Global Trends In Insurance Sector Commerce Essay


This project aims at understanding Personal Selling , its various aspects how customers can be acquired through it in Insurance Sector. This involved theoretical as well as industrial application of customer acquisition methods. The In recent Scenario, Customer Acquisition indeed is one of the key aims of the company today. Personal Selling plays a vital role in attaining it. It is important to determine and focus on psychology of customers, like how the customers feel and think and then selecting the product segment to be presented to them. This project also deals with selling of one of the product of IDBI Federal Life Insurance Company Ltd. Known as "Incomesurance" and analysing the role of personal selling in customer acquisition. IDBI Federal Incomesurance Endowment and Money Back Plan is loaded with lots of benefits which ensure that you get Guaranteed Annual Payout along with insurance protection which will help you to reach you goals with full confidence. Incomesurance Plan is very flexible and allows you to customise your Plan as per your individual and family's future requirements. Moreover it also allows you to choose Premium Payment Period, Payout Period, Payout Options and more.

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As a matter of fact, Personal selling occurs where an individual salesperson sells a product, service or solution to a client. Salespeople match the benefits of their offering to the specific needs of a client. Today, personal selling involves the development of longstanding client relationships. Personal selling is a good way of getting across large amounts of technical or other complex product information. The face-to-face sales meeting gives the sales force chance to demonstrate the product. Frequent meetings between sales force and customer provide an opportunity to build good long-term relationships. Various surveys, interviews have been conducted in various areas of Bangalore to analyse the role of Personal Selling in Customer Acquisition and new methods were suggested in order to improve personal selling in IDBI Life Insurance co. Ltd.


Insurance Sector

Insurance may be defined as Collective bearing of Risk. Insurance, whether life or non-life,

provides people with a reasonable degree of security and assurance that they will be protected in the event of a calamity or failure of any sort.

Origin of Insurance Sector:

Insurance in modern form originated in the Mediterranean during the 13th century. (The earliest references to insurance- found in Babylonia, the Greeks and the Romans). Marine insurance is the oldest form of insurance followed by life insurance and fire insurance. The history of life insurance in India dates back to 1818 when it was conceived as a means to provide for English Widows. A higher premium was charged for Indian lives than the non-Indian lives (considering to be more riskier for coverage). Oriental life Insurance Company was incorporated at Calcutta in1818, followed by Bombay Life Assurance Company in1823 and Triton Insurance Company for General Insurance in1850. By1938 there were 176 insurance companies. Insurance regulation formally began in India through the passing of two acts namely Life Insurance companies Act of 1912 and Provident Fund Act of 1912.

However the first comprehensive legislation was introduced with the Insurance Act of 1938 that provided strict state control over insurance business in the country. The business of India Insurance grew at a faster place as competition amongst the Indian companies intensified. The decision of nationalization of life insurance business took place in 1956 when 245 Indian and foreign insurance provident societies were first merged and then nationalized. As a result of globalization, deregulation and terrorist attacks, the insurance industry has gone through a tremendous transformation over the past decade.

Global Trends in Insurance Sector :

Insurance is a form of risk management, used to hedge against the risk of contingent loss. It involves the transfer of the risk of potential loss from one entity to another, in exchange for a risk premium. Given this role, insurance sector fosters financial stability by enabling economic agents to undertake various transactions with the facility of transfer and dispersion of risks. As a crucial component of the financial system, life insurance plans are an important source of savings and long-term institutional investments essential for the development and growth of bond markets. The role of life insurance as a financial intermediary is particularly important in countries like Pakistan with low levels of financial penetration. Overall Insurance penetration itself is also just 0.8 percent in the country, much lower than the regional average of 2.0 percent.

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Source : Sigma 03/2009, World Insurance in 2009

This figure gives the performance analysis of the insurance sector as a crucial component

of the financial system, discussing in detail developments in both the General and Life

insurance sectors, in addition to giving a brief overview of the scope of Reinsurance in the


Global Players in Insurance:

Japan is an over-insured market. Three of the top 10 Japanese insurers, Mitsui Life, Sumitomo Life, and Asahi Life, have been marked with non-investment grade ratings.

