African Journal of Business Management Vol. 5(17), pp.

7511-7515, 4 September, 2011

Available online at http://www.academicjournals.org/AJBM
DOI: 10.5897/AJBM11.439
ISSN 1993-8233 2011 Academic Journals




Full Length Research Paper

Factors of cross-buying intention - bancassurance
evidence

Chiang Ku Fan
1
, Li-Tze Lee
2
*, Yu-Chieh Tang
3
and Yu Hsuang Lee
4


1
Department of Risk Management and Insurance, Shih Chien University, China.
2
Department of Accounting and Information, Overseas Chinese University, Taiwan, China.
3
Graduate Institute of Management Sciences, Tamkang University, Taiwan, China.
4
Graduate Institution of Business Administration, Shih Chien University, Taipei, Taiwan.

Accepted 15 April, 2011

The question of why bank customers decide to cross-buy and to enhance their relationship with a bank
has received scant attention in the literature, and has not been appropriately investigated in prior
studies. The first purpose of this study is to address this research gap by developing and assessing an
objective research model to weigh the factors that affect intention of cross-buying insurance in banks.
The second purpose of this study is to identify the resulting degree of satisfaction of these factors. The
gaps between the factors of cross-buying intention and the resulting satisfaction are recognized by
using the Importance Performance Analysis. On the basis of the findings, bancassurance strategy
makers can identify and allocate the marketing or operational resources for an organization
accordingly.

Key words: Cross-buying, bancassurance, intention, conjoint analysis, importance performance analysis.


INTRODUCTION

The banking industry in Taiwan has experienced
tremendous change and an increased growth in earnings
from selling insurance products. Banking networks
represent the major distribution channel for life insurance
products. Most banks are looking for the same things -
better ways to retain customers and to increase income.
Similarly, most insurers are looking for the same things -
more efficient distribution channels to sell policies and to
expand premium incomes.
To manage their relationship development efforts
better, it is important for practitioners to understand the
motivations that lead the customer to reduce their market
choices and to engage in a relationship with a financial
firm (Sheth and Parvatiyar, 1995).
Cross-selling is the practice of promoting additional
services or products to a firms existing customers, which
are in addition to the ones that the customers already
have (Butera, 2000). Selling additional products or
services to existing customers may reduce the cost of



*Corresponding author. E-mail: [email protected].
customer acquisition and yield price advantages over
competitors (Nbogo, 2004). In spite of cross-selling being
associated with increased lifetime duration and value
(Reinartz and Thomas, 2001), prior studies have implied
that it is not easy to motivate customers to cross-buy
services or products from the same provider. Unfor-
tunately, the question of why customers decide to cross-
buy and to enhance their relationships with a bank has
received scant attention in the literature and has not been
appropriately investigated in prior studies (Ngobo, 2004).
Furthermore, no satisfaction evaluations of these factors
that affect cross-buying intention have been conducted.
There is, therefore, a significant research gap which has
emerged in understanding the factors that motivate
cross-buying intention (Soureli et al., 2008). Obviously,
additional evidence and conceptualizations are
necessary in this area.
The first purpose of this study is to address this
research gap by developing and assessing an objective
research model to weigh those factors that affect
intention of cross-buying insurance in banks that have
been suggested in previous studies. The second purpose
is to identify the degree of satisfaction of these factors
7512 Afr. J. Bus. Manage.



Table 1. The factors impact cross-buying intention for bancassurance.

Factors impact cross-buying intention References
Image Ngobo, 2004; Soureli et al., 2008
Service convenience Dimitriadis, 2010; Berry et al., 2002; Ngobo, 2004; Liu and Wu, 2007
Interpersonal relationships Reinartz, 2003; Jeng, 2008

Trust Anderson and Weitz, 1989; Doney and Cannon, 1997; Liu and Wu, 2007, 2008;
Soureli et al., 2008

Payment equity Bolton, 1998; Verhoef, 2001
Experience Anand and Cunnane, 2010; Verhoef, 2001; Ngobo, 2004
Pricing Verhoef, 2001; Jeng, 2008
Product variety Jeng, 2008; Kumar et al., 2008



that affect intention of cross-buying insurance in banks.


