PAPERmaking! g FROM THE PUBLISHERS OF PAPER TECHNOLOGY Volume 1, Number 1, 2015
3. Apply the Pareto principle as a general rule Recognise that 20% of the customers contribute to 80% of the profits, or which 20% of the causes are resulting in 80% of the complaints or desertion, etc. 4. Use absolute numbers as well as percentages The percentage, being relative, must be supplemented with the factual value in numbers (e.g., indicate that a 15% desertion is the equivalent 3,500 customers). 5. Shortening the measurement period lowers the desertion index To avoid underestimating the amount of desertion, make the measurement period equivalent to the longest credit term of the MFI (e.g. 18 months). 6. Use moving averages to eliminate temporality and see the tendencies The average of the previous 12 months has to be measured on a monthly basis, thereby removing the seasonal desertion and considering that most customers had at least the chance not to renew during the last 12 months. 7. Define desertion in terms of customers and not products If you have more than one product or service such, as insurance, savings, or training, include the use of all products in the desertion index and not just credit products. 8. Make measurements in the same time To allow valid comparisons, use the same time period (be it day, week, month, or quarter). For instance, make measurements in the first week of May, and then the first week of June. Conclusions Desertion is endemic throughout industry and is a forewarning about the mismatch between the value offer delivered by the companies and the objectives of the entrepreneurs. The majority of former clients are not going to the competition nor are they resting, which suggests the causes have to do with industry weaknesses that will not be fixed by just letting all the players compete. Rather, dual measures are necessary: adjustments in market target as well as the value offer delivered. It is important to keep in mind that successful micro entrepreneurs are people who choose financing options based on the relative cost/benefit of any offer. Their intuitive rationale takes into consideration the convenience of credit renewal. References 1. Ahmad R, Buttle F (2002) International Journal of Bank Marketing 20: 5-16. 2. Ahn JH, Han SP (2006) Customer churn analysis: Churn determinants and mediation effects of partial defection in the Korean mobile telecommunications service industry. Telecommunications Policy 30: 552-568. 3. Janelle B (2009) Emotional Value: Creating Strong Bonds with Your Customer . Berreneet-Koehler Publisher Inc, USA. 4. Churchill, CF (2010) Banking on Customer Loyalty . 5. Churchill, CF, Sahra SH (2011) Building Customer Loyalty. Microfinance Network. 6. Doyle, M (2000) Value Based Marketing , Wiley, England. 7. Kotler, P (1997) Marketing Management . Ninth edition, Prentice-Hall, Inc. 8. Pawlak K, Matul M (2004) Client Desertion in Microfinance: How To Diagnose It Successfully? Microfinance Centre. 9. Wilson, K (2001) Exodus: Why the Customer Leaves .
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Article 5 – Marketing (customers)
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