The top 10 global insurance companies are from developed countries are :


Source: J. Franois Outreville, "Players and Driving Forces in World Insurance Services: Locations and

  Governance, Paper delivered during the 2005World Risk and Insurance Economics Congress,

7-11 August 2005, Salt Lake City, Utah, United States of America

Source:Financial Services Management Report

Overview of Indian Insurance Sector:

The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and General Insurance Business (Nationalisation) Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related Acts. With such a large population and the untapped market area of this population Insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7 per cent to the country's GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation "Malhotra Committee" was constituted by the government in 1993 to examine the various aspects of the industry. The key element of the reform process was Participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform.


Since then the insurance industry has gone through many sea changes .The competition LIC started facing from these companies were threatening to the existence of LIC .since the liberalization of the industry the insurance industry has never looked back and today stand as the one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today. The use of new distribution techniques and the IT tools has increased the scope of the industry in the longer run.

Insurance Market- Present:

The insurance sector was opened up for private participation four years ago. For years now, the private players are active in the liberalized environment. The insurance market have witnessed dynamic changes which includes presence of a fairly large number of insurers both life and non-life segment. Most of the private insurance companies have formed joint venture partnering well recognized foreign players across the globe.

There are now 29 insurance companies operating in the Indian market - 14 private life insurers, nine private non-life insurers and six public sector companies. With many more joint ventures in the offing, the insurance industry in India today stands at a crossroads as competition intensifies and companies prepare survival strategies in a detariffed scenario. There is pressure from both within the country and outside on the Government to increase the foreign direct investment (FDI) limit from the current 26% to 49%, which would help JV partners to bring in funds for expansion. There are opportunities in the pensions sector where regulations are being framed. Less than 10 % of Indians above the age of 60 receive pensions. The IRDA has issued the first licence for a standalone health company in the country as many more players wait to enter. The health insurance sector has tremendous growth potential, and as it matures and new players enter, product innovation and enhancement will increase. The deepening of the health database over time will also allow players to develop and price products for larger segments of society.

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Source: FreePress India-

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Life insurance industry's new business volumes in the individual new business segment remained strong, growing 36% Y-o-Y and 23% M-o-M, in August 2010 Various Life Insurers stack up against each in the Industry as a whole. The following Data suggests that LIC of India is still the market leader followed by ICICI Prudential, HDFC Standard Life, SBI, Reliance, Bajaj, Birla Sun Life, Max New York etc.

Future Outlook of Indian Insurance Sector

Insurance undergone rapid and massive changes in all aspects of their business: product and services, sectoral structure, market segmentation, competitive environment. It is believed that the information sharing has not taken its expected shape in the insurance industry for the purposes of practices, research and education. Privatization of insurance sector has allowed insurance companies to work in the market by depositing 100 crore rupees in the reserve of government. This has encouraged many overseas insurance companies, having a required amount in their reserve, to open their branch in our country. Introduction of the sector has changed the employment pattern, but people must know how to make profit from it. To be in the global market and have advantage of it, capital and skill as per the demand and knowledge of market is the requirement. It is necessary that institutions, which form a part of this financial system, have internal management, governance and accountability structures, which measure up to the highest standards. It is believed that the information sharing has not taken its expected shape in the insurance industry for the purposes of practices, research and education. However, data is one of the most needed ingredients in the insurance business development as well as for research and consultancy. There have been regular efforts by IRDA for collection and sharing of the data and other information of public interest. The industry is facing problems in terms of data review as parliament need to register this beforehand. We believe that progress of the industry should not be constrained by any extraneous conditions in the interest of research and development in the area.

The post-liberalized insurance industry panorama in India is witnessing dramatic changes in terms of a slew of latest products and services, new channels of distribution, greater use of I.T. as a service facilitator etc. There is also the phenomenon of noticeable shifts in consumer preferences impacting the product mix being offered by insurers.

