ABSTRACT

Personal selling is gaining great importance on the performance of MFIs generally and as such we record an intense competition faced by microfinance institutions which is a major challenge. This study had as objective to investigate the effect of personal selling on the Performance of Micro Finance Institutions in Bamenda town.

This was divided into specific objectives which included to determine the effect prospecting on the performance of MFIs in Bamenda town, to determine the effect of sales presentation on the performance of MFIs in Bamenda town and to examine the effect of objection handling on the performance of MFIs in Bamenda town. the researcher employed a qualitative research design since the data was non-numberic. Data was collected both from secondary sources which included articles, library sources and other online sources while primary sources included questionnaires and field observation.

The researcher had a sample population of 35 respondents from Bambili Cooperative Credit Union, BAMCCUL. Data was treated and analysed using ms word 2010 and SPSS 20. From the findings, the researcher noted that personal selling has a significant effect on the performance of MFIs with R=0.05, SD=0.076. more so, performance of MFIs was also analysed through prospecting as sales people go out to look for customers even at households (91.4%), from other companies (51.4%) and self employed workers to be their customers (51.4%).

Furthermore, sales presentation and objection handing significantly affects the performance of MFIs in Bamenda. The study underscores the importance of continuous prospecting, sales presentation and objection handing efforts in maintaining a steady flow of clients and achieving long-term viability for MFIs. It is evident that investing in prospecting activities is a key strategy for MFIs aiming to improve their performance and achieve organizational goals. The study recommends Investing in sales team training, focus on customer relationships, leverage technology, and monitor performance for improvement.

Keywords: Personal selling, Prospecting, Sales presentation, Objection Handing, Performance of MFIs, 

CHAPTER ONE

INTRODUCTION

1.1.            Background to the Study

Globally, the microfinance sector has experienced rapid growth, with an estimated 140 million low-income clients served by MFIs in 2018, according to the Global Microscope report by the Economist Intelligence Unit. Despite this progress, challenges persist in terms of reaching the most marginalized populations, ensuring financial sustainability, and maintaining high repayment rates. Personal selling has been identified as a potential solution to address these challenges by enabling MFIs to engage directly with clients, tailor their services to specific needs, and establish trust and rapport that can lead to increased uptake of financial products and services.

Research studies have shown that personalized interactions through personal selling can significantly impact the performance of MFIs. For example, a study by Mersland and Strøm (2009) found that the use of personal selling techniques was positively associated with higher loan disbursements and lower default rates among clients of MFIs in developing countries. Similarly, a study by Kaur and Sharma (2017) highlighted the importance of relationship-building through personal selling in enhancing customer loyalty and retention in the microfinance sector. Moreover, the shift towards digitalization and fintech innovations in the financial services industry has created new opportunities for MFIs to leverage personal selling strategies through online platforms, mobile applications, and social media channels. By combining traditional face-to-face interactions with digital tools, MFIs can enhance their outreach, improve customer engagement, and drive operational efficiency in serving low-income clients.

In Africa, microfinance institutions (MFIs) play a critical role in providing financial services to low-income individuals and underserved communities, contributing to poverty alleviation, economic empowerment, and financial inclusion on the continent. According to the African Microfinance Network (AFMIN), there are over 800 MFIs operating in Africa, serving millions of clients and disbursing billions of dollars in loans to micro-entrepreneurs and small businesses. Despite the significant impact of MFIs in Africa, challenges such as limited access to financial services, high operational costs, and low repayment rates persist in many countries. Personal selling has emerged as a key strategy for MFIs in Africa to overcome these challenges by establishing direct relationships with clients, understanding their needs, and customizing financial products and services to meet their specific requirements. Research studies on the effects of personal selling on the performance of MFIs in Africa have shown promising results. For example, a study by Asongu and Nwachukwu (2016) examined the impact of personal selling techniques on loan disbursement and repayment rates in microfinance institutions in sub-Saharan Africa. The study found that personalized interactions with clients through personal selling significantly improved loan disbursement efficiency and repayment behavior, leading to better financial performance and sustainability for MFIs.

According to the Association of Microfinance Institutions in Cameroon (CAMCCUL), there are over 600 licensed MFIs operating in Cameroon, serving millions of clients and disbursing billions of Central African Francs (CFA) in loans to micro-entrepreneurs, small businesses, and low-income individuals. Despite the significant presence of MFIs in Cameroon, challenges such as limited access to financial services, high operational costs, and low repayment rates persist in the sector. Personal selling has emerged as a strategic approach for MFIs in Cameroon to address these challenges by building relationships with clients, understanding their financial needs, and customizing products and services to suit their requirements. Research studies on the effects of personal selling on the performance of MFIs in Cameroon have shown promising results. For instance, a study by Nkengfack and Tchamyou (2018) investigated the impact of personal selling techniques on loan disbursement and repayment rates in microfinance institutions in Cameroon. The study found that personalized interactions with clients through personal selling significantly improved loan disbursement efficiency, client satisfaction, and repayment behavior, leading to enhanced financial performance and sustainability for MFIs in the country.

