Echo's new consumer research report 'counting the cost of debt recovery' reveals that energy companies and local authorities are two of the worst sectors in the UK when it comes to collecting debt...
We surveyed 1,500 UK households on their debt collection experiences with everyday service providers, and the findings are outlined in our new consumer research report 'counting the cost of debt recovery'.
The consumers that we surveyed placed energy companies at the top of a debt collection worst practice list, with local authorities and credit card companies placed second and third. These sectors most often subject customers to inaccurate billing, deploy overly aggressive tactics and follow recovery procedures which make customers feel embarrassed, according to the new research.
On the other hand, consumers felt that retailers and banks were the most likely to deploy best practice debt recovery processes, including offering affordable payment plans and easy payment options as well as having helpful and friendly staff.
A big challenge to businesses today is that of forgetful customers. Our research revealed that 41% of people surveyed made a payment late simply because they forgot to pay - this was the top reason stated for being in debt.
Consumers in many cases reported feeling embarrassed and harassed by businesses collecting arrears with our research report concluding that given the high numbers of people now falling into debt, it should simply be seen as a natural component of the customer journey.
"Our research revelaed a number of potentially concerning aspects in how debt is being collected across the UK, particularly in certain sectors. Hearing what consumers think in relation to different collection practices is insightful and businesses should be taking these findings on board."
Monica Mackintosh, customer services director (Echo Managed Services)
It is concerning that many customers are still being caused additional distress when in arrears in many instances, when in fact many feel incredibly guilty about it already. Understanding the wide range of reasons behind debt and why customers fall into arrears is crucial for businesses when honing their collections strategies. Everyone has the potential to fall into debt at some point, so treating these customers badly is neither fair nor effective.
Here at Echo, we recommend that businesses take a flexible approach to debt and adopt collections strategies in line with each individual customer and their circumstances, as well as aiming to intervene as early as possible. Transparent and regular communication and payment reminders are vital here, and can lead to both fairer and quicker outcomes - even reducing the instances of accrued debt in the first place. It's vital that businesses consider the above points or they may be at risk or customer disengagement, reputational damage and lost future business.
Suggested further reading:
- Issues with recovering debt? Let's get it sorted.
- Research: counting the cost of debt recovery
- Case Study: customer-centric debt collection in the field
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