Literature Review

Insurance has a long history in India. Life Insurance in its current form was introduced in 1818 when Oriental Life Insurance Company began its operations in India. General Insurance was however a comparatively late entrant in 1850 when Triton Insurance company set up its base in Kolkata. History of Insurance in India can be broadly bifurcated into three eras: a) Pre Nationalisation b) Nationalisation and c) Post Nationalisation. Life Insurance was the first to be nationalized in 1956. Life Insurance Corporation of India was formed by consolidating the operations of various insurance companies. General Insurance followed suit and was nationalized in 1973. General Insurance Corporation of India was set up as the controlling body with New India, United India, National and Oriental as its subsidiaries. The process of opening up the insurance sector was initiated against the background of Economic Reform process which commenced from 1991. For this purpose Malhotra Committee was formed during this year who submitted their report in 1994 and Insurance Regulatory Development Act (IRDA) was passed in 1999. Resultantly Indian Insurance was opened for private companies and Private Insurance Company effectively started operations from 2001. Together with banking services, it adds about 7 per cent to the country's GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life insurance cover and the Health insurance. There are now 29 insurance companies operating in the Indian market - 14 private life insurers, nine private non-life insurers and six public sector companies.




The Industrial Development Bank of India Limited, now more popularly known as IDBI Bank, was established as a wholly-owned subsidiary of Reserve Bank of India. The foundation of the bank was laid down under an Act of Parliament, in July 1964. The main aim behind the setting up of IDBI was to provide credit and other facilities for the Indian industry, which was still in the initial stages of growth and development. In February 1976, the ownership of IDBI was transferred to Government of India.

After the transfer of its ownership, IDBI became the main institution, through which the institutes engaged in financing, promoting and developing industry were to be coordinated. In January 1992, IDBI accessed domestic retail debt market for the first time, with innovative Deep Discount Bonds, and registered path-breaking success. The following year, it set up the IDBI Capital Market Services Ltd., as its wholly-owned subsidiary, to offer a broad range of financial services, including Bond Trading, Equity Broking, Client Asset Management and Depository Services.

In September 1994, in response to RBI's policy of opening up domestic banking sector to private participation, IDBI set up IDBI Bank Ltd., in association with SIDBI. In July 1995, public issue of the bank was taken out, after which the Government's shareholding came down (though it still retains majority of the shareholding in the bank). In September 2003, IDBI took over Tata Home Finance Ltd, renamed 'IDBI Home finance Limited', thus diversifying its business domain and entering the arena of retail finance sector.

The year 2005 witnessed the merger of IDBI Bank with the Industrial Development Bank of India Ltd. The new entity continued to its development finance role, while providing an array of wholesale and retail banking products (and does so till date). The following year, IDBI Bank acquired United Western Bank (which, at that time, had 230 branches spread over 47 districts, in 9 states). In the financial year of 2008, IDBI Bank had a net income of Rs 9415.9 crores and total assets of Rs 120,601 crores.

The Present

Today, IDBI Bank is counted amongst the leading public sector banks of India, apart from claiming the distinction of being the 4th largest bank, in overall ratings. It is presently regarded as the tenth largest development bank in the world, mainly in terms of reach. This is because of its wide network of 509 branches, 900 ATMs and 319 centers. Apart from being involved in banking services, IDBI has set up institutions like The National Stock Exchange of India (NSE), The National Securities Depository Services Ltd. (NSDL) and the Stock Holding Corporation of India (SHCIL).

About IDBI Federal Life Insurance Co Ltd

IDBI Federal Life Insurance Co Ltd is a joint-venture of IDBI Bank, India's premier development and commercial bank, Federal Bank, one of India's leading private sector banks and Ageas, a multinational insurance giant based out of Europe. In this venture, IDBI Bank owns 48% equity while Federal Bank and Ageas own 26% equity each. At IDBI Federal, we endeavor to deliver products that provide value and convenience to the customer. Through a continuous process of innovation in product and service delivery we intend to deliver world-class wealth management, protection and retirement solutions to Indian customers. Having started in March 2008, in just five months of inception we became one of the fastest growing new insurance companies to garner Rs 100 Cr in premiums. The company offers its services through a vast nationwide network across the branches of IDBI Bank and Federal Bank in addition to a sizeable network of advisors and partners. As on January 31st 2011, the company has issued over lakh 2.68 lakh policies with over Rs 14, 230 Cr in Sum Assured.

