Market Research for Microfinance: Detecting the Needs Beyond the Numbers

This paper looks at microfinance from a client’s perspective, with an eye to delivering microfinance services in a way that is more appropriate to the client.

It argues that:

• By providing more appropriate products and services, MFIs should be able to attract and retain more clients, and thereby expand the effective delivery of services;
• Market research looks at the demand side, examining who is buying the MFI’s services and what do they want?

The paper discusses the following four issues:

• The reasons for the emergence of a more market-led microfinance agenda;
• Key questions for understanding clients;
• Use of market research to understand the nexus between clients, products, institutions and markets;
• The tools for, and the costs of, conducting research.

The paper states that:

• Competition and high drop-out rates have forced MFIs to focus on attracting and retaining clients;
• MFIs need to recognize market opportunities, develop strategies, and provide access to a broader range of financial services;
• Poor people use credit to generate income, accumulate assets and manage risks.

The paper states that market research focuses on customer preferences and customer financial behavior, and generates information that can be used to determine the most appropriate products. It also helps determine how to assess and consolidate an MFI’s position within the market. The paper concludes that market research for client-led microfinance not only makes good business sense, but is necessary for the survival of the MFI.