Abstract
The South African long-term insurance industry is of substantial economic importance, and as such, the challenges it faces due to high employee turnover needs to be addressed. The industry contributes an equivalent of 8% of the GDP to the economy annually, while employing over 147 360 South Africans as sales representatives alone. Within the industry, Financial Services Providers employ independent financial advisors (IFAs) to liaise with clients and make sales, which makes the high IFA turnover rate experienced by the industry a cause for concern. A combination of recruitment pressures, and the high cost of getting new advisors set up within the industry have made IFAs a sought-after resource that Financial Services Providers compete for. To reduce IFA turnover intention, improve their satisfaction levels, and increase the perceived value offered by employing Financial Services Providers, internal marketing offers a possible solution, by presenting a combination of need-satisfying benefits to IFAs.
Internal marketing places employees at the forefront of an organisation’s marketing communications, showing the importance of first gaining employee support for the organisation, its products, and its brand, before communicating with the outside marketplace. Internal marketing is important for service industries, such as long-term insurance, where employees are an integral part of the market offering. Consequently, this study aimed to identify an effective combination of internal marketing elements designed to increase IFAs’ perceived value and overall satisfaction and reduce IFAs’ turnover intentions. Specifically, this study considered the implementation of an expanded internal marketing mix consisting of 12 elements, namely internal products, internal place, internal price, internal promotion, internal processes, internal people, internal physical evidence, internal political power, internal personal relationships, internal packaging, internal positioning, and internal performance management.
This study followed a metatheoretical approach, allowing for the development of a realistic, systems thinking orientation investigating the inner workings of complex theoretical concepts, proven to be appropriate in the field of marketing. The theories grounded in the study include Relationship Marketing Theory, Social Exchange Theory, Motivational Theory, and Expectancy Disconfirmation Theory. The primary research component was quantitative in nature, using self-administered questionnaires and non-probability, judgement sampling to obtain 410 responses, through two rounds of data collection. The primary data was then analysed using AMOS 24 to conduct a Confirmatory Factor Analysis to measure the proposed
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model and assess the structure. This was followed by Structural Equation Modelling to test the relationship between the internal marketing mix elements, perceived value, employee satisfaction, and employee turnover intention, as well as the moderating variable of brand commitment.
The main findings of this study revealed that within the context of the South African long-term insurance industry internal people, internal political power, internal performance management, and internal positioning do positively influence perceived value. IFAs will seek out the employment exchange that they perceive as offering the most value, whether that is with their current employer or not. Although employee satisfaction has not been found to reduce turnover intention within the context of this study, it has been found that brand commitment has a negative effect on the relationship between IFA satisfaction and turnover intention. This means that brand commitment weakened the positive relationship between IFA satisfaction and turnover intention. However, even if IFAs are satisfied, their commitment to the employer brand may not be strong enough to prevent them from leaving. Academically, the identification of four, non-traditional, internal marketing mix elements as being significant provides important insight into the need for the evolution of internal marketing theory to match changing socio-economic trends.
It is recommended that Financial Services Providers operating in the South African long-term insurance industry follow a structured, systematic approach to internal marketing implementation. All elements of the internal marketing mix should hold equal importance and serve the combined purpose of enhancing the overall employee proposition. Internal promotion should be used to remind IFAs of the organisational vision, mission, and goals, utilising digital communication channels where possible, and maximising the impact of internal events. IFAs want a sense of achievement, incorporated into reward systems. Financial Services Providers should monitor the effect of the soon-to-be implemented RDR Bill on the value IFAs perceive in the employment exchange. The move to open-plan working environments should be designed to reduce the negative side of social interactions and enhance the positively contributing factors. Financial Services Providers must acknowledge the additional challenge of time-consuming administrative duties and the burden of technological changes in internal processes. Finally, Financial Services Providers must acknowledge that although IFAs may be satisfied with the overall employment exchange, they may still be open to other employers offering more opportunities.