A study of customer’s attitudes to cross selling by banks with particularly reference to the practice in Libya


Examination Thesis 2009 84 Pages

Business economics - Offline Marketing and Online Marketing


Table of Contents



Distinctive and Facilitative Features of Services
Services in an International Arena
Understanding Service Marketing
Marketing in banking and financial services
Cross selling
Building Relationships for Cross Selling
Cross Selling – How and Why?
Behaviour Driven Approach to Cross Sell
Buyer behaviour in the financial sector
Buyer Behaviour and Cross Selling
Summary and Conclusion

Research Methodology
Research Design Approaches
Secondary Data Gathering
Key sources of data
Secondary data
Primary data gathering
Sampling Strategy
Data Sampling
Analyzing Data
Quantitative Data
Qualitative Data
Ethical Issues
Summary and Conclusion

Marketing and Customers Relationship in Libyan Banks
Principles of Islamic Financial Systems
Financial Services Markets in Libya
The current Situation and Practice in Libya
Review of the Practice of Banking in Libya
Reasons for Banking Reform in Libya
Summary and Conclusion

Class of People Responded to Questionnaires
Analysis of the Questionnaire
Summary and Conclusion


Results of the Questionnaire
Survey Questionnaire


Cross selling is the key value-add to the banking industry globally. This industry has seen major reforms and developments over the years. Particularly in the Libyan market, ever since it started in 1951, the banking industry has flourished and now matches the international competitors in terms of providing at par services. Cross selling activities have also developed to similar extent. This research work studies the cross selling function of the Libyan banks from the customers point of view. The Literature section of the research focuses on the core theories of marketing that focus on the cross selling or the sales aspect. The author focuses the discussion on the services marketing concepts and highlights difference in services marketing as compared to marketing of tangible products. The theory of Ansoff highlights how can the banks in Libya focus on expansion strategies and look to acquire new markets or customers. The customer behaviour analysis and the buyer behaviour theories discuss the importance of the study to the customer within any market.

Secondary Research focuses on the current marketing practices in the Libyan banking market. It highlights the competitive environment of the Libyan banks. The services offered by the Libyan banks are at par with the international competitors. This section also focuses on cultural impact on the banking industry and explains how the products or services need to be altered to meet the need of the cultural changes. Primary research focuses on judging the customer satisfaction level of the Libyan banks. This satisfaction is measured in light of the cross selling activities of the banks and it serves as a good feedback mechanism for the Libyan banking industry.

In the final section of the research the author has concluded with the key highlights of the work. In the discussion of how the research meets the objectives that were set, the author brings out the key theories that can be focussed on while planning a cross selling activity. The recommendations for this work encourages a further study which can be much more detailed and look at customer behaviour and segmentation more closely. This work can be referred by the banking industry as a feedback on their performance and help further improve their cross sell programs and customer attitudes towards these programs.



The following dissertation is a research on the marketing techniques specifically that of cross selling, applied in the banking sector in Libya. The idea of this research is also to observe that how the customer through its behaviour and attitude affects this process of cross selling. The research will mainly focus on analyzing and examining customer’s attitudes towards cross-selling and relationship with the private, public and foreign banks in particularly reference to the republic of Libya.

This dissertation study on the Libyan banking sector aims to study the relevance, prevalence and efficiency of cross selling techniques and how consumers perceive them. The consumer attitude is paramount in its decision making process. The effect of how a consumer feels and behaves towards cross selling is also tried to be gathered.


In Libya, banking services started in 1956. Before that there was Libyan Currency Committee which was actually been created by the United Nations body in 1951 in order to help the Libyan economy based in four provinces. In Libya all major banks and related bodies are under the control of Central Bank of Libya.

The management of internal and general affairs of the bank within the specified policies is under constant supervision of a Board of Directors including the governor and deputy, plus other key figure members. The role of governor includes:

- Directing the bank and be a leader over the governing council and executive commissions, take responsibility for the bank within a lawful manner.
- Holding an ultimate authority over bank contracts and related legal documents,
- Bank representative to the tribunals of justice.
- Key figure and representative of the bank in all relations with other parties.

