commitment, trust, communication and responsiveness. The strategy-relationship marketing dimensions are hypothesized to be significantly associated with WOM communications in the Nigerian insurance industry.

With the increased competition and low level of trust and customer retention, it implies insurance service marketers must look beyond the traditional marketing mix strategies and explore other customer led approaches that are non-commercial strategies (Ntale, Ngoma & Musiime, 2013). Thus the success factor in this supposed non-commercial strategic era is long-term relationship with insurance stakeholders. This relationship marketing strategy would increase customer loyalty and retention, transform indifferent customers to loyal customers, increase positive WOM communications, provide opportunities for repeat purchase, up-selling and cross-selling. (Ntale et al, 2013; Anabila et al, 2012). Through relationship marketing strategy, WOM communication would become a more sustainable alternative for organisations to promote their services and to attract and retain loyal customers through providing good quality customer services. In this era of decreased trust and reduced reliance on commercially based sources of information, e.g., television, radio, outdoor advertising, etc. (Ntale et al, 2013), WOM communication which is a consequence of relationship marketing (Ngoma & Ntale, 2019) is the next best alternative, just as Peng and Wang (2006) stated that relationship marketing is concerned with building customer loyalty by providing value to all parties involved in the relational exchanges.

This study is a cross-sectional survey research design. This research design was chosen because it has been found that in analyzing social issues, it is suitable to consider a cross-section of the population at one point in time (Anabila et al, 2012). The population of this study comprises all the insurance consumers based in Lagos metropolis in Nigeria. Lagos metropolis, as the commercial nerve centre of Nigeria, has large number of insurable risks (life and non-life) and therefore housed the headquarters of most insurance companies operating in Nigeria. As a result of non-availability of a sampling frame for all insurance consumers in Lagos metropolis, the researchers applied Cochran (1997) formula for sample size determination from an infinite population. Formula:

In this study owners of private motor cars who are mostly found among paid executives (senior staff employees) in both private and public institutions constitute our unit of analysis. The researcher assumed maximum variability of 50% of the attribute at 95% confidence level.

400 structured questionnaire spread across the 20 local government areas of Lagos state were distributed. The self-administered questionnaire was distributed by 20 selected research assistants (part time post graduate students) from the Faculty of Management Sciences. Each student was assigned to a particular local government area. Convenience sampling technique was applied as it is assumes to be cheaper and simpler to implement.

The research instrument was adapted from Pressey and Mattews (2000) and Sin, Tse, Yau, Chowb, Leeb and Lau (2002). A total of 42 items in the questionnaire, are structured into sections A, B & C, with 35 items in sections A & B measuring the relationship marketing constructs and WOM communication using Likert format scale ranging from ‘1’= strongly disagree to ‘ 5’ strongly agree while seven items from section C captures the socio demographic profile of the respondents. Table 1 below shows the number of items that measured which research constructs and their reliability measured by cronbach Alpha.

In Cronbach’s Alpha, above 0.7 suggests a good reliability of the research instrument. However, Table 1 above shows the reliability test for the instrument as all measurement scales for this constructs produced a Cronbach alpha of 0.842, 0.873, 0.786 and 0.787, 0.939 and 0.886 respectively for research constructs, i.e., Customer-Focused Strategy, Commitment, Trust, Communication, Responsiveness and WOM Communication respectively. The results in Table 1 met the above criteria which suggest an excellent internal consistency of these constructs.

The descriptive analysis of data obtained was summarized in percentages while the hypothesis was tested using the regression statistics. Out of the 400 copies of questionnaires administered to the respondents, 294 copies of questionnaire were completed and returned which implies a response rate of 74%.

Table 2 shows that majority of the respondents fall under the category of holders of HND/B.Sc. qualifications taking a percentage of 70.1% while 29.9% are categorized in the MBA/M.Sc. level of qualification. It could therefore be said that the population survey are literate and are expected to provide an objective assessment of the issues raised in the questionnaire used, thus valid information are expected to be elicited from these set of respondents. As regard to the marital status, 44.6% are single while 55.4% of the respondents are married. Table 2 also shows the distribution of the respondents’ information revealed that 69.7% are male and 30.3% are female. This suggests that both genders have been adequately represented. Furthermore, Table 2 above also revealed that 25.9% of the respondents are within the age range of 20-30 years, 55.8% are within the age range of 31-40 years while the remaining 18.4% are within the age range of 41-50 years. It also revealed itemization of the respondents’ policy type as all the respondents has one insurance policy or the other.

