Imp-Act Practice Notes No. 3: Learning From Client Exit

This paper focuses on the need to monitor exit of clients from microfinance institutions (MFIs) to help them perform better. The paper argues that knowing about client exit is necessary as:

• A rising exit rate may indicate major problems for an MFI and even threaten its survival;
• The cost of attracting new clients is relatively high;
• The advantages competitors have can be gauged;
• Assessment of the quality of services offered can be done.

The paper lists the guidelines for defining and measuring exit rate for an organization:

• Exit rates need to be relevant as they vary considerably across continents depending on socio economic conditions;
• They need to be measured over a standard period;
• Accounting should be done for temporary exits as some clients may plan or hope to return at a later time;
• The right exit rate has to be ascertained depending on the environment in which the organization is functioning.

The paper argues that profiling ex-clients is important because it helps in understanding:

• The types of clients that are leaving;
• The stage at which they are leaving;
• The reasons for their leaving.