Functions of the Central Bank of Libya are also listed below:

- Regulating and issuing banknotes and coins in the country of Libya.
- Maintaining and stabilizing currency internally.
- Maintaining and managing official reserves of gold and foreign exchange.
- Regulating qualities, quantities, and cost of credits in order to meet the target of economic growth and strength.
- Perform appropriate measures when dealing with foreign or local economies and all related financial problems.
- Act as a banker of other commercial banks.
- Support and assist other commercial banks to provide better services same time protect the right of depositors and shareholders.
- Acting as a banker as well as fiscal agent to state and public entities.
- Managing all types of government loans
- Managing the supervision of foreign exchanges
- Acting as an advisor to the state when starts formulation and implementation of financial and economy policies.


The purpose of dissertation is to explore the attitudes of customer behaviour in relation to cross selling banks in references to Libya. The research question which will be looked into in the course of the thesis is:

“What are the attitudes of personal customers of Libya banks towards cross selling of products and do those attitudes change in relation to private, public (state) and foreign owned banks?”

While doing this piece of work the following below listed aims and objectives will be followed.


As this piece of work carries on below the following aims and objectives will be followed:

- To provide academic literature review examine the underpinning theory relating to the question;
- To see, how Marketing services operates in banks in Libya?
- To analyse the impact of religious and cultures this affects banking sectors;
- To provide Primary Research by:
- Conducting research from bank customers in Libya and determine their satisfaction with services offered by banks and their attitudes in cross selling.
- How banking customers in Libya perceive the activities of banks?
- To draw up conclusions and propose for future improvements in banking institutions in Libya.


The following dissertation is presented in a very well structured manner with six chapters. The dissertation begins with an Introduction where the purpose of the study is given. A brief background on the Libyan banking sector and the central bank of Libya is also provided. The introduction also includes the research question and the aims and objectives of this dissertation study.

The study then provides a detailed review of the literature available on this topic. The review begins by studying the evolution of services marketing. It then discusses marketing techniques used in banking and financial institutions. A detailed study of cross selling techniques, motivation and behavioural patterns is also included. The review follows with a critique on consumer behavioural impacts on cross selling.

The study then moves on to presenting the methodologies used for the research. It starts by laying down the research objectives. It then talks about the approach followed for methodologies as well as research design. It is then mentioned the secondary and primary data gathering methods. How analysis of quantitative and qualitative data is to be done is mentioned next.

The next chapter in this study focuses on secondary research done about the Libyan Banking sector. It talks about the marketing and customer relationship in Libyan banks. It also assesses the financial services market in its current context and also reviews the reforms initiated there. The next chapter includes the primary research. This includes the questionnaire used and its detailed analysis. Finally, this dissertation then ends with a few recommendations and conclusion.




The banking industry world over is increasingly getting more competitive. In the banking sector, Lau, Chow and Liu (2004) believe cross selling is a key value enhancer for the future. The idea of this review is to analyze the literature pertaining to cross selling in the banking industry, as well as, the customer attitude which may contribute to its development.

Customer is the most important resource which any organization’s primary interest lays. According to Lindgreen and Antioco (2005), customer as a resource should be developed and managed through relationships, networks and interactions. Customer Relationship Management (CRM) thus plays a vital role in assessing the buyer behaviour. This literature review looks into several aspects of customer’s attitudes, the effect of culture and other environmental factors on it, and how cross selling by the banks is affected by it. The purpose of this literature review is not just to provide a summary of all the available literature, but to review and analyze the most relevant and significant research about the question in hand. This review aims to achieve a critical analysis of cross selling in the banking industry and the customer attitude towards it; through a study of various scholars and authors and through their empirical evidence and proven hypotheses. The review of literature that follows tries to critically analyze all the theoretical learning. This review ultimately forms the foundation for research and analysis for this dissertation study.