LITERATURE REVIEW

Verhoef et al. (2001) were the first to introduce the term
cross-buying and defined it as the purchase of a
number of different services from the same provider. In
other words, cross-buying is the behavior expressed in
buying various products from the same provider (Soureli
et al., 2008; Verhoef et al., 2001). In fact, cross-selling
and its benefits can only be achieved if consumers are
willing to cross-buy (Polonsky et al., 2000). Therefore,
cross-buying is complementary to cross-selling, which
pertains to the suppliers efforts to increase the number of
products or services that a customer uses within a firm
(Aurier and N' Goala, 2010; Kamakura et al., 2003).
A number of factors that may impact bank customers
cross-buying intentions have been proposed in previous
research studies. The findings of these prior studies are
reported in Table 1.
A summary of the literature review with regard to
factors that affect cross-buying intention is listed thus:

1. The tendency of most prior studies has been to
examine variables such as image, service convenience,
interpersonal relationships, trust, payment equity,
experience, pricing, and product variety.
2. It is difficult to determine the relative importance of the
weight or ranking of each cross-buying intention, because
they were not defined in previous studies.
3. Prior studies have neither focused on evaluating the
strategies of stimulating the customers cross-buying
intentions, nor suggested how bancassurance decision-
makers should allocate marketing resources.


METHODOLOGY

The estimation model in this study consists of three phrases. In the
first phrase, the factors of cross-buying intention for bancassurance
are identified using the modified Delphi method. In the second
phrase, the factors' weights of cross-buying intention are also used
as the evaluation criteria and are calculated effectively by
employing the Conjoint Analysis. In the third phrase, the gaps
between the factors' weights of cross-buying intention and the
customers satisfaction are recognized by using the Importance
Performance Analysis. The main theoretical approaches adopted
herein are described, as shown in Figure 1.


RESULTS

To identify the factors that affect intention of cross-buying
insurance in banks, this study applied a purposive sam-
pling technique and selected 23 financial advisers who
were employed by different model banks and have many
years of experience working with bancassurance. The
interviews were conducted either through e-mail or face-
to-face. Respondents were asked to justify their answers
to interview questions and to rate their level of agreement
toward the factors of cross-buying intentions, ranging
from strongly agree (SA) (5) to strongly disagree (SD) (1).
The interview protocol was developed on the basis of
the literature review. On the basis of the result of a
Wilcoxon Signed-Rank test, no significant attitude
difference toward each factor of cross-buying intention
was found between round 2 and round 3. This means that
the 8 items proposed by this study can be identified as
factors that affect intention of cross-buying insurance in
banks according to the Delphi study procedures. All
factors that affect cross-buying intention were ranked SA
by most of the Delphi panelists in the 3
rd
round of the
interviews.
The CA questionnaire was developed on the basis of
some of the literature, planned with an orthogonal design,
and distributed to 300 customers. Two hundred and sixty-
nine questionnaires were completed in the survey.
According to the CA report, the most important factor
was image (relative importance = 36.172%), the second
most important factor was service convenience (relative
importance = 11.099%) and the third most important
factor was interpersonal relationships (relative
importance = 10.514 %).
The purpose of the attitude survey was to collect data
with regard to the performance of each factor that affect
intention of cross-buying insurance in the bank. The
Fan et al. 7513





Figure 1. Theoretical approach adopted in this study.



Table 2. Gap analysis of factors' importance and their performance.