Vision and Values

Maintaining integrity through our values


To be the leading provider of wealth management, protection and retirement solutions that meets the needs of our customers and adds value to their lives.



To continually strive to enhance customer experience through innovative product offerings, dedicated relationship management and superior service delivery while striving to interact with our customers in the most convenient and cost effective manner. To be transparent in the way we deal with our customers and to act with integrity. To invest in and build quality human capital in order to achieve our mission.


Values incorporated in the company

Transparency: Crystal Clear communication to our partners and stakeholders

Value to Customers: A product and service offering in which customers perceive value

Rock Solid and Delivery on Promise: This translates into being financially strong, operationally robust and  having clarity in claims

Customer-friendly: Advice and support in working with customers and partners.

Profit to Stakeholders: Balance the interests of customers, partners, employees, shareholders and the community at large

Sponsors of IDBI Federal Life Insurance Co Ltd

Federal Bank is one of India's leading private sector banks, with a dominant presence in the state of Kerala. It has a strong network of over 739 branches and 797 ATMs spread across India. The bank provides over four million retail customers with a wide variety of financial products. Federal Bank is one of the first large Indian banks to have an entirely automated and interconnected branch network. In addition to interconnected branches and ATMs, the Bank has a wide range of services like Internet Banking, Mobile Banking, Tele Banking, Any Where Banking, debit cards, online bill payment and call centre facilities to offer round the clock banking convenience to its customers. The Bank has been a pioneer in providing innovative technological solutions to its customers and the Bank has won several awards and recommendations.

Ageas is an international insurance company with a heritage spanning more than 180 years. Ranked among the top 20 insurance companies in Europe, Ageas has chosen to concentrate its business activities in Europe and Asia, which together make up the largest share of the global insurance market. They are grouped around four segments: Belgium, United Kingdom, Continental Europe and Asia. It is an undisputed leader in the Belgian market for individual life and employee benefits, as well as a leading non-life player, through AG Insurance. Internationally Ageas has a strong presence in the UK, where it is the second largest player in private car insurance. The company also has subsidiaries in France, Germany and Hong Kong. Ageas has a track record in developing partnerships with strong financial institutions and key distributors in different markets around the world and successfully operates partnerships in Luxembourg, Italy, Portugal,China, Malaysia, India and Thailand. Ageas employs more than 13,000 people and has annual inflows of almost EUR 18 billion

Products offered by IDBI Federal Life Insurance Co Ltd

Wealthsurance : The Wealthsurance Milestone Plan is a unique Insured Wealth Plan designed to help cross different milestones in one's life. It enables customers to save and build wealth under the protection of Insurance to meet their financial goals. The Wealthsurance Milestone Plan offers a wide range of Investment options, Insurance options and unmatched flexibility that allows customers to customize a plan suited to their needs. Customers can plan for their milestones like completion of school education for their child, a marriage, acquisition of a new house and so on. This Plan comes with a wide range of 13 investment options and 7 insurance benefits - all packaged with a low charge structure and unmatched flexibility.

Homesurance : IDBI Federal Homesurance Protection Plan is a mortgage reducing term assurance plan - MRTA, which provides insurance cover equal to the outstanding balance of your home loan. In the unfortunate event of death of the home loan borrower, the insurance cover enables repayment of the home loan liability so that it does not become a burden to the family. This plan gives you the flexibility to choose your premium payment option

Bondsurance : Given the ever-changing market conditions, a certain segment of customers prefer to invest their money in guaranteed return products. Bondsurance is designed for customers looking for guaranteed returns which will not get affected by financial market conditions. It offers guaranteed return on investment along with life insurance cover. Investment in the Plan is eligible for deduction under Sec 80C of the Income Tax Act and the maturity amount is tax-free under Sec 10(10D) of the Income Tax Act. The IDBI Federal Bondsurance Advantage Plan is a single premium plan where you need to make just a one-time investment. You can choose a Maturity Period of 5, 7, 10, 15 or 20 years. At the end of the chosen period, you will receive a guaranteed maturity amount. In case of death of the insured person before the Maturity Date, a guaranteed Death Benefit will be paid.


