We want to make credit work better for all: for our customers, for our clients, for society, and for the economy. To do this, we must understand our customers, their needs and their fears. This is constantly changing, so keeping track of these is an important part of what we do, and research is key to this.
In late 2019, we commissioned a research company called Walnut to investigate what customers think ‘good’ would look like in terms of contact communications, branding, and support. The research included face-to-face, in-depth interviews that lasted between 60-90 minutes, and were conducted in the customer’s home.
Lisa Hulme-Vickerstaff, Lowell’s Customer Insight Manager, was recruited for her expertise in research and customer insight and helping companies to better understand their customers – something Lowell is serious about. Lisa explained, “This is the first piece of qualitative research we’ve done with our customers since forming our new Insights team, and we were really keen to understand the drivers of customer actions, so that we could adapt our approach, improve engagement and help more people to find sustainable solutions for their debt situation.”
The research identified three main types of audiences:
• Active avoiders – customers who are disengaged with all collection companies
• Partially engaged – customers who are engaged with some collection companies but disengaged with others
• Those who are motivated to pay – customers who are engaged, in contact with, and either paying or planning to pay all collection companies
When asked about all collection companies in general, most participants had a negative initial perception. Some of the main issues cited were:
• Lack of understanding and empathy
• Aggressive approach
• Significant emotional consequence
The participants claimed that these issues often led them to avoid the collections company altogether.
We’re not what was expected
The research showed that customers’ perceptions of Lowell changed after they engaged. Before engagement, their assumptions were in line with those cited above but after engaging with us they discovered we are not what they expected. One participant said, “just pick up the phone to them, they’re not what you think. They’ll help you. Trust me, they sorted me right out.”
As part of the research, we also looked at how we could use some principles from behavioural science to increase customer engagement. These principles being:
• Differentiation – We know, and the research participants told us, that we are not the same as other collection companies. Highlighting our unique approach is a big pull factor to encourage customers to engage with us.
• Ownership/autonomy – By emphasising the control customers have over their situation, we encourage them to take ownership of their debts, and empower them to work towards becoming debt-free.
• Reciprocation – Recognising the person behind the reference number by showing empathy to our customers and making them feel they are being dealt with on an individual basis.
• Achievements – Celebrating the achievements of our customers as they clear their debt not only builds a positive relationship but also incentivises them to want to achieve more.
• Chunking and sequencing – By ‘chunking’ content in a communication into small paragraphs, or by creating a sequence such as steps to follow, we can reduce cognitive friction for customers, making it easier, and therefore more likely, for them to engage with us.
As Lisa explains, the research has proved very useful: "Applying this in-depth research, and using behavioural science principles, has enabled us to better understand and help our customers. We’ve already made significant changes to the way in which we engage with our customers, including introducing a refreshed brand on our website, and adapting the content and tone of voice on key communication pieces such as Notice of Assignment letters, and we have a lot more improvements planned. Going forward we will be enhancing the quality of our insight by establishing a customer panel and we will also make this platform available to our clients so that they too can create better customer experiences."
The main purpose of this research is to drive the actions that help our customers begin their journeys to becoming debt-free. The early indicators are encouraging as we are seeing engagement rates improving following the changes we’ve made. There is no doubt that a better understanding of customer behaviour helps us to enhance our communication strategies and deliver better outcomes for our customers. Research-based insight will be at the heart of this.