These MFIs offer a range of financial products and services, including savings accounts, credit facilities, insurance, and money transfer services, tailored to meet the needs of their diverse client base. The sector is regulated by the Ministry of Finance and the Central Bank of Central African States (BEAC) to ensure compliance with legal and prudential requirements and protect the interests of clients. Research studies have highlighted the importance of personalized customer engagement through personal selling techniques to enhance client trust, loyalty, and retention in the microfinance industry in Cameroon. Innovative approaches, such as digital channels and mobile platforms, are also being adopted by MFIs to strengthen their personal selling strategies and expand their reach to underserved communities and remote areas. Overall, MFIs in Cameroon continue to play a crucial role in promoting financial inclusion, empowering micro-entrepreneurs, and driving sustainable development in the country.

According to the Association of Microfinance Institutions in Cameroon (CAMCCUL), there are several licensed MFIs operating in Bamenda, serving a significant number of clients and disbursing loans to support economic activities and poverty alleviation in the region. These MFIs are regulated by the Ministry of Finance and the Central Bank of Central African States (BEAC) to ensure compliance with legal and prudential requirements and protect the interests of their clients. Research studies have emphasized the importance of personalized customer engagement through personal selling techniques to build trust, loyalty, and retention among clients of MFIs in Bamenda. 

1.2. Statement of the Problem

Despite the growing importance of personal selling in the financial services sector, there is a notable gap in the literature regarding the specific effects of personal selling on the performance of microfinance institutions. While personal selling is recognized as a key component in building relationships and driving sales in various industries, its impact on the performance metrics of microfinance institutions remains underexplored (Armah & Mensah, 2018). Understanding how personal selling strategies can contribute to the success and sustainability of microfinance institutions is crucial for enhancing their operational efficiency and financial viability (Alemayehu, 2017). 

Intense competition is a major challenge faced by microfinance institutions (MFIs), negatively impacting their performance. In a competitive market, MFIs struggle to maintain market share as clients have numerous options to choose from. This leads to reduced market share and pressure on profitability, as MFIs are forced to offer lower interest rates and more services to attract and retain clients. Furthermore, intense competition increases operating costs for MFIs. To stay competitive, MFIs must invest in marketing, technology, and staff training, which can strain their financial resources. Additionally, reaching new clients becomes more difficult in a saturated market, forcing MFIs to explore new markets or develop innovative products and services to differentiate themselves. This problem causes confusion to customers on which MFI to go for.

Furthermore, customer ignorance of financial products is a significant problem faced by microfinance institutions (MFIs) that can negatively affect their performance. When clients lack financial literacy and understanding, they may make poor financial decisions that can have detrimental consequences for both themselves and the MFI. One of the primary ways in which customer ignorance affects MFI performance is through increased risk of loan defaults. Clients who do not fully understand the terms and conditions of their loans, including the interest rates, repayment schedule, and potential penalties, may be more likely to default on their payments. This can lead to financial losses for the MFI and damage its overall portfolio quality. Additionally, customer ignorance can make it more difficult for MFIs to educate and inform their clients about financial management practices. MFIs often provide financial education and training to their clients to help them improve their financial literacy and make informed financial decisions. However, if clients lack basic financial knowledge, they may not be able to fully understand or benefit from these educational programs. This can limit the effectiveness of MFIs’ efforts to promote financial inclusion and empowerment.

Lack of timely and accurate updates on financial products is a prevalent challenge faced by microfinance institutions (MFIs), significantly hindering their performance. Customers may not receive updates on interest rates, loan terms, or new product offerings, leading to misunderstandings and dissatisfaction. This communication gap can cause customers to miss out on beneficial opportunities or make uninformed financial decisions. As a result, MFIs may experience reduced loan uptake, increased customer attrition, and reputational damage. Additionally, the lack of updates can hinder the effective management of customer relationships, as MFIs are unable to tailor their services to individual needs and preferences. 

To stem the tide of competition and improve MFIs performance, most of them now employ sales force members who are deployed to the sales field shortly after recruitment and selection for aggressive customer drive. They also employ various forms of advertising and sales promotions either to directly boost sales or to indirectly enhance salespeople’s performance. The research problem stem from the fact that there are many MFIs selling similar products in addition to competition from allied organisations such as insurance firms and micro-finance banks which also offer similar services such that selling bank products become very tough. Marketing managers adopt promotions to drive sales force performance but they are yet to ascertain the effects of these promotions. Managers are yet to know which of these tools provide the best results and how they interact to produce sales. Therefore the aim of this study is to determine the influence of Personal Selling, Advertising and Sales Promotions on Sales Force Performance of MFIs in Bamenda.  

1.3. Research Questions

The research questions of this study are presented in two parts which are the main question and the specific questions

1.3.1. Main question

What is the effect of personal selling on the Performance of Micro Finance Institutions in Bamenda town?

1.3.2. Specific Questions

1. What is the effect of prospecting on the performance of MFIs in Bamenda town?
2. How does sales presentation affect the performance of MFIs in Bamenda town?
3. To what extent does objection handling affect the performance of MFI, in Bamenda town?

1.4. Research Objectives

The research objectives of this study are presented in two parts which are the main objective and the specific objectives

1.4.1. Main Objective

To investigate the effect of personal selling on the Performance of Micro Finance Institutions in Bamenda town

1.4.2. Specific Objectives

1. To determine the effect prospecting on the performance of MFIs in Bamenda town
2. To determine the effect of sales presentation on the performance of MFIs in Bamenda town
3. To examine the effect of objection handling on the performance of MFIs in Bamenda town.