Group Microsurance : IDBI Federal Group Microsurance Plan (Microsurance) is an insurance plan dsigned specially for various Micro Financial Institutions and NGOs, wherein not only the members but even their family gets an insurance cover. DBI Federal Group Microsurance  Plan offers life insurance protection at a affordable cost, with wide coverage and hassle-free options to avail accidental benefits

Termsurance : Termsurance Protection Plan is a unique term insurance plan that offers different types of cover for different individual needs at an affordable cost. IDBI Federal Termsurance  Protection Plan gives you multiple cover options so you can select protection as per your needs. This comes with a pack of convenient premium payments options and flexibility to choose policy term to suit your lifestage. Moreover, it also gives you attractive discounts and tax benefits to help you grow your wealth faster

Incomesurance : Some goals cannot be left to chance. Like educating your child, or planning for her marriage, or providing financial security to a loved one, or ensuring a comfortable retirement income. You need to invest in a product that gives you guaranteed returns when you need them. IDBI Federal Incomesurance Endowment & Money Back Plan is a unique combination of a money back and endowment plan that gives you a Guaranteed Annual Payout along with insurance protection, so you can reach you goals with full confidence. IDBI Federal Incomesurance Endowment & Money Back Plan guarantees an Annual Payout each time you pay your premium. There are also lots of other features which are inbuilt in the product like convenient premium payment options, Tax benefits and double advantage of Endowment and Money Back plan

Healthsurance : The costs involved in even the shortest hospital stay can be difficult to meet for many individuals and families. Apart from the costs of the treatment itself, household bills still need to be paid and there could be extra costs to cover, such as travel expenses for family visits or additional childcare costs. You need a plan to help you to manage this extra financial burden. Presenting the IDBI Federal Healthsurance  Hospitalisation and Surgical Plan. If you're aged 18 years to 55 years and currently in good health, this new insurance plan is designed to help you manage the extra financial burden that comes with hospitalisation, by providing a wide range of attractive benefits.

Loansurance : Loansurance is a cost-effective way to ensure that the outstanding debt is settled in the unfortunate event of death of the insured member. This term assurance plan provides cover to a person directly liable for loan repayment (and the partners, in case of a partnership), as per the benefit schedule

Retiresurance : A retirement plan designed to accumulate money to aid a comfortable retirement. The plan provides a guaranteed return on your investment and grows steadily over the years to ensure that you have a corpus on your retirement date, guaranteed. With Retiresurance  you can know the exact amount that you will receive on your vesting date for each premium paid.To top it all, you can also receive Guaranteed Loyalty Additions at your vesting date.


The first adage that we learn while studying marketing is that "it pays to know your customer".We should be able to first understand selling and its creative types and on the process of building and managing an effective salesforce. Salesforce Management is the analysis, planning, implementation, and control of salesforce activities. It includes setting salesforce objectives, designing salesforce strategy, and recruiting, selecting, training, supervising, and evaluating the firms salespeople.

Major steps in Sales Force Management


Fig-1 Ch-18 Part-IV Developing the marketing mix

Principles Of marketing-Kotler and Gary Armstrong, Sixth Edition

Salesforce Strategies:

A company must base its strategy on an understanding of the customer buying process. Hence, a customer can use the following approaches to contact customers

Rep to buyer - discuss issues with a prospect or customer

Rep to buyer group - rep gets to know as many members of buyer group as possible

Sales team to buyer group -

Conference selling - company sales rep and resource group to customer to talk big problems or opportunities

Selling Seminar - Company team to group of buyers/customers

Moreover the company can use either direct sales force or contractual sales force. Direct sales force consists of full or part-time paid employees who work for the company exclusively. Contract sales force consists of independent representatives, agents and brokers who are paid commission based on their sales.

