Listening to Customers: Key to Being Effective Microfinance Organizations

This paper is intended for class discussion and is written in a dialogue form.

The author begins by linking effectiveness to vision of MFIs, and states that most MFIs envision improving the quality of life of the poor, with the aim of helping them move out of poverty by providing responsive financial services. As per the author, for microfinance to have an impact, the microfinance organizations must have:

• Breadth (large client base) and depth (reaching the poorest) in outreach;
• Sustainability for increasing its outreach.

The author stresses the need to view the poor as customers and provides arguments to prove that designing and providing responsive financial services is the key to maintaining outreach and sustainability (pushing the frontiers). The author details the following plan for achieving it:

• Market segmentation;
• Need assessment for kind of financial services;
• Preferred features of the target market;
• Pricing, methodology, promotion/advertising;
• Gauging the effectiveness and scope for improvement.

The author suggests that:

• Key is to listen and learn from the customers;
• Organization must use market research for finding the answers to key marketing questions;
• This will increase the organization's chances and ability to push the frontiers of microfinance so that more and more of the poor can be served.