Customer Retention Practices of Microfinance Banks

Abstract

The popularity which microfinance banking enjoys is predicated on its poverty alleviation potential. To attain this potential the banks need to be financially sustainable and can only achieve this by ensuring that their customers (the active poor) are satisfied and delighted by their service offerings. Microfinance bank services are undergoing major transformations, driven by change and customer sophistication. But their marketing has often been deficient in the area of customer retention. This study examines customer retention practices within the context of  micro finance banks. Data was obtained through a survey of 84 respondents, and analyzed using descriptive and inferential statistics. The study identifies a core group of retention strategies and explores the anticipated effects of these drivers. Managerial implications and future research directions are also discussed.

Keywords: Microfinance, customer retention strategies, customer retention rate, Customer defection