Table 3. Descriptive statistics and Correlation between relationship marketing (customer-focused strategy, commitment, trust, communication, responsiveness) and WOM communication.

Table 3 depicts the descriptive statistics and correlation between relationship marketing constructs (customer-focused strategy, commitment, trust, communication, responsiveness) and WOM communication. The result shows that all the relationship marketing dimensions (customer-focused strategy (r =.560 p = .000), commitment (r =.641 p = .000), trust (r =.617, p = .722, p = .000), communication (r =.722, p = .000), responsiveness (r = .761 p = .000), are positively (r ≤+1) and significantly related (p < 001** or 0.05*) to WOM communication.

Table 4 - Regression result for relationship marketing (customer-focused strategy, commitment, trust, communication, responsiveness) vs. WOM communication.

Table 4 presents the results of the regression analysis for relationship marketing dimensions (customer-focused strategy, commitment, trust, communication, responsiveness) as predictor of WOM communication. The R-squared statistic as explained by the fitted model implies that about 67.5% of the total variation in measure of WOM communication is explained by the variations in relationship marketing (customer-focused strategy, commitment, trust, communication, responsiveness). The regression coefficient, t statistic and p value for the model shows that customer-focused strategy (β=-.037, t=-.917, p>0.05) exerts a negative and statistically insignificant effect on WOM communication. Commitment (β=.064, t=1.079, p>0.05) and trust (β=.055, t=1.173, p>0.05) also exert negative and statistically insignificant effect on WOM communication. However, the calculated t values for customer focused strategy, trust and commitment lie within 1.96, i.e., 95% confidence, thus, their alternate hypotheses were rejected while communication (β=.315, t=6.616, p<0.05) and responsiveness (β=.346, t=9.067, p<0.05) exert positive and statistically significant effect on WOM communication. Therefore, the hypothetical statements that organizational communication and responsiveness are significantly related to WOM of mouth communication are accepted.

Customer satisfaction and loyalty for insurance services have become a source of concern to the managers as well as the investors and other stakeholders in the industry. In this era of phenomena growth of the service sector (UNCTAD, 2017) and intensive global competition due to disruptive innovations, insurance service in Nigeria is stagnated (Cenfri, 2018). While in UK, South Africa and Kenya insurance contributes 20%, 17% and 3.4% of GDP respectively, in Nigeria, insurance contributes only 0.3% to GDP (Cenfri, 2018). This study reveals that relationship marketing (customer focused strategy (empathy) trust, commitment, communication and responsiveness) explained 67.5% of the variations in WOM communication. WOM communication is a powerful service promotional strategy because it drives consumer purchase decision process and consumer behavior (Whyte, 1954; Wijewarene, 2017) WOM communication is a consequence of customer satisfaction and loyalty (Ngoma & Ntale, 2019; Guede, Curiel & Antonovica, 2018).

Based on our model, we found that only communication and response positively predicted WOM communication respectively. These findings are consistent with previous research results (Mbang & Phiri, 2015; Akbari et al, 2016; Ngoma & Ntale, 2019). Customer-focused strategy, trust and commitment as revealed in this study, have negative relationship with WOM communication. This suggests that respondents do not consider customer service, trust and commitment emanating from insurance practitioners sufficiently satisfactory. Past researchers have identified customer dissatisfaction and distrust of insurance practitioners as impediment for patronage (Ogbechi, Okafor and Onifade; Cenfri, 2018). For instance, Ogbechi et al, (2018) identified variables such as core service, promotion and distribution (logistics) as factors that affect customer satisfaction and loyalty. In the same vein, Nwankwo and Durowoju (2011) and Nebo and Okolo (2016) identified lack of prompt settlement of claims, empathy and operational efficiency in terms employee responsiveness, timely communication on product renewals, as factors that hinders customer satisfaction.

In this study, trust was negatively related to WOM communication. Nwakanma and Jackson (2007) posit that for effective relationship marketing programme to run interactively, trust must be present. Trust is seen as a key element in successful relationship marketing programme (Nwakanma & Jackson, 2007). It represents the customers believe and confidence in the reliability and integrity of the firm (Buttle, 1996). Empirically, Damtew & Pagidimarri (2013) in India found that 69% of respondents chose an insurance provider based on firms trustworthiness, 43% on customer service and 38% on convenience. Going by the above, it means that comparatively insurance consumers in Nigeria do not have confidence in the service providers and are not satisfied with their operational efficiency no wonder trust was negatively related to customers WOM communications.

