Customer loyalty in banking: cross buying on the German retail market

A major driver for customer value in retail banking is the purchase of additional products by the existing customer, so-called cross-buying. Sales of additional products benefit particularly in product categories with sequential purchase behavior (e. g. financial services) from a close customer's tie with the provider. The analysis of cross buying loyalty is complicated by the fact that consumers often hold multiple products from different providers. This article proposes an extension for the Brand Switching Model of Colombo/Morrison based on externally available data, that does not only evaluate the cross buying loyalty of banking customers, but that also takes into consideration the existence of half-loyal customers. The model is applied to empirical survey data on the German retail banking market in 2006, 2007 and 2008, where its usefulness is demonstrated within the cross buying categories investments and building society savings.