A recent study conducted by Lexop, a Canadian-based fintech, revealed a significant disconnect between consumer expectations and the service levels companies provide once accounts become past due.
The study, Early-Stage Collection Trends in 2022, surveyed over 4,500 consumers across Canada and the United States to understand their preferences and experiences as past-due customers. While 69% of consumers expect digital outreach via email and SMS in 2022, only 27% report having been contacted by either of these channels of communication.
“As economic uncertainty and consumer debt levels continue to rise, it’s essential that organizations continue to deliver an elevated customer experience to everyone – even those with past-due accounts – to succeed in today’s hyper-competitive market,” said Amir Tajkarimi, Chief Executive Officer and Co-founder of Lexop. “Organizations must adapt their collections strategy to meet changing consumer expectations, balancing the needs of the business with those of the past-due consumer.”
The findings indicate that the pandemic has fostered a digital-first environment where frictionless payments are standard. Across North America, consumers recognize that flexibility in terms and unobtrusive communication tactics can be motivators to pay their late bills.
“We’ve seen that leading organizations across North America have leveraged a digital collections strategy to conduct faster outreach at scale, accelerating the debt recovery process while enhancing the overall customer experience,” noted Tajkarimi. “In doing so, they’ve shifted their collections department from being a cost center to a revenue and customer retention driver.”
The key imperatives for early-stage collections that the research identified include:
Consumers want a frictionless past-due experience
The vast majority of respondents in North America (63%) agree that the perfect way to pay a late bill would be online via bank transfer or credit card. More than a third (33%) see the simplicity of the payment process as an important factor influencing the customer experience – a little over a quarter (27%) also mentioned good customer service.
- 47% of past-due customers had to call customer service, mail a check, or go to the bank in person to make a payment.
- 46% of past-due customers received phone notices about their late bills in 2022, and 51% said the agent was indifferent or didn’t seem engaged most of the time.
- 32% of respondents attributed their negative past-due experience to poor service from unsympathetic and rude agents, and 71% have considered switching to the competition as a result.
Consumers expect payment arrangements and digital notifications that show empathy
Nearly half of respondents (48%) would like to have the option to make payment arrangements (46%) or make a minimum payment to show good faith (38%), signaling the need for more flexibility.
- Over a third (38%) of past-due customers were late on a payment because of a cash flow shortage.
- Almost half (48%) of participants agreed to prioritize paying their late utility bills before other debts.
- More than half (55%) of respondents would feel more inclined to pay a late bill if they received personalized emails or SMS reminders showing empathy and a desire to collaborate based on their current situation.