Similarly, commitment was negatively related to WOM communication. Commitment involves a firm maintaining a long term mutual relationship with her customer (Nwakanma & Jackson, 2007). This can be nurtured through understanding the needs of the customers and continually striving to meet the needs. In a situation where claims are not settled on time, no effective communication (Nebo & Okolo, 2016) one cannot say the customers’ needs are adequately met. Genuine commitment commences from clear understanding of customers’ needs and providing them innovatively (Anabila et al, 2012). Insurance consumers may have perceived that insurance firms are not committed enough in meeting customer needs, thus commitment is negatively related to WOM communication.

The third relationship marketing construct that ended up with a negative relationship with communication is customer focused strategy (empathy/customer service). Customer service implies understanding customer expectations and providing them, which are essential for business success (Nwakanma & Jackson, 2007). The implication is that insurance practitioners should be empathetic, i.e., customers should be understood, nurtured and listened to (Nwakanma & Jackson, 2007). Past researchers provided evidence that insurance firms have not done enough empathetically for their customers (Yusuf, 2009; Cenfri, 2018) thus customer focused strategy is negatively related with WOM communication. For any insurance firm to earn positive WOM communication which would yield a sustainable and profitable collaborative relationship (Akbari et al, 2016), such firm must be duty bound to provide services suitable to customers’ needs and desires innovatively (Anabila, Nateh & Twenboah-Koduah, 2012).

Some major marketing characteristics of service firms, among others, are that their service products cannot easily be differentiated nor can they be trialed before purchase. Thus in this era of disruptive innovations and intense competitive business environment, most companies realize the need to build strong long-term mutual relationship with clients in order to enhance customer satisfaction and loyalty coupled with WOM communication which is a powerful force that shapes consumer buying behavior (Whyte, 1954). It has been proved that satisfied customers freely share their experience with other consumers, thus spreading positive WOM communication which promotes the company and its service (Wijewardene, 2017). This study explored the impact of relationship marketing on WOM communication. The outcome is that relationship marketing (customer focused strategy, trust, commitment, communication and responsiveness) can significantly predict WOM communication; as the relational elements can jointly explain 67.5% of variations in WOM communication in insurance industry in Nigeria. From our model only communication and responsiveness positively significantly predicted WOM communication, while customer focused strategy (empathy) trust and commitment could not significantly predict WOM. Although other past researchers found that trust, commitment and empathy are key relational elements that positively predicted WOM (Anabila et al, 2012; Sivesan, 2012 and Ngoma & Ntale, 2019), the plausible reason for this unique result from Nigeria insurance industry is that most Nigerians distrust insurance, because of the aged-long cultural and communal life style and dishonesty among insurance practitioners. Sequel to the findings of this research we conclude that if insurance is to profit from WOM communication the firms must strive to generate customer trust and confidence by positioning themselves as trustworthy. Second she must also be committed to innovatively meet the needs of the customers through building strong collaborative relationship with her clients. Finally, insurance in Nigeria must be customer-centric focused in order to be profitable, as WOM communication drives consumer purchase decision making process and their buyer behaviour in an industry whose service products cannot be trialed before purchase.

The theoretical contributions of this study, begin with the deconstructing the concept of relationship marketing as applicable to insurance services. We conceptualize relationship marketing in insurance industry as consisting of elements such as customer focused strategy (empathy), trust, commitment, communication and responsiveness; while WOM communication which could be positive or negative, was conceptualized as consumer reliable source of information, emanating from consumers’ experience in the purchase and use of the service product. Empirically, there are few if any, documented study that have explored the impact of relationship marketing on WOM communication in the Nigerian insurance industry. Based on literature review, relationship marketing has multidimensional components such as trust, commitment, reciprocity, communication, empathy, bonding, share value (Nwakanma & Johnson, 2007; Sin, Tse, Yau, Lee & Chow, 2002). However few studies in the financial services sector limited the choice of relational elements to trust, commitment, communication, conflict management, competence, social and financial bonds (Akbari et al, 2016; Anabila et al, 2012 and Parsa & Sadeghi, 2015). In this study we able to establish that relationship marketing (customer focused strategy, trust, commitment, communication and responsiveness) significantly predicted positive WOM communication in the Nigerian insurance industry. Furthermore, we added to the existing body of knowledge that effective communication and employees responsiveness individually and significantly predicted WOM communicated. Thus we have through empirical insight showed that profitable insurance patronage is a function of relationship marketing which is an antecedent of WOM communication; a powerful low cost, and effective promotional strategy, which consumers perceived as reliable source information, that drives consumers’ purchase decision making and attitudes.