Salesforce Structure:

Strategy determines structure. An appropriate strategy for the organization is arrived at first and then any changes required for the existing structure are carried out so that the structure is capable of executing the strategy. There are 3 types of Salesforce Structure :

Territorial - A sales force organization that assigns each salesperson to an exclusive geographic territory in which that salesperson sells the company's full line. This sales structure results in a clear definition of responsibilities. It increases the salesperson's incentive to cultivate local business and personal ties. Travel expenses are relatively low because each salesperson travels within a small area.

Product - A sales force organization under which salespeople specialize in selling only a portion of the company's products or lines. For Example---Dedicated conference centers and resorts appeal to corporate market segments; they were designed specifically for these markets. Thus, sales people in conference centers are more effectively structured by corporate industry. In this case, a sales person might specialize in the pharmaceutical industry and a few other highly defined industries. This sales person has an advantage in knowing the customers very well.

Complex - Large and complex customer organizations (accounts) are often called, key accounts, major accounts, house accounts, and other.

Salesforce Size:

After the selling organization establishes its strategy and structure, then they must consider salesforce staffing. The basic challenge is appropriately staff to achieve cost/benefit maximization. The Workload Approach (above) yields the total number of sales people needed to cover the entire salesforce territory and/or product/market accounts. Of course, each territory will vary by potential and each sales person's ability and experience will vary.

Salesforce Compensation:

To attract salespeople, a company must have an appealing compensation plan.

Compensation is made up of the several elements: A fixed amount, usually a salary, gives the salesperson a more stable income, a variable amount, which might be commissions or bonuses, rewards a sales- person for greater effort, expense allowances (which repay salespeople for job-related expenses) let salespeople

undertake needed and desirable selling efforts, fringe benefits provide job security and satisfaction.

Management must decide which of these elements (and which combination or amount) makes the most sense for each sales job. The compensation plan can both motivate and direct a salesperson's work.

Basic methods include: Straight salary, Straight commission, Salary plus bonus , Salary plus commission.

Selecting and Training Salespeople

  Selecting: The heart of a successful salesforce operation is the selection of effective salespeople. One survey has reported that the top 27% of salespeople brought in over 52% of the sales volume. Saleforce turnover is another reason to be very careful in selecting; turnover is a major cost for the organization in addition to the personal costs to the salesperson who might be in the wrong profession. The following are a few key areas to consider when selecting salespeople: Honesty, reliability, knowledgeable, psychologically sound who has a compulsive need to win and hold the affection of others.

Training: Training is expensive and necessary for new salespeople as well as experienced people hired from other firms. New salespeople need to learn the basics of sales along with the way of doing business in the new firm. Experienced salespeople often are well set in their ways and need to learn the new policies of the new firm as well as the new product offerings. Training programs have several goals:

1. Salespeople need to know and identify with the company. Here company history, objectives, lines of authority, policies/procedures, etc. are described.

2. Salespeople need to know the company's products.

3. Salespeople need to know the company's customers and competitor characteristics.

4. Salespeople need to know how to make effective sales presentations.


Fig 2: Dartnell Corporation; 27th Survey of Sales Force Compensation,1992

Principles of Personal Selling

Personal selling can be defined as follows:

Personal selling is oral communication with potential buyers of a product with the intention of making a sale. The personal selling may focus initially on developing a relationship with the potential buyer, but will always ultimately end with an attempt to "close the sale".

Personal selling occurs where an individual salesperson sells a product, service or solution to a client. Salespeople match the benefits of their offering to the specific needs of a client. Today, personal selling involves the development of longstanding client relationships

Personal selling is one of the oldest forms of promotion. It involves the use of a sales force to support a push strategy (encouraging intermediaries to buy the product) or a pull strategy (where the role of the sales force may be limited to supporting retailers and providing after-sales service).

Steps in Personal Selling Process:

Stage One - Prospecting.

Prospecting is all about finding prospects, or potential new customers. Prospects should be 'qualified,' which means that they need to be assessed to see if there is business potential, otherwise you could be wasting your time. In order to qualify your prospects, one needs to:

Plan a sales approach focused upon the needs of the customer.

Determine which products or services best meet their needs.

In order to save time, rank the prospects and leave out those that are least likely to buy.

