Assignment 2_ Group 4

Souhardya Banerjee
Saiyam Arora

FLOW OF PRESENTATION

Managerial Problem is defined

Computation of aggregate factors and factor Analysis

Regression Analysis with impact of linear/non-linear relationships on Key

Loyalty predictors

Take assumptions and validate for regression

Best predictive model for aggregate data is interpretted

Moderating affects of variables on best aggregate model

customer segments to loyalty predcitors implicaions

Recommendations for Driving Loyalty Up

Problem Statement
An insurance company facing stiff global
competition chipping its loyal customer base
Tough business environment
Price competitiveness need to match
customer needs for trusting relationships
To enhance the companys competitive
position in the customers mind
Company Seeking for Driving Loyalty Up
Strategy

Factor Analysis

Trust Agent

Satisfaction
Trust
Company
ShortTerm
value
LongTerm
Value

Loyalty

Composites for Regression Analysis

Beh_loyalty: (loy1+loy2+loy3+loy4)/4
Cog_loyalty : (loy5+loy6+loy7+loy8)/4
Satisfaction = (inter1 + inter2 + inter3)/3
Trust on Agent =
(rep17+rep18+rep19+rep20)/4.
Trust on company
=(prac17+prac18+prac19+prac20)/4.
Value_Shortterm = (val1+val2+val3)/3.
Value_Longterm= (val4+val5+val6)/3.

Variable Setup in SPSS Statistics

Outcome
Variable :
Cog_loyalty ( for
cognitive
Loyalty)
Beh_Loyaltty(For
behavioral
Loyalty)

Predictor
Variable :
Satisfaction
Trust_agent
Trust_Comp
Value_ST,
Value_LT

Hypothesis :
H0 : KLPs (trust on agent, trust on company, customer satisfaction, long
term and short term value ) do not have a influence in driving up the
loyalty loyalty.
H1: KLPs (trust on agent, trust on company, customer satisfaction, long
term and short term value ) have a influence in driving up the loyalty
loyalty.

If p value > 0.05 , we accept the null hypothesis and reject otherwise

Regression on Behavior Loyalty(Beh_Loyalty)

KLPs explain 55.2% of the variablity on

Beh_Loyalty

The table shows that the independent variables

statistically significantly predict the dependent variable,
F(5,773) = 1095, p < .0005 (i.e., the regression model is a
good fit of the data

Statistical significance of the independent

variables

From the "Sig." column that all independent variable coefficients

are statistically significantly different from 0 (zero)
Results
Adjusted R square change is 0.552 means 55.2% of main
factors are influencing model.
It is significant as for p < 0.05 and hypothesis is rejected
Behavioural Loyalty is dependent on all the independent
variables
The dependency is higher in satisfaction and long term value
variable
VIF< 10 that satisfies that they are not multi-collinear.

Linear
Normality
Since median comes user
+-2sigma mean. Also
std. residual is zero at
mean. Thus it is normal

Trends show that it is

following a nearly a
linear trial.
Independent of
Errors
The linear curve shows
that it is Independent

Regression on Cognitive Loyalty(Cog_Loyalty)

KLPs explain 52.3% of the variablity on

Beh_Loyalty

The table shows that the independent variables

statistically significantly predict the dependent variable,
F(5,762) = .912, p < .0005 (i.e., the regression model is a
good fit of the data

Results
Adjusted R square change is 0.523 means 52.3% of main
factors are influencing
It is significant as for p < 0.05 and null hypothesis is
rejected
Cognitive Loyalty is dependent on all the independent
variables
The dependency is higher in short term value variable.
VIF< 10 that satisfies that they are not multi-collinear.

Normality
Since median comes user
+-2sigma mean. Also
std. residual is zero at
mean. Thus it is normal

Linear
Trends shows that it is
following a nearly a
linear trial.
Independent of
Errors
The linear curve shows
that it is Independent

Regression on Total Loyalty

KLPs explain 60% of the variablity on

Beh_Loyalty

The table shows that the independent variables

statistically significantly predict the dependent variable,
F(5,773) = .902, p < .0005 (i.e., the regression model is a
good fit of the data

Results
Adjusted R square change is 0.602 means 60.2% of main
factors are influencing model.
It is significant as for p < 0.05 and hypothesis is rejected
Behavioural Loyalty is dependent on all the independent
variables
The dependency is higher in satisfaction and long term value
variable
VIF< 10 that satisfies that they are not multi-collinear.