This study found that relationship marketing constructs used in this study were strongly and positively correlated to each other (Table 2). This implies that relationship marketing practice is suitable tool to improve marketing of insurance in Nigeria. Therefore insurance firms in Nigeria should take corrective steps to improve on its marketing by applying relationship marketing strategy. For instance, the companies should invest and embark on training of her employees for technical competence and empathetic skills for operational efficiency. Second, the companies should build strong long term collaborative relationship with her clients to boost trustworthiness and also demonstrate commitment by regularly and consciously meeting customers’ needs innovatively. These combined with effective communication and employee responsiveness would inevitably generate WOM communication which is perceived reliable and trusted source of information by consumers. WOM communication is a powerful low-cost and effective promotional strategy (from the supplier perspective) because it can significantly influence buyers’ attitude and perception of a service good and affects consumers’ purchase decision making process in Nigeria context.

As most insurance companies are headquartered in Lagos, the commercial nerve centre for Nigeria, this study was conducted and domiciled in Lagos as sample was taken only from Lagos metropolis. This is a serious limitation as Lagos is just one state out of 36 states of the federation; therefore the results from this research cannot be generalized to other parts of the nation because of its geographical limitation. Second, the research was domiciled only in insurance industry a sub sector of the financial sector, therefore its results cannot be suitably generalized to other sectors of the economy. Future researchers can replicate this study in other sectors of the economy and with a wider geographical spread in sample.

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1PhD, Department of Actuarial Science & Insurance, Faculty of Management Sciences, University of Lagos, Nigeria, Address: Lagos, Nigeria, Corresponding author: drmoya1995@gmail.com.

2PhD in progress, Department of Actuarial Sciences & Insurance, Faculty of Management Sciences, University of Lagos, Nigeria, Address: Lagos Nigeria, E-mail: sunny_michael1988@yahoo.com.

AUDŒ, Vol. 16, no. 3/2020, pp. 89-110

Variables	Response Label	%	N
Sex	Male	205	69.7
	Female	89	30.3

Age	20-30 years	76	25.9
	31-40 years	164	55.8
	41-50 years	54	18.4
Educational Qualification	HND/B.Sc.	206	70.1
	MBA/M.Sc.	88	29.9

Marital Status	Single	131	44.6
	Married	163	55.4
What type of policy	Motor Vehicle	89	30.3
	Liability Insurance	18	6.1
	Personal Accident	34	11.6
	Others	153	52.0

Variables	Mean	SD		r(p)
Variables	Mean	SD		(1)		（2）	（3）	（4）	（5）	（6）
1. Customer-Focused Strategy	3.473	0.7067	1		.639^**(.000)	.628^**(.000)	.631^**(.000)	.627^**(.000)	.560^**(.000)
2. Commitment	3.446	0.6006			1	.746^**(.000)	.729^**(.000)	.623^**(.000)	.641^**(.000)
3. Trust	3.455	0.7152				1	.582^**(.000)	.683^**(.000)	.617^**(.000)
4. Communication	3.312	0.6704					1	.649^**(.000)	.722^**(.000)
5. Responsiveness	3.291	0.8001						1	.761^**(.000)
6. WOM Communication	3.358	0.588							1

Constructs	Number of Item	Cronbach Alpha Values
Customer-Focused Strategy	6	0.842
Commitment	5	0.873
Trust	6	0.786
Communication	5	0.787
Responsiveness	5	0.939
WOM Communication	8	0.886

Source	Β	SE β	t	Sig.
(Constant)	.899	.120
Customer-Focused Strategy	-.037	.041	-.917	.360
Commitment	.064	.059	1.079	.282
Trust	.055	.047	1.173	.242
Communication	.315	.048	6.616	.000
Responsiveness	.346	.038	9.067	.000