According to Germain (2000), the term ‘services marketing’ encompasses the concepts of the scientific study of it, as well as practice of marketing by service firms. With a lot of interest in academic research on services and its marketing, numerous articles, conference papers, books and working papers on various aspects of services are available. The scientific study of services marketing, according to Fisk, Brown and Bitner (1993), started surfacing slowly as early as the late 1950s and early 1960s. Marketing thought and nature has developed and progressed over the decades and has incorporated many new ideas and practices. The American Marketing Association definition of marketing as noted by Darroch, Morgan, Jardine and Cooke (2004), recognizes it as a tool to create, communicate, and deliver value, and to manage customer relationships in a way that benefits the firm and its stakeholders. Even Lindgreen et al (2005) believe that the nature of services marketing has evolved from transactional to relationship marketing. There have been many rapid changes in the services environment which have contributed to this evolvement. These changes include information technology, globalization, client expectations, distribution patterns, legislative changes and physical distance from clients, economy, deregulation, time, and competition (Easingwood and Arnott, 1992).

Distinctive and Facilitative Features of Services

According to Knight (1999), services are usually regarded as performances (legal services) or experiences (live theatre), which may be equipment based (telecommunications) or people based (management consulting). He also lays down some unique features of services that distinguish them from manufactured physical goods. First, they are intangible which means that they cannot be touched, transported, or stored. Second, services are inseparable, i.e. production usually cannot be separated from consumption. Third, services are perishable, which means that they must be consumed at the time they are produced, or they will be lost. And finally, services are highly heterogeneous, that is, unlike manufactured goods; service performance is not identical to one another. Most of the service encounters are often highly customized and unique. Dahringer (1991) points out several marketing problems that are resultant from these distinctiveness of services. Because of its intangibility, services cannot be readily displayed or communicated or even protected through patents; and the prices are also difficult to set. Because of being inseparable from consumption, the consumer is usually involved in the production of the service. Thus centralized mass production is very difficult to achieve. Because of perish ability of services, inventories cannot be maintained. Because of their being heterogeneous, standardization and quality control remain a challenge (Dahringer, 1991).

Services have also been considered as an additional tool to facilitate the sale of tangible goods (Martin, 1999). For example, transportation, warehousing, and other logistical services have been recognized as important services, but the products that were being shipped and stored have been manufactured ones. Now, as competition between manufacturers has intensified, services have also gained added prominence and are considered as significant points of differentiation between manufacturing firms. Martin (1999) feels that to gain competitive advantage, even manufacturers have been taking on a few characteristics of service firms. Service as a term thus also includes an augmentation of manufactured goods; assistance provided to customers to speed up or ease; and, also how customer interactions are handled (Martin, 1999).

Services in an International Arena

Services assume a different outlook in terms of international trade because of the effect of culture. International services are defined by Clark, Rajaratnam and Smith (1996) as “deeds, performances, efforts, conducted across national boundaries in critical contact with foreign cultures”. Boddewyn, Halbrich and Perry (1986) point out the difficulties in research on international services. They also emphasize those existing international business theories, if modified through elaborations, should be able to explain the international services phenomenon. Thus according to Boddewyn et al (1986) all international service activity can be explained through existing theories. It is safe to say that since their study was completed, numerous scholars and academics have advanced general findings on services and their international aspects as well.

McLaughlin and Fitzsimmons (1996) have stated several factors that must be considered by managers seeking to internationalize their service offering. Services always have a very high level of human involvement; therefore the degree of customer contact is a critical factor between success and failure of it. In light of specific country circumstances, the service may be subject to substantial modification. The complexity and extent of required customization is important to take care of. The human resource intensity of the service offering is critical, particularly if it requires a good deal of qualified or highly trained workers. In their empirical study, Patterson and Cicic (1995) devised a framework to differentiate various marketing practices of international service providers. They note that the most useful dimensions for services to consider in the international context are the degree of tangibility and the degree of face-to-face contact with clients.

Understanding Service Marketing

With the changing market environment and increased competition and as the consumers become more aware, service firms have started to adopt a market orientation in order to leverage client relationships and improve service delivery (Reid, 2008). Quality in services is also a complex issue, involving many of the company’s functions. A major solution of how to provide service quality is by actually understanding and meeting the customer needs and expectations. However, in order to get a clear picture of the criteria which been used to form these expectations, recognizing is important that the consumers of services value not only the outcome of the services encounter but also the general experience of taking part in it (Jobber, 2007). Services represent the new edge in business globally however; they imply very unique characteristics that pose unique challenges to the organizations dealing with them. Extensive customization, intensive customer contact, cultural adaptation and degree of tangibility are all factors of extreme relevance in case of service offerings (Knight, 1999). In order to be successful, marketers are required to understand these challenges clearly.