Stage Two - Making First Contact.

This is the preparation that a salesperson goes through before they meet with the client, for example via e-mail, telephone or letter. Preparation will make a call more focused.

Stage Three - Sales Presentation

Here the salesperson tells the product "story" to the buyer, showing how the product will make or save money for the buyer. The salesperson should know how to meet the buyer, make him satisfied and get the relationship off to a good start. A need satisfaction approach where the salesperson investigates the buyer's needs and then matches the product to those needs is advised. Here plenty of questions are asked using open questions and closed questions i.e. questions that will only give the answer 'yes' or the answer 'no.'

Stage Four - Objection Handling

Objection handling is the way in which salespeople tackle obstacles put in their way by clients. Some objections may prove too difficult to handle, and sometimes the client may just take a dislike to you. Here are some approaches for overcoming objections.

Stage Five - Closing the Sale

This is a very important stage. Closing occurs when the salesperson asks the customer for an order. The techniques for closing include: Ask for the order, review points of agreement, offer to help in writing up the order, ask whether the buyer wants this model or that one. The follow-up occurs after the sale and ensures customer satisfaction

Major Steps in Personal Selling


Fig-3 Ch-18 Part-IV Developing the marketing mix

Principles Of marketing-Kotler and Gary Armstrong, Sixth Edition

Advantages of personal selling:

• Personal selling is a face-to-face activity; customers therefore obtain a relatively high degree of personal attention

• The sales message can be customised to meet the needs of the customer

• The two-way nature of the sales process allows the sales team to respond directly and promptly to customer questions and concerns

• Personal selling is a good way of getting across large amounts of technical or other complex product information

• The face-to-face sales meeting gives the sales force chance to demonstrate the product

• Frequent meetings between sales force and customer provide an opportunity to build good long-term relationships

Disadvantages of personal selling:

The main disadvantage of personal selling is the cost of employing a sales force. Sales people are expensive. In addition to the basic pay package, a business needs to provide incentives to achieve sales (typically this is based on commission and/or bonus arrangements) and the equipment to make sales calls (car, travel and subsistence costs, mobile phone etc).

In addition, a sales person can only call on one customer at a time. This is not a cost-effective way of reaching a large audience.

Customer Acquisition - Meaning and its Process

Customer acquisition is the process of acquiring new customers for business or converting existing prospect into new customers. The importance of customer acquisition varies according to the specific business situation of an organization. This process is specifically concerned with issues like acquiring customers at less cost, acquiring as many customers as possible, acquiring customers who are indigenous and business oriented, acquiring customers who utilize newer business channels etc. The whole process should concentrate on following considerations:

It is important to determine and focus on psychology of customers, like how the customers feel and think and then selecting the product segment to be presented to them.

Concentrating on how the customers are influenced by the surrounding environment like the business culture, technology, media etc.

Analysis of customer behavior

and tendency while buying specific range of product.

Studying the customer's inconvenience of knowledge processing power which influence the decision making power.

Finally it's very important to engage best strategies for effectively convincing new customers and improving marketing campaigns.

Customer acquisition techniques change with technological changes. Therefore in the market, which is a collection of individuals, to know what individuals want, marketers need to ask them the right questions. The fact of the matter is that there are certain types of prospects in the B2B market place that the marketers need to understand and target. These prospects may be from different verticals. Ultimately these prospects make the purchase decision. So the strategy for customer acquisition should be built around these prospects. Now we need to understand these phases through which the prospects pass before they sign the Statement of Work.

Acquiring a customer depends on how effectively the organization is able to build a comprehensive relationship with that customer. When suppliers have healthy relationship with customers, the revenue of the organization always increases as customers tend to buy more and more. There is possibility that a satisfied customer seek to buy special category of related products apart from the regular ones from that particular supplier. For instance if a satisfied and loyal customer has a home insurance policy from an insurance company then there are positive chances that he could also insure his property and car if he is fully satisfied with the services of that insurance company. This will definitely result in growth of business. While acquiring, the nature of response provided to acquisition is the key aspect to create an impressive opinion in customer's mindset. Hence, the suppliers should always have prompt, responsive and experienced executives to serve customers. For example, if a customer calls and asks about some critical features of any product and the executive fails to explain it or being non-responsive to most of his questions then the customer could probably divert his way to some other organization for better response which could definitely result in end of the deal and relationship with that customer.

