> Posted by Micol Pistelli, Social Performance Director, MIX
Customer retention is a key objective for any business, and microfinance institutions (MFIs) are no exception. Whether you are a shareholder, board member, CEO, or head of operations at a microfinance institution, your strategy must rely on retaining most of your clients that still need financial services. But what happens when many of your clients stop using your services? How do you determine whether they left because they no longer need financial services or because they prefer a competitor? How do you know whether they were dissatisfied with your customer service?
Answering these questions can be difficult. Some organizations conduct exit surveys over the phone or in-person through their customer service departments. However, due to the expense and time required to conduct such research, many MFIs are only able to reach a small number of clients, which may not be representative of the whole. Additionally, the quality of the data collected can be lacking due to inaccuracies because clients may not feel comfortable being candid with representatives of the MFI they are leaving.
Of the thousand-plus institutions reporting consumer protection data to MIX, 65 percent of them have set-up complaint mechanisms that offer some form of redress for clients, such as hotlines, call centers, or customer service representatives. However these feedback tools are functional only when clients proactively use them and when MFIs manage to gather data and solve issues in a timely fashion. What often happens is that MFIs are left with questions about their clients’ satisfaction and can only guess at the root causes for their drop-out.
To help MFIs better understand their clients’ needs, preferences, and experience with their financial institution, Hivos and MIX developed the Voice of the Client (VoC). This initiative leverages mobile technology for MFIs to proactively reach out to clients in a non-intrusive manner to uncover potential issues affecting client satisfaction with the organization’s suite of products and services. Using mobile technology results in a low-cost, scalable method for producing valuable, timely, and relevant market research.
Built on Hivos’ experience with citizen monitoring and MIX’s experience with collecting data and providing insights on the performance of financial service providers, VoC uses an independent monitoring approach to data collection, which ensures a high level of data quality and reliable benchmark information by country, so that institutions can not only gain information about their clients’ needs but can also compare the information with other market peers.
VoC was tested for the first time in India last year with four microfinance institutions, on a sample of almost 6,000 clients. The results of the analysis, covering 33 questions on customer satisfaction and consumer protection, are published on MIX Market.
Three different methods of data collection were tested: interactive voice response mobile phone surveys (IVR), call center telephone surveys, and in-person interviews captured via smart phones. The majority of clients were interviewed via IVR as we were specifically interested in testing this approach due to its potential for scalability, lower cost per survey, and lack of interviewer bias. Twenty percent of clients receiving the IVR cards called the number and took part in the survey.
One of the lessons learnt when testing these survey methods was that, in some instances, clients who responded via IVR tended to provide less positive answers to the more sensitive questions – for instance, those related to their relationship with their loan officers. This was consistent across all four MFIs, thereby suggesting that clients might be inclined to provide more candid responses to sensitive questions when they perceive themselves to be answering under conditions of anonymity.
For example, to the question whether a loan officer ever demanded commission or intimidated/mistreated a client, a considerably higher percentage of clients interviewed via IVR provided a positive answer (see figure below).
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When clients were asked about their satisfaction with the loan installment payments, a much smaller number of clients interviewed via IVR reported it to be the correct size, with respect to clients interviewed using the other two methodologies.
The VoC project represents a departure from the often expensive, time-consuming, and unreliable or low quality alternative methods for collecting client-level data. This new approach creates actionable insights and benchmarks that can be used by financial service providers, funders, and investors to better understand the operating environment, marketplace, and consumer experience. Additionally, this information can lead to improvements in operating procedures, staff training, and product development.
While our main focus has been on client protection data, VoC is well-suited for research related to outcome data as well, including poverty assessment, savings, or women’s empowerment, to name a few. We have worked closely with the Smart Campaign to select consumer protection indicators and are now exploring how the VoC initiative can help it include client voices in its assessments and certifications. We are also completing our second pilot in Peru and hope to expand the project by partnering with a larger number of financial service providers across the world. Now that we’ve shown the power of this approach to measuring client satisfaction, we hope to engage more service providers and networks to help them better understand their customers and strengthen their businesses.
Image credit: Accion
Have you read?
Why Does Consumer Protection Lag in Africa
My Weeks in Customer Service Hell
What Do Clients Care About? Results from Research in Pakistan