Many firms today deliver a broad range of services and value can be added to client’s business and further the relationship by access to more services. For example, an accounting firm may be helping a client for taxation but mutual benefit may also occur from financial management and business advisory services. Professional care of a client means fulfilling all their needs. Hayes (2002) believes that if an organization has a skill range within itself to offer multiple services, it makes sound business sense to do so.

Marketing in banking and financial services

Banking and financial services advertising are often seen and heard on the television, newspapers, magazines and radio. However, these are the traditional above-the-line advertising measures and Lau et al (2004) wonder if these help bring in any additional revenues. These sources of advertising in banking are best used for brand building whereas reaching for new customers requires a different approach altogether. Many banks and financial institutions have made deliberate efforts to become customer-focused institutions, as opposed to product driven companies. Characteristically their goal is to provide products and services that help their customers improve their financial situations. A direct resultant from this goal is that marketing campaigns are multiple product campaigns, in order to offer the customers more and increase the return on investment of the campaign (Cohen, 2004).

Lau et al (2004) suggest a database marketing model where the economic ‘footprints’ left in the databases are used to infer knowledge about the customers and hence achieve required goals. The goals of database marketing are cross selling; customer retention; new customer acquisition; cost/service quality and increased utilization (Lau et al, 2004). Compared with traditional above the line advertising, database marketing follows a more targeted approach where resource requirement is fewer and results are easily measurable. Thus, database marketing provides an alternative way of looking at the business dynamics of banks.

The banking sector is thus required to move from a mass orientated vision (minimizing costs and maximizing revenues) to a consumer orientated vision (developing and retaining customer relationships). Lindgreen et al (2005) suggest that the bank’s main activity should shift be identifying profitable clients with whom they can implement one-to-one marketing, the main objective being to provide to them personalized solutions and products. The bank should adopt Customer Relationship Management (CRM) as a marketing strategy that allows it to focus on profitable clients through segmentation. It would also help to understand different combinations of clients, products, and volumes. Certainly, information and data regarding “who buys what and how much” enables the bank to have a commercial approach based on the client. The bank, through CRM also plays on a proactive approach, which consists in creating the demand – as a result of better information – instead of just servicing it (Lindgreen et al, 2005). The banks can also set different distribution channels with standardized or specialized services according to the client’s needs and importance.

According to Cohen (2004), the mantra of database marketing in banking and financial services is “the right product to the right customer at the right time”. In recent years, the banking industry has released many campaigns which were targeted to existing customers, offering them new products. Cohen (2004) also believes that this approach has gained significance since the analysis capabilities of data mining has improved and customer data has become increasingly available. However, practical and effective implementation of this is not very easy as the banks generally offer multitudes of products and they operate under a complex set of business constraints. Choosing what to offer, and to which customers to offer, so as to maximize the return on investment and meet business constraints is enormously intricate.

Cross selling

Butera (2000) explains cross selling as the practice of promoting additional products and services to existing customers in addition to the ones they have. Cross-selling to be understood in simplest terms is encouraging an organization’s consumers who have already bought the product A to also buy its product B. While cross-selling helps customers by providing them a one-stop solution; it also helps banks increase their sales volumes. Customers today do prefer to have one-stop shop for all their solutions due to fast lifestyle and increased time pressure. Through cross selling banks are able to provide customers added benefits and greater convenience. A study by Vyas and Math (2006) has shown that customers prefer their existing banks for additional financial services. In their study, McGoldrick and Greenland (1992) also found out that traditional suppliers of financial services like banks are the most preferred sales channel for loans and mortgages as well. Similarly, Lymberopoulos, Chaniotakis and Sourelli (2004), in their study conducted in Greece; found that customers were more willing to buy insurance products from their banks.

