It’s hard to believe that the year is already winding down, but consumer debt certainly isn’t. And not having the right collection partner today can equate to missed recovery opportunities tomorrow.
So what makes the end of the year such an important time to evaluate your current collections partner? Let’s take a look at some of the timely factors.
Why Evaluate Your Collection Partner in Q4? To be Better Prepared for 2024
Be Ready for the Aftermath of Holiday Spending
It should come as no surprise that consumer spending typically increases in the last few months of the year—Black Friday, Cyber Monday, Super Saturday, Boxing Day, not to mention the expenses around holiday travel too.
But last year marked a particular surge in consumers putting a lot of that spending on credit, with 41% of Americans putting more than 90% of their holiday expenses on their credit cards, and one-third using credit cards for all their holiday expenses.
Get a Jump on Engagement Before Tax Season
Even though tax season may feel far off today, now is the time to start preparing engagement strategies to reach and remind consumers to prioritize repayments when tax refunds come around.
And this shouldn’t be a novel concept to customers already dealing with debt: surveys find one in five respondents intend to pay off their holiday spending bills with federal tax refunds. In 2023, 44% of Americans reported earmarking their refunds to pay off their debt overall, according to the CNBC Your Money Financial Confidence Survey.
Why Opt for Digital Outreach? To Meet Consumers Where They Already Are
Your collection partner needs to be prepared for when and where your customers are ready to engage. And after the holidays and gearing up for tax season, many consumers are already active online—so don’t miss the chance to engage them through digital outreach.
By the numbers, consumers are primed for digital communications in Q4 and Q1 considering:
Given that consumers will be spending a lot of time online through Q4 and into Q1, digital communications is crucial to stay top of mind as holiday spending rolls into delinquency and competition for tax refund dollars ramps up. Your collection strategy should not only include email but also be ready with the right message at the right time to secure repayment—it takes more than just generic mass blast emails to get consumers to engage.
Consumers Prefer Digital for Financial Services—Any Time of Year
While we see spikes in online shopping during the holiday season and more consumers choose to file taxes electronically, these aren’t the only times of year that financial transactions happen digitally.
During any given month, surveys find that 73% of people worldwide turn to online banking at least once a month, with 59% specifically using mobile banking apps. This marks an increasing adoption rate of digital channels by customers to get their banking done, jumping to 83% in 2023 up from 77% in 2020.
Globally, the number of online banking users is expected to reach 3.6 billion by 2024.
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