| dc.description.abstract | Customer retention in the banking and microfinance sector has, for long, been a difficult goal for
the players to attain. In addition the recent microfinance crises, most of which occurred between
2008-2010 in several countries around the world, and the emergence of new research findings
exposed gaps in previous microfinance studies. Some of these gaps include lack of empirical
testing on the concepts recognized globally as playing a key role in influencing retention of
customers in the service sector. The study has identified four of those concepts. The purpose of
the study was to analyze the factors influencing customer retention in microfinance organizations
in Kenya, using Micro Africa Ltd (MAL), a leading credit only microfinance institution in
Kenya, as a case study. The main specific objectives of the study were to determine the extent to
which price perception, commitment, service quality and switching barriers influence customer
retention in microfinance organizations. The researcher used both descriptive and correlation
research design. Out of the active borrowers of the case study organization, the researcher
focused on 2,100 found in Nairobi County as the target population. This is a secondary source of
data. A sample size of 210 customers spread in four branches of Nairobi County was picked
using a simple random sampling method. This ensured adequate representation of the total
population in the country. The main data collection instruments were structured questionnaires.
The dependent variable was customer retention, while the independent variables were price
perception, customer commitment, service quality and switching barriers. Data analysis was
done through factor analysis using STATA, statistical software and the out presented through
tables and a regression matrix. The study found that of the four independent variables, only
customer commitment had a significant and positive relationship with customer retention in
Micro Africa Ltd in Nairobi County. The other three had a weak but positive relationship with
customer retention. In order for MAL and other related MFIs to enhance customer retention, the
study recommended close attention to customer commitment by investing more into customer
relationship management that can inhibit switching and increase customers‟ dependency. Also
there is the need to focus on switching barrier factors such as transaction time and to open more
efficient branches closer to customers, thereby making switching to other financial providers
somehow unattractive. Industry wide further research on the four variables should also be
explored. | en_US |