With competition getting more fierce and plummeting effectiveness of conventional marketing campaigns, cross selling has emerged as an important substitute to traditional communication methods. Cross selling tends to create multiple relationships, which increases exit barriers for the consumers and reduce the cost of acquiring new customers for the bank (Vyas and Math, 2006). As the customers buy additional services form their bank, the overall switching costs for the consumers become higher. Selling additional services to existing customer base greatly reduces the bank’s cost of advertising and gives them cost advantage.

It is also important to discuss Ansoff’s market expansion strategies to understand cross selling. According to Ansoff, an organization can expand either market wise or product wise. One can enter new markets with existing products or also launch new products in new markets. Cross selling however, deals with the existing markets of the organization only. For cross selling, bankers, try to ‘penetrate’ the market by offering their existing products to their existing markets only. The model of Ansoff is briefly described below.

Abbildung in dieser Leseprobe nicht enthalten

Ansoff / Product Market Framework, (Johnson et al, 2002)

Market Penetration

Here organizations market existing products to existing customers. This means increasing revenue by, for example, promoting the product, repositioning the brand, and so on. However, the product is not altered and firms do not seek any new customers.

Market Development

Here firms market existing product range in a new market. This means that the product remains the same, but it is marketed to a new audience. Exporting the product, or marketing it in a new region, are examples of market development.

Product Development

This is a new product to be marketed to existing customers. Here firms develop and innovate new product offerings to replace existing ones. Such products are then marketed to our existing customers. This often happens with the auto markets where existing models are updated or replaced and then marketed to existing customers.


This is where firms market completely new products to new customers. There are two types of diversification, namely related and unrelated diversification. Related diversification means that firms remain in a market or industry with which they are familiar. For example, a soup manufacturer diversifies into cake manufacture (i.e. the food industry). Unrelated diversification is where firms have neither previous industry nor market experience. For example a soup manufacturer invests in the rail business.

Ansoff's matrix is one of the most well know frameworks for deciding upon strategies for marketing.

Building Relationships for Cross Selling

Dibb (2001) believes that the banks should have to develop individual personal relationships with customers in order to help to provide customized products and a marketing mix to suit their customer’s individual needs. Successful cross-selling depends on optimum contact management (Dibb, 2001). The relationship could be put at risk if the efforts for contacts with the customer are excessive and repetitive. For successful cross selling, it is also required to retrieve and store customer’s information in an accessible form. Demographic data, such as age, education, income and financial status provide the banks with useful information about the probability of purchasing another product from them (Vyas and Math, 2006).

While personal chemistry compels the success or failure of cross selling at a bank, these associations do not form overnight (Sisk, 2007). Bank representatives must be patient and pay attention to the tiniest of details, especially in the starting phase of relationship building. Sisk (2007) also believes that for cross selling to work, it must receive ample support by the top management. By support, it means that rewarding those executives who do it and effectively tracking their progress.

Cross Selling – How and Why?

Sisk (2007) also puts forth three basic procedures which applied can easily facilitate cross selling in a banking or financial institution. First, the bank representatives must receive a list of customers with maturing deposits every month; because this money which is going to be freed-up could be easily channelled into investment sales. This could be an automated procedure so that the representatives don't have to rely on the manager for the list. Second, the bank consultants should receive a copy of all mortgage applications. These applications provide with the most complete and comprehensive financial picture of a customer. And third, the bank must be sure that compensation to the representatives and executives is not too skewed toward deposits or investments.

However, even when management is solidly behind cross-selling, encourages it via compensation and holds employees to certain targets of referrals per year and the amount of business those referrals generate; there still exist the problem of bank employees of working together. At Wachovia, such interdepartmental relationships were fostered by co-locating representatives with each other’s lines of businesses, whenever possible (Sisk, 2007). Since genuine cross sales are based on trust and it is general knowledge that building trust takes a lot of time; making inter departmental sales is not always that easy. One cannot expect a bank representative to storm into a first meeting with a commercial banking client and make a sale. According to data collected by Kerbsbach (2002), there is still plenty of room for growth via cross selling. His figures state that only 7.8% of all U.S. households buy investment products from their bank; and the consumers who also trade where they bank, are premium customers with high income and long-term cross-selling potential.