Item Factor affecting cross-
buying intention
Linear transformation of relative
importance of cross-buying intentions (A)
Mean of
performance (B)
Gap analysis (B-
A)
1 Image 3.90 3.92 0.02
2 Service convenience 3.71 3.83 0.12
3 Interpersonal relationships 3.71 3.81 0.10
4 Trust 3.70 3.97 0.27
5 Payment equity 3.64 3.53 -0.12
6 Experience 3.61 3.58 -0.03
7 Pricing 3.19 3.31 0.12
8 Product variety 3.23 3.64 0.41
Overall 3.59 3.70 0.11



respondents were asked to answer a question regarding
the level of performance for each factor affecting intention
of cross-buying insurance in the bank. Through a
judgment-sampling technique, the questionnaires were
distributed to the customers who had purchased
insurance products in banks. This study successfully
surveyed 131 bank customers. As stated earlier in
methodology, the range of the rating level in the
performance survey was from one to five. However, the
range of relative importance estimated through CA was
from zero to one. To conduct comparisons, this study
transfers the relative importance of factor affecting cross-
buying intention to a scale of 1 to 5.
Table 2 reports the means of the relative importance of
factors affecting cross-buying intention; their performance
ratings were 3.59 and 3.70, respectively. Table 2 also
shows the gap between the relative importance of factors
affecting cross-buying intention and their performances. If
the gap shows as negative, it means the factor of cross-
buying intentions performance is less than its relative
importance. On the other hand, if the gap shows as
positive, it means that the factor of cross-buying inten-
tion's performance is more than its relative importance.
In the grid, there were 8 factors that affect intention of
cross-buying insurance in the bank that fell into four
quadrants (Figure 2). According to the grid, a total of two
factors of cross-buying intention fell into the area of
concentration (quadrant (I)). These included payment
equity (3.53, 3.64) and experience (3.58, 3.61). That is,
payment equity was more important than experience in
7514 Afr. J. Bus. Manage.





Figure 2. Importance-performance grid of factors affecting intention of CROSS-buying insurance in a bank.





Figure 3. Resources allocation for bancassurance.



quadrant (I). Furthermore, of the four factors of cross-
buying intentions located in quadrant (II), image (3.92,
3.90), service convenience (3.83, 3.71), interpersonal
relationships (3.81, 3.71), and trust (3.97, 3.70) were
included. The management scheme action is keep up
the good work. In addition, two factors of cross-buying
intention were plotted in the area of low priority
(quadrant III). These were product variety (3.64, 3.23),
and pricing (3.31 3.19). However, no factor of cross-
buying intention fell within the area of possible overkill
(quadrant IV).


CONCLUSION AND RECOMMENDATIONS

The above-mentioned analysis supports the argument
that, although it is necessary to identify areas of
importance, and low performance, neither of these
factors, by themselves, is sufficient. Just because a factor
of cross-buying intention is important does not mean that
resources should be focused and expended on that factor
of cross-buying intention; the performance may be
adequate, in which case the benefits of expending
resources will be limited.
In the context of this study, factors affect cross-buying
intention, such as payment equity and experience that fell
into quadrant (I), and are perceived as more important
but performed poorly in bancassurance. The managerial
implication is that management has to put greater efforts
into improving performance with respect to these factors.
Factors of cross-buying intention, such as image,
service convenience, interpersonal relationships, and
trust, that were located in quadrant (II), are rated as
important with a high level of performance, and manage-
ment has to maintain the performance with respect to
these factors to sustain the resultant competitive
advantages (Figure 3).
Factors of cross-buying intention that are located in
(I) Concentration
(II) Keep up the good work
(III) Low priority
(IV) Possible overkill
Maintain
Resources
Resources




quadrant (III), including product variety and pricing, are
rated as having a low level of importance, and
performance. Thus, it is not necessary that management
put too much effort into improving their performance with
respect to these factors (Figure 3).
To improve the performance of bancassurance,
administrators should move some of those efforts that
were originally invested in the factors of product variety
and pricing into payment equity and experience. On the
other hand, administrators should not expand the
resources devoted to the factors that affect cross-buying
intention of image, service convenience, interpersonal
relationships, and trust (Figure 3).


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