Customer switching behaviour in the microfinance industry: evidence from Tamale Metropolitan Area

Abstract

This study sought to examine customer switching behaviour among microfinance customers. The study adopted the causal research design and used nine variables from the customer switching model to determine the customer switching behaviour in the microfinance industry. The study used 250 respondents who were conveniently sampled for data collection. The data collected from respondents were analysed using descriptive and inferential statistics. The findings of the study showed that customer switching behaviour among customers of microfinance institutions is moderately high. The study found that price, core service failure, service recovery failure, service encounter failure, attraction by competitors, and switching cost were statistically significant with customer switching behaviour. However, reputation of microfinance institution and involuntary switching were found not be statistically significant to customer switching behaviour. Service inconvenience, core service encounter failure, and switching cost were most significant variables. This implies that microfinance companies must consider how these three important service challenges can be reduced in their quest to reduce churn.