A key feature of BackOntrack® is that it increases interest in payment reminder enrollment. It does this by priming customers as they go through the online financial health experience. Priming is an incredibly valuable behavioral science principle. Out of the billions of potential thoughts we can have at a given moment, priming brings forward specific ones. Conscious or unconscious, these thoughts influence our subsequent actions for a short period afterwards. Priming has a limited shelf life. That means near-term follow-up on the priming is required. Otherwise the opportunity is lost.
Which brings us to the priming that BackOnTrack does for payment reminders.
Nudging for interest in payment reminders
After viewing empathetic videos and positive financial health advice, the delinquent customer is presented with a nudge for payment reminders. Specifically, the BackOnTrack nudge promotes payment reminders, touting their financial health value. This messaging continues the theme struck from the outset of BackOnTrack.
In the initial implementation done with a credit card issuer, we took a less ambitious tack with the nudge. We asked the person’s interest in receiving payment reminders. Not whether they wanted us to sign them up for payment reminders. The idea was to test out people’s level of interest, with an eye toward optimizing the nudge once we had more information.
What did we learn?
We tracked 15,705 delinquent customers who were not enrolled in payment reminders prior to completing BackOnTrack. The table below outlines two key metrics based on their interest.
|Response||Percent of population||Rate of enrollment|
|Yes, I’m interested||95.6%||2.1%|
|No, I’m not interested||4.4%||0.3%|
The overwhelming number of delinquent customers indicated they were interested in payment reminders (95.6%). This level of interest compares to 45% of this same population expressing interest in autopay. Why would payment reminders have much interest? My hypothesis is that email and text reminders do not require you to give up control. You control your email inbox and text messaging app.
And they’re familiar. How often do you use your work or personal calendar to remind yourself about a meeting? Reminders are commonly used, have no financial risks, and are valuable ways to practice good financial health.
Now about that rate of enrollment…
Easy way to boost reminder enrollment
Looking at the actual enrollment for reminders in the above table, we see people who expressed interest enrolled at a rate 7 times higher than those who were not interested. Clearly saying you’re interested is a marker for higher enrollment rates.
But why only 2.1% enrollment? In this case, it’s two factors:
- The prompt was only for interest, not actual request to be enrolled
- It requires the customer to remember to go sign up for payment reminders later
The first factor is easily remedied, by changing the option to an affirmative request to enroll. The second factor is much harder to manage from the consumer end. Here’s a question for you:
How many steps to sign up for reminders on your credit card?
I tried it for one my credit cards. Here what’s I had to do:
- Navigate to credit card website
- Remember, then enter your account ID and password
- Complete your second factor authentication
- Land on the account home page
- Find the link to reminders (no mean feat)
- Sign up for the reminder
Seriously, that step 5 was the hardest part. Reminders were well hidden on the site.
Thus, even with primed interest, it still required the customer to separately navigate to the credit card site and figure out where reminder signups were. But there is an easier way.
Batch file enrollment
The BackOnTrack reminder nudge asks about both email and text communications. 92% of respondents expressed interest in email reminders, 79% in text reminders. Email is the more popular form of payment reminders. Which allows us to confidently say we can close this enrollment gap.
Our form of customer outreach is email. Meaning we have the email address of the person responding. This enables a simpler solution to getting people enrolled: use the BackOnTrack completer’s email address. Take a periodic batch file of customers who are interested in email payment reminders and load it into the credit card issuer’s account management system. This bypasses the user experience friction where each individual has to remember to sign up, then work through the six steps to do so.
Buy why do payment reminders matter?
Better payment performance via reminder enrollment
A lot of talk about increasing enrollment for reminders. But what to end? Start with this research conducted by two academics, as part of a program funded by funded by Bank of America, Chase Bank, Synchrony Financial, and Wells Fargo. They evaluated the impact of reminders. Their conclusion:
We find that consumers offered reminders were 21% less likely than the control to experience severe (60+ day) payment delinquencies and were 12% less likely to experience a 30+ day delinquency.
These results square with what we saw in the is particular data set. Here are the serious delinquency (90+ DPD) rates based on payment reminder enrollment:
|Enrollment status||Serious delinquency|
|Enrolled for reminders||9.6%|
|Did not enroll for reminders||20.8%|
The improvement in 90+ day delinquencies for enrollers was 54%. Certainly there is some self-selection bias in that improvement. Some customers who went through the effort to enroll were displaying characteristics indicative of better payment performance anyway. But a good amount of the improvement we saw was due to the attention raising that reminders provide, when considering the true test-control trial run by the academic researchers.
For a relatively “cheap” intervention – payment reminders – creditors will enjoy improved payment performance. Our credit card client will be implementing the batch enrollment process to harvest these benefits. And consumers will be better off for it.
Signup to be notified when we’ve posted a new article to the Scorenomics Blog!