The CEO of American Express made this observation about customer retention during the coronavirus pandemic:
“These are good customers who are in a bad time through no fault of their own, and we’d like to retain them as customers,” AmEx Chief Executive Stephen Squeri #
The pandemic has put millions of households into a precarious financial position. With unemployment at record levels, individuals who were successfully managing their affairs have suddenly found themselves wondering how to pay their bills.
In response, financial institutions have put in place measures to provide relief to these accidentally delinquent borrowers: payment grace periods, forbearance, modified payment plans, and fee waivers. These are supportive moves that recognize the nature of these delinquencies, and the gravity of the financial situation for many households.
Eventually, payments will be required on consumers’ credit card accounts. But the basis of the financial fragility, the pandemic-induced shutdown, will continue to have long lasting effects. This presents financial institutions with a conundrum: how to pursue payments while maintaining customer retention during the coronavirus pandemic?
Credit card companies’ collections approach will determine their relationship
Fast forward to the end of the payment grace period or payment forbearance. It’s time to seek some sort of payment from these accidental delinquents. Certainly financial institutions can rely on what they’d been doing before: reminders of amounts due and escalating consequences for non-payment.
But the nature of what’s causing the delinquency tsunami, and the customers’ “in-good-standing” status prior to the pandemic, argue for a more empathetic treatment.
De-stress your customers and get them into positive actions
With the surge of delinquent customers that credit card companies want to retain, using an empathetic collections approach is a smart strategy. It acknowledges the consumer’s situation, and represents a totally different approach to nudging them to pay.
Scorenomics’ BackOnTrack collections platform was specifically designed using empathetic principles. The screenshot below gives a taste of it:
The use of empathetic principles was designed to reduce the temperature of a stressful situation. And the coronavirus pandemic with its attendant economic impact is a prime example of a stressful situation.
As detailed in Improve collections roll rates with these 3 behavioral principles, the approach gets results. BackOnTrack causes a meaningful improvement in payment rates in the months that follow. To get a sense of the difference it’s making, see these quotes from actual delinquent consumers who have completed BackOnTrack.
These are powerful statements that demonstrate a real difference in collections approach. With the large cohort of accidentally delinquent households, such positive reactions will be a difference maker in customer retention during the coronavirus pandemic. As Mark Sullivan, Global Business Leader, Banking & Capital Markets at Genpact observed:
Those lenders who deliver on customer experience will be paid first and will come out much stronger than their counterparts when this crisis is over. #
Position your company ahead of others, try a little empathy.