Most cross selling can be understood as making the right suggestion at the right time and not being intrusive. According to Miller (1993), most cross marketing happens months before the sale and begins with building awareness. As McCausland (2002) puts it ‘the key is to know when to focus and when to partner’. Caplan (2001) also suggests that the success of cross selling primarily depends on the message, its timing, and its relevance and more often than not, on the communication channel used to deliver that message. Thus it is critical for cross sell messages to be designed and delivered with appropriate timing. However, doing this for a customer base for banks which runs into thousands and millions is easier said than done. Fortunately emerging software solutions and technological advancements help scan, focus and time the organization’s marketing activities. Cornwell (2009) talks about such technology used for automation of loan administration and facilitate mass loan modification programs. Caplan (2009) has also talked about emerging technological solution which is based on tracking and leveraging individual consumer behaviour and attitude to drive marketing dialogues with them.

Behaviour Driven Approach to Cross Sell

Behaviour driven marketing solutions recognizes the changes in individual customer behaviour and are designed to drive their offers based on them (Caplan, 2009). These types of solutions could be very effectively used for cross sell initiatives. With behaviour driven marketing, bank managers can constantly follow customer activities and behaviours as simple as withdrawal, deposit, debit card credit card usage, frequency, size, direct deposits among others. The solution discussed by Caplan (2009) establishes normal patterns of behaviour of the consumers and also establishes consumer activities that may signal an interest or need in additional services. With such a monitoring mechanism in place, it becomes quite uncomplicated to drive target messages to the consumer. The messages can be delivered to the consumers through sales personnel, call centres, or directly via e mail, mail or ATM networks. These behaviour driven solutions have been tried and tested to provide daily target cross sell alerts for high value customers by five largest retail banks in the USA (Caplan, 2009). With critical knowledge being provided, everyday cross sell alerts were generated, prioritized and sent to appropriate mediums of contact. The results of this usage were pretty outstanding reinstating the fact that cross selling is primarily behaviour driven and the message and its timing is paramount for it to be successful.

The behaviour of the bank employees also matters a lot when cross selling is concerned (Hudson, 1995). The best and the easiest opportunity that bank employees have to sell bank services is when a customer opens an account with them or applies for a loan. Hudson (1995) feels that establishing an objective of how many services should be sold when an account is opened seems to be a very simple method for motivating employee behaviour and capitalize on this crucial encounter. This simplistic approach, however, does not take into consideration the effect the thinking and behaviour of the sales staff.

For instance, in a program that measures cross-selling performance, the performance of a sales representative is based on the number of services sold to each customer who opens an account. Given that performance is calculated by the ‘cross-sell ratio’ where each account and service sold gives one credit. Sales representatives face a dilemma: should they concentrate on a more profitable sale such as transferring a large sum of money from another bank, or try for simple accounts like ATM cards?

Buyer behaviour in the financial sector

In the past the financial services structure and operations has been such that consumers had little choice in terms of selecting their financial plan and the delivery channel of the instruments. According to Beckett, Hewer and Howcroft (2000) the consumer earlier had to accept the set price of the financial instrument and the form of delivery channel of it because of the rigid structure of the industry. He further explains that the only a little long term benefit was generated to the consumers when they switched between financial providers and it rather proved costly because of disruption and switching costs. Therefore, the consumers were in a way locked into patterns and there were also too few incentives to change.

However, since the deregulation of the industry and with the emergence of new communication and information technology, a highly competitive market has been created which changed the role of consumer just as a price taker. Consumers today are now more willing to change their buying behaviour when dealing with financial products. As a result of this, managers at the bank are less certain that their customers will continue to bank with them. Beckett et al (2000) feel that the industry cannot rely upon the traditional banker customer relationship to cross-sell high value supplementary products. Therefore, the bank or a financial services institution would have to respond to these changes strategically in order to maintain customer retention. The banks must ‘attempt not only to anticipate but also to influence and determine consumer’s buying behaviour’ in order to maintain profitability (Beckett et al, 2000).



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University of Sheffield – Business School
Libya Marketing




Title: A study of customer’s attitudes to cross selling by banks with particularly reference to the practice in Libya