Improving customer acquisition is the primary challenge which an organization faces. Hence it is important to identify critical approaches to enhance customer acquisition power. This includes acquiring more number of customers or more number of attractive customers at low cost. One of the best strategies to acquire new customers is performing promotional campaigns. These campaigns should be efficient and well targeted to customers. Encouragement of customer referrals can also attract new customers. It is always a cost-free advocacy by customers to provide referrals to supplier when they feel satisfied and encouraged and when they have a healthy relationship with customers. For enhancing the revenue, the organization should always balance the number of customers acquired with number of customers who divert to different organizations. Failing to which will definitely effect the economic growth of the organization.

Source: Kotler, Marketing Management, Customer satisfaction, 2009

Factors affecting Customer acquisition:

The following marketing mix element affects acquisition:



Personal Selling

Word of mouth




Product quality

Channel distribution

Customer acquisition cost-- is the cost which suppliers invest to acquire a new customer. This cost should be always less than the overall value of customer in the entire customer life-cycle. For example, if the cost incurred to acquire a customer is $10, but the contribution of the customer to the profit is only $9 till the life of relationship with that customer, then there is an obvious business loss. Customer acquisition cost depends on way the customers are acquired. Lower the acquisition cost higher is the chance to increase return on investment (ROI). For accomplishing this, the following tasks should be followed:

Identify the processes, marketing campaigns and analytical deadlocks that are resulting in weak return on investment.

Predict and forecast the relevant return on investment before creating new strategies and marketing campaigns.

Rate and rank the customers by analyzing future perspectives.

The best approach to predict the customer acquisition cost is to calculate the overall investment on a product. For example, an organization sells a product for $100 which includes the manufacturing cost of the product (say $85) and the profit earned ($15 accordingly). Now, the organization also spends $50 for that product in campaigns and advertisements. Hence to capitalize this $50, at least one customer must be acquired at $50. This will be the maximum customer acquisition cost for the organization. However, the profits may further increase if the organization can acquire customers for less than $50, or when they sell the product at some higher prize.


Customer acquisition is the life of business. Different industries follow different customer acquisition methods. This report was prepared at IDBI Federal Life Insurance Co. Ltd to understand the different factors that influence the customers in their purchase decision and to find out the method of customer acquisition through personal selling. The report also discusses the recent developments in the method of customer acquisition.

Objective :

Primary Objective:

To analyse the role of Personal Selling in Customer acquisition and retention in IDBI Federal Life Insurance Co. Ltd

To Find out the various ways of how customer acquisition is presently implemented in IDBI Federal Life Insurance Co. Ltd through Personal Selling and an attempt to find out the effectiveness of these methods.

Secondary Objective:

An attempt to give an efficient way for Personal Selling for IDBI Federal Life Insurance Co. Ltd

To Build up relations with the customers and analyzing their preferences.


Research Design

The report is made using descriptive research design. Under descriptive research design, the conclusive research design is implemented.

Data Collection

The data collected was a combination of primary and secondary data. Under primary data,the quantitative data was collected. For primary data collection, structured and unstructured questionnaires were designed using itemized rating scale. Telephone surveys and personal interview were also carried out for the collection of the data. Under secondary data , the online research, books and journals contributed to collection of internal and external sources of data.

Sampling Technique

The technique of non-probabilistic random sampling was adopted for deciding the sample size.

The total sample size was 75 people. The sample units are the customers and clients who are buying the insurance products.

Scope Of The Study:

The scope of the study is defined within the boundaries of customer acquisition methods for IDBI Federal Life Insurance Co. Ltd being conducted in specific areas of Bangalore.

Limitations of the Study :

There is always a possibility of time constraint in market research done for the project. Reliability of the data can always prove a limitation. Preferences of the respondent can highly vary. There is also non disclosure of strategies adopted by companies for customer acquisition.