Linear
Normality
Since median comes user
+-2sigma mean. Also
std. residual is zero at
mean. Thus it is normal

Trends show that it is

following a nearly a
linear trial.
Independent of
Errors
The linear curve shows
that it is Independent

Removing Outliers

Outliers present in the model as COO Distance > 0.04 for some
data points

Multicollinearity
We have
considered 0.9
as the cut-off
value. Since no
correlation
value is above
or equal to 0.9,
it can be
concluded that
significant
multicollinearity
is not present
between any of
the
independent
variables.
Therefore, it is
appropriate to
proceed with

Multiple regression

The Adjusted R square value is 0.600.

This indicates that 60% variation in
Loyalty which is the dependant
variable is explained by the
independent variables which we have
considered.
The model is converging well since
significance is less than 0.5

Multiple regression

All the Independent Variables have significance values <0.05.

Hence all of them are going to be part of the Multiple Regression Model.
Based on the unstandardized coefficients of the IVs, following model is made

Loyalty = 0.004 + 0.127*Agent + 0.123*Trust + 0.135*Value_Shortterm

+ 0.160*Value_Longterm + 0.133*Satisfaction

Analysis Aggregate Data

Based on the outcome of multiple regression,
we can conclude that all independent variables
has to be considered.
Further, observing the coefficients tell us that
a unit increase in Value_Longterm will
contribute most to Dependent Variable Loyalty.
This is followed by Value_Shortterm and
Satisfaction, which are closely followed by
Agent and Trust

Multiple Regression Model significance

observed that the models are significant (<0.05) in case of the data specific to a
ntries.
The US-specific data
ANOVAa

Model
1

Regression

Sum of Squares
423.537

df
5

Mean Square
84.707

F
125.127

Sig.
.000b

Residual
159.088
235
.677
Total
582.625
240
a. Dependent Variable: loyalty
b. Predictors: (Constant), Value_Shortterm, Satisfaction, Trust, Agent, Value_Longterm

Germany-specific data
Model
1

ANOVAa
Sum of
Squares
500.027
293.813
793.840

df
Mean Square
F
Regression
5
100.005
111.642
Residual
328
.896
Total
333
a. Dependent Variable: loyalty
b. Predictors: (Constant), Value_Shortterm, Satisfaction, Trust, Agent, Value_Longterm

Holland-specific data
Model
1

Sig.
.000b

ANOVAa
Sum of Squares
133.154
229.196
362.350

df

Mean Square
5
26.631
198
1.158
203

Regression
Residual
Total
a. Dependent Variable: loyalty
b. Predictors: (Constant), Value_Shortterm, Satisfaction, Trust, Agent, Value_Longterm

Sig.
23.006

.000b

Adjusted R Square
The US

Model Summaryb
Change Statistics
Std. Error
Adjusted R of the
R Square
Sig. F
DurbinModel
R
R Square Square
Estimate Change F Change
df1
df2
Change
Watson
1
.853a
.727
.721
.82278
.727 125.127
5
235
.000
2.170
a. Predictors: (Constant), Value_Shortterm, Satisfaction, Trust, Agent, Value_Longterm
b. Dependent Variable: loyalty

Germany
Model
1

Model Summaryb
Change Statistics
Std. Error
Adjusted R of the
R Square
Sig. F
DurbinR
R Square Square Estimate Change F Change
df1
df2
Change
Watson
.794a
.630
.624
.94645
.630
111.642
5
328
.000
1.836

a. Predictors: (Constant), Value_Shortterm, Satisfaction, Trust, Agent, Value_Longterm

b. Dependent Variable: loyalty

Holland

Model Summaryb
Change Statistics
Std. Error
Adjusted R of the
R Square
Sig. F
DurbinModel
R
R Square Square Estimate Change F Change
df1
df2
Change
Watson
1
.606a
.367
.351 1.07590
.367
23.006
5
198
.000
2.102
a Predictors: (Constant), Value_Shortterm, Satisfaction, Trust, Agent, Value_Longterm
b. Dependent Variable: loyalty

highest value of Adj. R sq. is in case of the US, which is 0.721. i.e. 72.1% variatio
lty is explained by the IVs considered. That value is 62.4% in case of Germany.
and, however, has the adj. R sq. value just 0.351, which means there exist other
t from the IVs considered who drive the customer loyalty.

Multiple Regression Model

The US

Coefficientsa
Standardi
zed
Unstandardized Coefficien
Coefficients
ts

Model
1

Beta

t
1.421

95.0% Confidence
Interval for B
Collinearity Statistics
Lower
Upper
Sig.
Bound
Bound Tolerance
VIF
.157
-.121
.745

(Constant)

B
Std. Error
.312
.220

Satisfaction

.081

.037

.115

2.172

.031

.007

.154

.414

2.418

Agent

.128

.044

.185

2.884

.004

.041

.216

.282

3.543

Trust

.158

.050

.231

3.165

.002

.060

.256

.219

4.569

Value_Shortt
.096
erm
Value_longt
.190
erm
a. Dependent Variable: loyalty

.053

.131

1.838

.067

-.007

.200

.228

4.394

.057

.278

3.341

.001

.078

.303

.168

5.958

All the Independent Variables have significance values <0.05.

Therefore all of them need to be considered for the Multiple Regression Model.
Based on the unstandardized coefficients of the IVs, following model is made

oyalty = 0.312 + 0.081*Satisfaction + 0.128*Agent + 0.158*Trust

+ 0.096*Value_Shortterm + 0.190*Value_Longterm

Multiple Regression Model

Germany
Coefficientsa
Standardi
zed
Unstandardized Coefficient
Coefficients
s
Model
1

(Constant)
Satisfaction
Agent
Trust

B
Std. Error
-.255
.237
.226
.054
.064
.053

Beta
.292
.083

t
-1.077
4.185
1.207

95.0% Confidence
Interval for B
Collinearity Statistics
Lower
Upper
Sig.
Bound
Bound Tolerance
VIF
.282
-.722
.211
.000
.120
.332
.232
4.308
.228
-.040
.168
.239
4.191

.120

.060

.151

1.980

.049

.001

.238

.194

5.145

Value_Short
.184
term
Value_longt
.110
erm
a. Dependent Variable: loyalty

.051

.218

3.626

.000

.084

.283

.313

3.195

.053

.137

2.079

.038

.006

.213

.261

3.825

l the Independent Variabless have significance values <0.05 except for the Agen
est of them are going to be part of the Multiple Regression Model.
ased on the unstandardized coefficients of the IVs, following model is made

oyalty = -0.255 + 0.226*Satisfaction + 0.120*Trust

+ 0.184*Value_Shortterm + 0.110*Value_Longterm

Multiple Regression Model

Holland

Unstandardized
Coefficients
Model
1

B
(Constant)
Satisfactio
n
Agent

Std. Error
.236
.459
.096
.100

Coefficientsa
Standardiz
ed
Coefficient
s
Beta

.098

.515
.956

95.0% Confidence
Interval for B
Collinearity Statistics
Lower
Upper
Sig.
Bound
Bound Tolerance
VIF
.607
-.669
1.142
.340
-.101
.293
.302
3.308

.172

.082

.176

2.086

.038

.009

.335

.447

2.238

.091

.089

.097

1.023

.308

-.084

.266

.353

2.831

Value_Sh
.010
ortterm
Value_lon
.280
gterm
a. Dependent Variable: loyalty

.112

.011

.088

.930

-.211

.230

.221

4.517

.093

.316

3.025

.003

.098

.463

.293

3.415

Trust

Only Agent and Value_Longterm are significant variables.

herefore only these two are going to be part of the Multiple Regression Model.
ased on the unstandardized coefficients of the IVs, following model is made

oyalty = 0.236 + 0.172*Agent + 0.280*Value_Longterm

Analysis Country-specific Data

d on the coefficients obtained from Multiple Regression, it is observed that a unit

ase in Value_LongTerm contributes most to the dependent variable Loyalty in cas
nd Holland.
ermany, Satisfaction has the most bearing on the Loyalty for every unit increase
esults of multiple regression on the US-specific data indicates that customer loya
ficantly dependent on all the Independent Variables under consideration.
ermany, Agent is not significant.
olland, only Agent and Value_Longterm are significant.
factors influencing customer loyalty varies from country to country

Recommendations
Company should implement good CRM
programs to keep the customer base
satisfied
because Satisfaction and long term value
are the major factor significant in driving up
the Loyalty
More long term insurance policies to
generate high Long term value from
Customers should be included